UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
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For the fiscal year ended December 31, 2021
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
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For the transition period from ________ to ___________
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U.S. STEM CELL,
INC.
(Exact name of registrant as specified in its charter)
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Florida
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001-33718
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65-0945967
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(State or other jurisdiction of
incorporation or organization)
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(Commission
file number)
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(I.R.S. Employer
Identification No.)
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1560 Sawgrass Corporate Pkwy
4th Floor, Sunrise, FL
33323
(Address of Principal Executive Offices)
(954)
835-1500
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Exchange
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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USRM
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OTC
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
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Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
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 every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b–2 of the Exchange Act.
(Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities
Act. ☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant’s voting equity held
by non-affiliates of the registrant, as of June 30, 2021, the last
day of the registrant’s most recently completed second fiscal
quarter, was $2,376,858 (based on the closing sale price of the
common stock reported on the OTC Markets, Inc. on June 30, 2021).
For purposes of the above statement only, all directors, executive
officers and 10% shareholders are assumed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for other purposes.
The number of shares outstanding of the registrant’s Common Stock,
$0.001 par value, as of March 31, 2022 was 571,626,258.
Transitional Small Business Disclosure Format Yes ☐ No ☒
Documents Incorporated By Reference None
U.S. STEM CELL, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended December 31, 2021
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes “forward-looking”
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, as well as historical information. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or industry results, to be materially
different from anticipated results, performance or achievements
expressed or implied by such forward-looking statements. When used
in this Annual Report on Form 10-K, statements that are not
statements of current or historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the
words “plan,” “intend,” “may,” “will,” “expect,” “believe,”
“could,” “anticipate,” “estimate,” or “continue” or similar
expressions or other variations or comparable terminology are
intended to identify such forward-looking statements, although some
forward-looking statements are expressed differently. We remind
readers that forward-looking statements are merely predictions and
therefore inherently subject to uncertainties and other factors and
involve known and unknown risks that could cause the actual
results, performance, levels of activity or our achievements or
industry results, to be materially different from any future
results, performance levels of activity or our achievements or
industry results expressed or implied by such forward-looking
statements. Such forward looking statements appear in Item 1-
“Business” and Item 7-“Management’s Discussion and Analysis of
Financial Condition and Results of Operations” as well as elsewhere
in this Annual Report. Factors that could cause our actual results
to differ materially from anticipated results expressed or implied
by forward-looking statements include, among others:
• our ability to manage our business despite operating losses and
cash outflows;
• our ability to obtain sufficient capital or strategic business
arrangements to fund our operations and expansion plans, including
meeting our financial obligations under various licensing and other
strategic arrangements and the funding of our development
programs;
• our ability to build and maintain the management and human
resources infrastructure necessary to support the growth of our
business;
• whether a large global market is established for our
cellular-based products and services and our ability to capture a
meaningful share of this market;
• the effect of any U.S. Food and Drug Administration rulings,
rules and regulations;
• scientific and medical developments beyond our control;
• our ability to obtain and maintain, as applicable, appropriate
governmental licenses, accreditations or certifications or comply
with healthcare laws and regulations or any other adverse effect,
actions, or limitations caused by government regulation of our
business;
• whether any of our current or future patent applications result
in issued patents, the scope of those patents and our ability to
obtain and maintain other rights to technology required or
desirable for the conduct of our business;
• our ability to bring our filings with the Securities and Exchange
Commission current and maintain current filings;
• the economic effects of the pandemic, the promptness of
distribution of vaccines, domestically and internationally to limit
the impact of COVID-19, the effect of new variants of COVID-19, and
the short and long term economic impact of COVID-19 on the
marketplace
The factors discussed herein, including those selected risks
described in Item 1A. “Risk Factors” and elsewhere in this Annual
Report on Form 10-K and in the Company’s other periodic filings
with the Securities and Exchange Commission (the “SEC”) which are
available for review at www.sec.gov under “Search for
Company Filings” could cause actual results and developments to be
materially different from those expressed or implied by such
statements. All forward-looking statements attributable to us are
expressly qualified in their entirety by these and other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof.
Consequently, all the forward-looking statements made in this Form
10-K are qualified by these cautionary statements and there can be
no assurance that the actual results anticipated by management will
be realized or, even if substantially realized, that they will have
the expected consequences to or effects on our business operations.
Except as required by law, we undertake no obligation to update or
revise these forward-looking statements, whether to reflect events
or circumstances after the date initially filed or published, to
reflect the occurrence of unanticipated events or otherwise.
Unless otherwise indicated or the context otherwise requires, all
references in this Form 10-K to “we,” “us,” “our,” “our company,”
“U.S. Stem Cell” or the “Company” refer to U.S. Stem Cell, Inc. and
its subsidiaries.
PART I
Item 1. BUSINESS
OVERVIEW
We are a biotechnology company focused on the discovery,
development and, subject to regulatory approval, commercialization
of autologous cell therapies for the treatment of disease and
injury. We are also a regenerative medicine company specializing in
physician/veterinary training and certification and stem cell
products. Our lead cardiac product candidate is MyoCell™, an
innovative clinical therapy designed to populate regions of scar
tissue within a patient’s heart with autologous muscle cells, or
cells from a patient’s body, for the purpose of improving cardiac
function in chronic heart failure patients. Our lead product for in
clinic use was Adipocell, a proprietary kit for the isolation of
adipose derived stem cells which, as of the date of this filing, is
currently on hold.
Biotechnology Product Candidates
We are an enterprise in the regenerative medicine/cellular therapy
industry. Our prior focus was on the discovery, development, and
commercialization of cell based therapeutics. Our business included
the development of proprietary cell therapy products, distribution
of regenerative medicine products, as well as revenue generating
physician and patient based regenerative medicine/cell therapy
training services.
US Stem Cell Training, Inc. (“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 SCT’s state
of the art facilities and globally at university, hospital and
physician’s 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.
Vet biologics, (“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 patient’s own adipose (fat) tissue directly on-site
within their own clinic or stall-side.
In early 2021, following the adjustments to our business plan, we
divested ourselves of our Member Interests in US Stem Cell Clinic,
LLC, (“SCC”) and retained our 49% Member Interests in US Stem Cell
Clinic of the Villages, LLC, which is currently dormant.
U.S. Stem Cell’s comprehensive map of products and services:
U.S. Stem Cell, Inc. was incorporated in the State of Florida in
August 1999 as Bioheart, Inc. In 2015, we changed our name to U.S.
Stem Cell, Inc. Our principal executive offices are located at 1560
Sawgrass Corporate Parkway, 4th FL Sunrise FL 33323 and our
telephone number is (954) 835-1500. Information about us is
available on our corporate websites at www. us-stemcell.com. We include
our website addresses in the Annual Report on Form 10-K only as an
interactive textual reference and do not intend it to be an active
link to our website. The information on our website is
expressly not incorporated by reference in the Annual Report on
Form 10-K.
The Annual Report includes the following trademarks, service marks
and trade names owned by the Company: U.S. Stem Cell, Inc. ™, US
Stem Cell Training, Vetbiologics, US Stem Cell Clinic, LLC.,
MyoCell ™ and Adipocell ™. These trademarks, service marks and
trade names are the property of U.S. Stem Cell, Inc. and its
affiliates.
REGENERATIVE MEDICINE / CELL THERAPY INDUSTRY
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. U.S. Stem Cell’s
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.
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 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. U.S. Stem
Cell’s 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, in our observation, for as many as 10,000 people from a
single donor tissue. By definition, OSCTs are always allogeneic in
nature.
CELLULAR THERAPY PRODUCT DEVELOPMENT PIPELINE
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, subject to development based on future financing,
and regulatory approval 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
patient’s 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.
At present, our development pipeline is on hold and no assurances
can be provided as to when they will restart.
STATUS OF CELLULAR THERAPY PRODUCT DEVELOPMENT CLINICAL
TRIALS.
MyoCell/MyoCell SDF-1
MyoCell™ is a regenerative, cellular therapy intended to improve
cardiac function for those with congestive heart failure and is
designed to be utilized months or even years after a patient has
suffered severe heart damage due to a heart attack or other cause.
We believe that MyoCell has the potential to become a leading
treatment for severe, chronic damage to the heart due to its
perceived ability to satisfy, at least in part, what we believe to
be an unmet demand for more effective and/or more affordable
therapies for chronic heart damage. MyoCell™ uses myoblasts, cells
that are precursors to muscle cells, from the patient’s own body.
The myoblasts are removed from a patient’s thigh muscle, isolated,
grown through our proprietary cell culturing process, and injected
directly in the scar tissue of a patient’s heart. A qualified
physician performs this minimally invasive procedure using an
endoventricular catheter. We entered into an agreement with
Biosense Webster (a Johnson & Johnson company) to use its NOGA®
Cardiac Navigation System along with its MyoStar™ injection
catheter for the delivery of MyoCell™ in the MARVEL Trial (as
defined below).
When injected into scar tissue within the heart wall, myoblasts
have been shown to be capable of engrafting in the damaged tissue
and differentiating into mature skeletal muscle cells. In a number
of clinical and animal studies, the engrafted skeletal muscle cells
have been shown to express various proteins that are important
components of contractile function. By using myoblasts obtained
from a patient’s own body, we believe MyoCell™ is able to avoid
certain challenges currently faced by other types of cell-based
clinical therapies including tissue rejection and instances of the
cells differentiating into cells other than muscle. Although a
number of therapies have proven to improve the cardiac function of
a damaged heart, no currently available competing treatment, to our
knowledge, has demonstrated an ability to generate new muscle
tissue within the scarred regions of a heart as MyoCell™ has
demonstrated.
Our completed clinical trials of MyoCell™ were primarily targeted
to patients with severe, chronic damage to the heart, who are in
Class II or Class III heart failure according to the New York Heart
Association, or NYHA, heart failure classification system. The NYHA
system classifies patients in one of four categories based on how
limited they are during physical activity. NYHA Class II heart
failure patients have a mild limitation of activity and are
generally comfortable at rest or with mild exertion while NYHA
Class III heart failure patients suffer from a marked limitation of
activity and are generally comfortable only at rest.
We believe the market for treating patients in NYHA Class II or
NYHA Class III heart failure is significant. According to the
American Heart Association (“AHA”) Statistics and the European
Society of Cardiology Task Force for the Treatment of Chronic Heart
Failure, in the United States and Europe there are approximately
5.2 million and 9.6 million, respectively, patients with heart
failure. The AHA Statistics further indicate that, after heart
failure is diagnosed, the one-year mortality rate is high, with one
in five dying and that 80% of men and 70% of women under age 65 who
have heart failure will die within eight years.
We believe that approximately 60% of heart failure patients are in
either NYHA Class II or NYHA Class III heart failure based upon a
1999 study entitled “Congestive Heart Failure Due to Diastolic or
Systolic Dysfunction – Frequency and Patient Characteristics in an
Ambulatory Setting” by Diller, PM, et. al.
MyoCell™ SDF-1 is intended to be an improvement to MyoCell™.
MyoCell™ SDF-1 is similar to MyoCell™ except that the myoblast
cells to be injected for use in MyoCell™ SDF-1 will be 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 acute myocardial infarction,
chronic heart ischemia, and lower limb ischemia. We hope to
demonstrate that these product candidates are safe and effective
complements to existing therapies for chronic and acute heart
damage.
We have completed various clinical trials for MyoCell™ including
the SEISMIC Trial, a 40-patient, randomized, multicenter,
controlled, Phase II-a study conducted in Europe and the MYOHEART
Trial, a 20-patient, multicenter, Phase I dose-escalation trial
conducted in the United States. We were approved by the U.S. Food
and Drug Administration, or the “FDA”, to proceed with a
330-patient, multicenter Phase II/III trial of MyoCell™ in North
America and Europe, or the “MARVEL Trial”. We completed the
MyoCell™ implantation procedure on the first patient in the MARVEL
Trial on October 24, 2007. Thus far, 20 patients, including 6
control patients, have been treated. Initial results for the 20
patients were released at the Heart Failure Society of American
meeting in September, 2009, showing a significant (35%) improvement
in the 6 minute walk for those patients who were treated, and no
improvement for those who received a placebo. On the basis of these
results, we have applied for and received approval from the FDA to
reduce the number of additional patients in the trial to 134, for a
total of 154 patients. We are planning, on the basis of these
results, to request the FDA to consider the MARVEL Trial a pivotal
trial (pivotal from Phase II to Phase III) and to reduce the number
of patients in the trial to 150. No assurances can be provided that
this request will be approved. We have also initiated the MIRROR
trial, which is a Phase III, double-blind placebo controlled study
for centers outside the United States. The SEISMIC, MYOHEART,
MARVEL and MIRROR Trials have been designed to test the safety and
efficacy of MyoCell™ in treating patients with severe, chronic
damage to the heart. We received approval from the FDA in July of
2009 to conduct a Phase I safety study on 15 patients of a combined
therapy (MyoCell™ with SDF-1) called the REGEN trial, during the
first quarter of 2010.
Advancement of the MyoCell™ and MyoCell™ SDF-1 clinical development
programs is contingent, among many factors, upon the Company
obtaining access to sufficient funding to execute the necessary
clinical trials to achieve proof of efficacy and regulatory
authorization to market such products. No assurances can be
provided that such development programs will be realized. At
present, these development programs are on hold and no assurances
can be provided as to when they will restart.
Adipocell
Adipocell, a proprietary kit for the isolation of adipose derived
stem cells which, as of the date of this filing, is currently on
hold.
Business Strategy
U.S. Stem Cell’s 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
distribution of products in the industry.
A fundamental shift in venture capital investment strategies where,
management believes, financial sponsorship is now directed toward
commercial or near commercial enterprises has required U.S. Stem
Cell to adapt its mission combining immediate revenue generating
opportunities with longer-term development programs. Accordingly,
U.S. Stem Cell developed a multifaceted portfolio of revenue
generating products and services in its US Stem Cell Training and
Vetbiologics, 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 venture
financings – a modern biotechnology company development strategy.
On May 9, 2018, the U.S. Department of Justice filed an injunctive
action, specifically United States of America v. U.S. Stem Clinic,
LLC, U.S. Stem Cell, Inc., Kristin C. Comella, and Theodore Gradel.
The Complaint was filed at the request of the U.S. Food and Drug
Administration (FDA) and alleges that the respective defendants
manufacture “stromal vascular fraction” (SVF) products from patient
adipose (fat) tissue, which the companies then market as stem
cell-based treatments without first obtaining what the government
alleges are necessary FDA approvals. The Company retained counsel
to defend in this action. On June 25, 2019, the federal court for
the Southern District of Florida ruled in favor of the government,
enjoining the Company and the other defendants from certain product
sales and processes. The Company filed an appeal on August 23, 2019
and attended oral argument on January 13th, 2021. On June 2nd,
2021, the Eleventh Circuit Court ruled to affirm lower courts’
judgement. The Company did not challenge the district court’s
judgment upon any other ground. The Company is not able to predict
the duration, scope, results, or consequences of the U.S.
Department of Justice actions and final rulings and management is
assessing its options on a going forward basis.
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 the Company can
raise additional capital at a reasonable fair market value, the
Company 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.
US STEM CELL TRAINING
US Stem Cell Training offers a variety of courses for physicians
and other health care professionals. These courses include didactic
lecture series and hands-on clinical techniques in the field of
regenerative medicine. We are currently hosting these courses
throughout the United States and in multiple countries. These
courses are also available in an online format. Pricing currently
ranges from $500-$7,500 depending on the location and modules.
U.S. STEM CELL, INC.
U.S. Stem Cell markets several products to physicians for in clinic
regenerative medicine use. These products include equipment
(centrifuges, heating block, laminar hood, autoclave) for
laboratory use. We are also providing a variety of materials
necessary to obtain bone marrow including, trocars, syringes and
other supplies.
VETBIOLOGICS
Vetbiologics is focused on providing regenerative medicine
therapies to veterinarians for use in both small and large animals.
We provide a complete regenerative medicine package which includes
training, equipment and supplies necessary for in clinic cell
therapy. We sell kits for isolating stem cells from bone marrow and
fat. We also provide kits for isolating platelet rich plasma. The
kits include all of the disposables and reagents necessary.
Vetbiologics is also working on several off the shelf type products
including an allogeneic stem cell source.
GENERAL AMERICAN CAPITAL PARTNERS
On March 3, 2017, we entered into an asset sale and lease agreement
(sale/leaseback transaction; “Asset Sale and Lease Agreement”),
with GACP (General American Capital Partners) Stem Cell Bank LLC, a
Florida limited liability company (“GACP) whereby we sold certain
lab, medical and other equipment relating to the cell banking
business for $400,000 and leased back the sold equipment over a
three year term. The lease includes a base monthly rental payment
of $20,000, due the first day of each calendar month. In addition,
we are required to pay 2.3%, 22.5% and 31.6% of revenues collected
on deposits arising from cell banking business for years 1, 2 and
3, respectively. At the expiration of the lease, we returned all
leased equipment and along with any maintenance records, logs, etc.
in our possession to the lessor with no right of repurchase.
Further, as a consequence of the Court Order , the Company resolved
to divest itself of certain equipment and other assets (the
“Equipment Assets”) used in connection with the Company’s human
tissue banking business, but consistent however with the
requirements of the Court Order, and to adjust the business plan
and operations to accommodate this potential divesture. The
divestiture became effective October 10th, 2019.
Royalty Agreement/Middle East
On November 9, 2016, the Company entered into an Intellectual
Property License Agreement whereby the Company granted High Rise
Group Company the exclusive right to the Company’s intellectual
property (as defined) for the licensed use and development in
Kuwait and other GCC/Middle East countries for 25 years in exchange
for a payment of $75,000 and a 5% royalty generated under the
agreement. The royalty payment is recorded as deferred revenue and
amortized over the term of the agreement. The carrying balance as
of December 31, 2021 and 2020 was $59,500 and $62,500
respectively.
The intent is for U.S. Stem Cell Middle East to offer regenerative
treatment options to patients, based on U.S. Stem Cell, Inc.
products and technologies like MyoCell™. To date, the first clinic
in Kuwait City has been completed but has not begun operations as
High Rising Group has not yet been able to secure regulatory
approvals to operate. No assurances can be provided as to the
ability to secure regulatory approvals to operate or the capacity
for any significant revenues arising from such operation once
commenced.
U.S. STEM CELL, INC.
U.S. Stem Cell markets several products to physicians for in clinic
regenerative medicine use. These products include equipment
(centrifuges, heating block, laminar hood, autoclave) necessary to
separate and obtain cellular medicine therapies. We are also
providing a variety of materials necessary to obtain fat and/or
bone marrow including cannulas, trocars, syringes and other
supplies. U.S. Stem Cell also supplies laboratory kits for
processing adipose and bone marrow tissue to obtain a mixture of
cells for use in clinic. These kits include disposables and
reagents. U.S. Stem Cell also provides banking services to patients
interested in storing their fat or bone marrow and the cells from
this tissue. U.S. Stem Cell is a registered FDA tissue bank in good
standing.
Patents and Proprietary Rights
We own or hold licenses or sublicenses to an intellectual property
portfolio consisting of numerous patents and patent applications in
the United States, and in foreign countries, for use in the field
of heart muscle regeneration. References in this report to “our”
patents and patent applications and other similar references
include the patents and patent applications that are owned by us,
and references to patents and patent applications that are
“licensed” to us and other similar references refer to patents,
patent applications and other intellectual property that are
licensed or sublicensed to us.
Patent life determination depends on the date of filing of the
application or the date of patent issuance and other factors as
promulgated under the patent laws. Under the U.S. Drug Price
Competition and Patent Term Restoration Act of 1984, as amended, a
patent which claims a product, use or method of manufacture
covering drugs and certain other products, including biologic
products, may be extended for up to five years to compensate the
patent holder for a portion of the time required for research and
FDA review of the product. Only one patent applicable to an
approved drug or biologic product is eligible for a patent term
extension. This law also establishes a period of time following
approval of a drug or biologic product during which the FDA may not
accept or approve applications for certain similar or identical
drugs or biologic products from other sponsors unless those
sponsors provide their own safety and efficacy data.
MyoCell™ is no longer protected by patents, which means that
competitors will be free to sell products that incorporate the same
or similar technologies that are used in MyoCell™ without
infringing our patent rights. As a result, MyoCell, if approved for
use, may be vulnerable to competition. In addition, many of the
patent and patent applications that have been licensed to us that
pertain to our other product candidates do not cover certain
countries within Europe.
Our commercial success will depend to a significant degree on our
ability to:
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defend and enforce our patents and/or compel the owners of the
patents licensed to us to defend and enforce such patents, to the
extent such patents may be applicable to our products and material
to their commercialization;
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obtain additional patent and other proprietary protection for
MyoCell™ and our other product candidates;
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obtain and/or maintain appropriate licenses to patents, patent
applications or other proprietary rights held by others with
respect to our technology, both in the United States and other
countries; and
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preserve company trade secrets and other intellectual property
rights relating to our product candidates; and operate without
infringing the patents and proprietary rights of third parties.
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In addition to patented intellectual property, we also rely on our
own trade secrets and proprietary know-how to protect our
technology and maintain our competitive position, since patent
protection may not be available or applicable to our technology.
Our policy is to require each of our employees, consultants and
advisors to execute a confidentiality and inventions assignment
agreement before beginning their employment, consulting or advisory
relationship with us. The agreements generally provide that the
individual must keep confidential and not disclose to other parties
any confidential information developed or learned by the individual
during the course of the individual’s relationship with us except
in limited circumstances. These agreements generally also provide
that we shall own all inventions conceived by the individual in the
course of rendering services to us. Moreover, some of our academic
institution licensors, collaborators and scientific advisors have
rights to publish data and information to which we have rights,
which may impair our ability to protect our proprietary information
or obtain patent protection in the future.
We work with others in our research and development activities and
one of our strategies is to enter into collaborative agreements
with third parties to develop our proposed products. Disputes may
arise about inventorship and corresponding rights in know-how and
inventions resulting from the joint creation or use of intellectual
property by us and our licensors, collaborators, consultants and
others. In addition, other parties may circumvent any proprietary
protection we do have. As a result, we may not be able to maintain
our proprietary position.
We are not currently a party to any litigation or other adverse
proceeding challenging our patents, patent licenses or intellectual
property rights. However, if we become involved in litigation or
any other adverse intellectual property proceeding, for example, as
a result of an alleged infringement, or a third party alleging an
earlier date of invention, we may have to spend significant amounts
of money and time and, in the event of an adverse ruling, we could
be subject to liability for damages, including treble damages,
invalidation of our intellectual property and injunctive relief
that could prevent us from using technologies or developing
products, any of which could have a significant adverse effect on
our business, financial condition and results of operation.
In addition, any claims relating to the infringement of third party
proprietary rights, or earlier date of invention, even if not
meritorious, could result in costly litigation, lengthy
governmental proceedings, divert management’s attention and
resources and require us to enter royalty or license agreements
which are not advantageous, if available at all.
See Item 1A. “Risk Factors — Risks Related to Our Intellectual
Property” for a discussion of additional risks we face with respect
to our intellectual property rights.
Recent Developments
COVID-19
In December 2019, a novel strain of coronavirus, COVID-19, was
reported in Wuhan, China. The World Health Organization determined
that the outbreak constituted a “Public Health Emergency of
International Concern” and declared a pandemic. The COVID-19
pandemic is disrupting businesses and affecting production, supply,
and sales across a range of industries, as well as causing
volatility in the financial markets. The extent of the impact of
the COVID-19 pandemic on our customer demand, sales and financial
performance will depend on certain developments, including, among
other things, the duration and spread of the outbreak of the virus
and the variants and the impact on our customers and employees, all
of which are uncertain and cannot be predicted. See “Risk Factors”
for information regarding certain risks associated with the
pandemic.
The effects of the COVID-19 pandemic are rapidly evolving, and the
ongoing impact and duration of the virus are unknown. Currently,
the COVID-19 pandemic has not had a significant impact on our
operations or financial performance; however, the ultimate extent
of the impact of the COVID-19 pandemic on our operational and
financial performance will depend on certain developments,
including the duration and spread of the outbreak, the
corresponding variants, and its impact on our customers, supply
chain problems, ability to raise capital as well impact of as
industry events, all of which are uncertain and cannot be
predicted.
For further information pertaining to the risk of Covid-19 upon our
business, see risk factors.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our SEC filings are available to
the public over the Internet at the website at http://www.sec.gov. The public
may also read and copy any document we file with the SEC at its
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549, on official business days during the hours of 10:00 am to
3:00 pm. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.
Item 1A. Risk Factors
The risk factors required pursuant to Regulation S-K, Item 503(c)
are not required for smaller reporting companies. Accordingly, the
Company has determined to provide particular risk factors at this
time. The risks and uncertainties described below are not the only
ones facing us. Other events that we do not currently anticipate or
that we currently deem immaterial also may affect our results of
operations and financial condition. If any events described in the
risk factors actually occur, our business, operating results,
prospects and financial condition could be materially harmed. In
connection with the forward looking statements that appear
elsewhere in this annual report, you should also carefully review
the cautionary statement referred to under “Cautionary Note
Regarding Forward Looking Statements.”
SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES
MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS OF OUR BUSINESS
PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE
ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR
PLANNED.
Risks Related to Our Financial Position and Need for Additional
Financing
We will need to secure additional financing in
2021 in order to continue to finance our
operations. If we are unable to secure additional financing on
acceptable terms, or at all, we may be forced to curtail or cease
our operations.
As of December 31, 2021, we had cash and cash equivalents of
$39,393 and an accumulated capital deficit of $139,801,924. As
such, our existing cash resources are insufficient to finance even
our immediate operations. Accordingly, we will need to secure
additional sources of capital to develop our business and product
candidates as planned. We are seeking substantial additional
financing through public and/or private financing, which may
include equity and/or debt financings, research grants and through
other arrangements, including collaborative arrangements.
As part of such efforts, we may seek loans from certain of our
executive officers, directors and/or current shareholders. We may
also seek to satisfy some of our obligations to the guarantors of
our loan with Seaside National Bank & Trust, or the Guarantors,
through the issuance of various forms of securities or debt on
negotiated terms. On January 3, 2018, the Company renewed the loan
with Seaside National Bank and Trust extends the maturity date to
May 18, 2020, all other terms and conditions remain unchanged. On
May 18, 2020, the Seaside loan was turned into a Demand Note with
no fixed maturity date but with a re-documentation requirement
every four years. The new re-documentation deadline is May 2022.
However, financing and/or alternative arrangements with the
Guarantors may not be available when we need it, or may not be
available on acceptable terms.
If we are unable to secure additional financing in the near term,
we may be forced to:
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curtail or abandon our existing business plans;
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reduce our headcount;
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default on our debt obligations;
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file for bankruptcy;
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seek to sell some or all of our assets; and/or
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Cease our operations.
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If we are forced to take any of these steps, any investment in our
common stock may be worthless.
If we raise additional capital and/or secure alternative
arrangements, with the Guarantors or otherwise, by issuing equity,
equity-related or convertible securities, the economic, voting and
other rights of our existing shareholders may be diluted, and those
newly issued securities may be issued at prices that are a
significant discount to current and/or then prevailing market
prices. In addition, any such newly issued securities may have
rights superior to those of our common stock. If we obtain
additional capital through collaborative arrangements, we may be
required to relinquish greater rights to our technologies or
product candidates than we might otherwise have or become subject
to restrictive covenants that may affect our business.
Our independent registered public accounting firm has
expressed substantial doubt about our ability to continue as a
going concern.
Our independent registered public accounting firm issued its report
dated March 31, 2022 in connection with the audit of our financial
statements as of December 31, 2021, which included an explanatory
paragraph describing the existence of conditions that raise
substantial doubt about our ability to continue as a going concern.
In addition, the notes to our financial statements for the year
ended December 31, 2021 included an explanatory paragraph
describing the existence of conditions that raise substantial doubt
about our ability to continue as a going concern for a reasonable
period of time. If we are not able to continue as a going concern,
it is likely that holders of our common stock will lose all of
their investment. Our financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
We are a development stage life sciences company with a
limited operating history and a history of net losses and negative
cash flows from operations. We may never be profitable, and if we
incur operating losses and generate negative cash flows from
operations for longer than expected, we may be unable to continue
operations.
We are a development stage life sciences company and have a limited
operating history, limited capital, limited sources of revenue, and
have incurred losses since inception. Our operations to date have
been limited to organizing our company, developing and engaging in
clinical trials of our MyoCell™ product candidate, expanding our
pipeline of complementary product candidates through internal
development and third party licenses, expanding and strengthening
our intellectual property position through internal programs and
third party licenses and recruiting management, research and
clinical personnel. Consequently, it may be difficult to predict
our future success or viability due to our lack of operating
history. As of December 31, 2021, we have accumulated a deficit of
approximately $139.8 million. Our MyoCell™ product candidate has
not received regulatory approval or generated any material revenues
and is not expected to generate any material revenues until
commercialization of MyoCell, if ever.
Our ability to continue generating revenues from any of our product
candidates will depend on a number of factors, including our
ability to successfully complete clinical trials, obtain necessary
regulatory approvals and implement our commercialization strategy.
In addition, even if we are successful in obtaining necessary
regulatory approvals and bringing one or more product candidates to
market, we will be subject to the risk that the marketplace will
not accept those products. We may, and anticipate that we will need
to, transition from a company with a research and development focus
to a company capable of supporting commercial activities and we may
not succeed in such a transition.
Because of the numerous risks and uncertainties associated with our
product development and commercialization efforts, we are unable to
predict the extent of our future losses or when or if we will
become profitable. Our failure to successfully commercialize our
product candidates or to become and remain profitable could impair
our ability to raise capital, expand our business, diversify our
product offerings and continue our operations.
Risks Related to Product Development
All of our product candidates are in an early stage of
development and we may never succeed in developing and/or
commercializing them. We depended heavily on the success of our
MyoCell™ product candidate. If we are unable to
commercialize MyoCell™ or any of our other product
candidates or experience significant delays in doing so, our
business may fail.
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We have invested a significant portion of our efforts and financial
resources in our MyoCell™ product candidate and depended
heavily on its success. MyoCell™ was currently in the clinical
testing stage of development, although we have suspended work under
our clinical trials.
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We need to devote significant additional research and development,
financial resources and personnel to develop commercially viable
products, obtain regulatory approvals and establish a sales and
marketing infrastructure.
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We are likely to encounter hurdles and unexpected issues as we
proceed in the development of our other product candidates. There
are many reasons that we may not succeed in our efforts to develop
our product candidates, including the possibility that:
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our product candidates will be deemed ineffective, unsafe or will
not receive regulatory approvals;
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our product candidates will be too expensive to manufacture or
market or will not achieve broad market acceptance
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others will hold proprietary rights that will prevent us from
marketing our product candidates; or
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our competitors will market products that are perceived as
equivalent or superior.
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Our approach of using cell-based therapy for the treatment of
heart damage is risky and unproven and no products using this
approach have received regulatory approval in the United States or
Europe.
No company, to our knowledge, has yet been successful in its
efforts to obtain regulatory approval in the United States or
Europe of a cell-based therapy product for the treatment of heart
damage. Cell-based therapy products, in general, may be susceptible
to various risks, including undesirable and unintended side
effects, unintended immune system responses, inadequate therapeutic
efficacy or other characteristics that may prevent or limit their
approval by regulators or commercial use. Many companies in the
industry have suffered significant setbacks in advanced clinical
trials, despite promising results in earlier trials.
One of our competitors exploring the use of skeletal myoblasts
ceased enrolling new patients in its European Phase II clinical
trial based on the determination of its monitoring committee that
there was a low likelihood that the trial would result in the
hypothesized improvement in heart function. Although our clinical
research to date suggests that MyoCell™ may improve the contractile
function of the heart, we have not yet been able to demonstrate a
mechanism of action and additional research is needed to precisely
identify such mechanism.
U.S. Food and Drug Administration injunction has curtailed
our business.
On May 9, 2018, the U.S. Department of Justice filed an injunctive
action, specifically United States of America v. U.S. Stem Clinic,
LLC, U.S. Stem Cell, Inc., Kristin C. Comella, and Theodore Gradel.
The Complaint was filed at the request of the U.S. Food and Drug
Administration (FDA) and alleges that the respective defendants
manufacture “stromal vascular fraction” (SVF) products from patient
adipose (fat) tissue, which the companies then market as stem
cell-based treatments without first obtaining what the government
alleges are necessary FDA approvals. The Company has retained
counsel to defend in this action. . On June 25, 2019, the federal
court for the Southern District of Florida ruled in favor of the
government, enjoining the Company and the other defendants from
certain product sales and processes. The Company filed an appeal on
August 23, 2019 and attended oral argument on January 13, 2021. On
June 2, 2021, the Eleventh Circuit Court ruled to affirm lower
courts’ judgement. The Company did not challenge the district
court’s judgment upon any other ground. The Company is not able to
predict the duration, scope, results, or consequences of the U.S.
Department of Justice actions and final rulings and management is
assessing its options on a going forward basis.
Healthcare reform could substantially reduce our revenues,
earnings and cash flows.
We cannot predict how employers, private payors or persons buying
insurance might react to the changes brought on by broad U.S.
healthcare reform legislation or what form many of these
regulations will take before implementation. The healthcare reform
legislation, enacted in 2010, introduced healthcare insurance
exchanges which provide a marketplace for eligible individuals and
small employers to purchase healthcare insurance. While patients
have begun receiving insurance coverage through these exchanges,
the business and regulatory environment for these exchanges
continues to evolve as the exchanges mature. Additionally, there is
uncertainty about how the applicable state and federal agencies
will enforce regulations relating to the exchanges. There is also a
considerable amount of uncertainty as to the prospective
implementation of the federal healthcare reform legislation and
what similar measures might be enacted at the state level. There
have been multiple attempts through legislative action and legal
challenges to repeal or amend the Patient Protection and Affordable
Care Act of 2010, as modified by the Health Reform Acts, including
the case that was recently heard by the U.S. Supreme Court, King v.
Burwell. Although the Supreme Court upheld the provision by the
federal government of subsidies to individuals in federally
facilitated healthcare exchanges in Burwell, which
ultimately did not disrupt significantly the implementation of the
healthcare reform legislation, we cannot predict whether other
current or future efforts to repeal or amend these laws will be
successful, nor can we predict the impact that such a repeal or
amendment would have on our business and operations, or on our
revenues and earnings. In addition, in the last year, the executive
branch and Congress have taken actions to weaken or modify the
Affordable Care Act. The enacted reforms, future legislative
changes, as well as current ongoing uncertainty in matters related
to the Affordable Care Act, could have a material adverse effect on
our results of operations.
Risks Related to Our Common Stock
Our common stock may be considered a “penny
stock,” and thereby be subject to additional sale and
trading regulations that may make it more difficult to
sell.
Our common stock is considered to be a “penny stock.” It does not
qualify for one of the exemptions from the definition of “penny
stock” under Section 3a51-1 of the Exchange Act. Our common stock
is a “penny stock” because it meets one or more of the following
conditions (i) the stock trades at a price less than $5.00 per
share; (ii) it is not traded on a “recognized” national exchange or
(iii) it is not quoted on the NASDAQ Global Market, or has a price
less than $5.00 per share. The principal result or effect of being
designated a “penny stock” is that securities broker-dealers
participating in sales of our common stock are subject to the
“penny stock” regulations set forth in Rules 15-2 through 15g-9
promulgated under the Securities Exchange Act. For example, Rule
15g-2 requires broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of
the document at least two business days before effecting any
transaction in a penny stock for the investor’s account. Moreover,
Rule 15g-9 requires broker-dealers in penny stocks to approve the
account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires
the broker-dealer to (i) obtain from the investor information
concerning his or her financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the
investor and that the investor has sufficient knowledge and
experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written
statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and
dated copy of such statement from the investor, confirming that it
accurately reflects the investor’s financial situation, investment
experience and investment objectives. Compliance with these
requirements may make it more difficult and time consuming for
holders of our common stock to resell their shares to third parties
or to otherwise dispose of them in the market or otherwise.
FINRA sales practice requirements may limit a
shareholder’s ability to buy and sell our common
shares.
In addition to the “penny stock” rules described above, FINRA has
adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is
a high probability that speculative low priced securities will not
be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers
buy our common shares, which may limit your ability to buy and sell
our stock and have an adverse effect on the market for our shares.
In addition, there are a limited number of clearing houses that
clear “penny stocks” and those that will clear such stocks may
enforce internal time consuming administrative requirements and may
arbitrarily determine to refuse to clear any stock.
Rule 144 sales in the future may have a depressive effect on
the company’s stock price as an increase in supply of
shares for sale, with no corresponding increase in demand will
cause prices to fall.
All of the outstanding shares of common stock held by the present
officers, directors, and affiliate stockholders are “restricted
securities” within the meaning of Rule 144 under the Securities Act
of 1933, as amended. As restricted shares, these shares may be
resold only pursuant to an effective registration statement or
under the requirements of Rule 144 or other applicable exemptions
from registration under the Securities Act of 1933 and as required
under applicable state securities laws. Rule 144 provides in
essence that a person who is an affiliate or officer or director
who has held restricted securities for six months may, under
certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed the greater
of 1.0% of a Company’s issued and outstanding common stock. There
is no limit on the amount of restricted securities that may be sold
by a non-affiliate after the owner has held the restricted
securities for a period of six months if the Company is a current
reporting company under the Securities Exchange Act of 1934. The
Company, as of the date of this report, not current in its filings
but is making efforts to bring the filings current. A sale under
Rule 144 or under any other exemption from the Securities Act of
1933, if available, or pursuant to subsequent registration of
shares of common stock of present stockholders, may have a
depressive effect upon the price of the common stock in any market
that may develop. In addition, if we are deemed a shell company
pursuant to Section 12(b)-2 of the Act, our “restricted
securities”, whether held by affiliates or non-affiliates, may not
be re-sold for a period of 12 months following the filing of a Form
10 level disclosure or registration pursuant to the Securities Act
of 1933. Currently, we are not current in our report and the
exemption to registration required pursuant to Rule 144 is
unavailable to our shareholders. While we intend to bring our
filings current to permit the use of the exemption to registration
required pursuant to Rule 144, there can be no assurances as to
timing and subsequent continued filings.
Failure to achieve and maintain effective internal controls
in accordance with section 404 of the Sarbanes-Oxley Act could have
a material adverse effect on our business and operating
results.
It is time consuming, difficult and costly for us to develop and
maintain the internal controls, processes and reporting procedures
required by the Sarbanes-Oxley Act, and as our business develops,
we may need to hire additional financial reporting, internal
auditing and other finance staff in order to remain compliant. The
cost of compliance will adversely affect our financial results,
while, if we are unable to comply, we may not be able to obtain the
independent accountant certifications that the Sarbanes-Oxley Act
requires of publicly traded companies.
If we fail to comply in a timely manner with the requirements of
Section 404 of the Sarbanes-Oxley Act regarding internal control
over financial reporting or to remedy any material weaknesses in
our internal controls that we may identify, such failure could
result in material misstatements in our financial statements, cause
investors to lose confidence in our reported financial information
and have a negative effect on the trading price of our common
stock.
Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC
regulations, we are required to prepare assessments regarding
internal controls over financial reporting and furnish a report by
our management on our internal control over financial reporting.
Failure to achieve and maintain an effective internal control
environment or complete our Section 404 certifications could have a
material adverse effect on our stock price.
In addition, in connection with our on-going assessment of the
effectiveness of our internal control over financial reporting, we
may discover “material weaknesses” in our internal controls as
defined in standards established by the Public Company Accounting
Oversight Board, or the PCAOB. A material weakness is a significant
deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not
be prevented or detected. The PCAOB defines “significant
deficiency” as a deficiency that results in more than a remote
likelihood that a misstatement of the financial statements that is
more than inconsequential will not be prevented or detected.
In the event that a material weakness is identified, upon receiving
sufficient financing or generating sufficient revenues, we will
employ qualified personnel and adopt and implement policies and
procedures to address any such material weaknesses. However, the
process of designing and implementing effective internal controls
is a continuous effort that requires us to anticipate and react to
changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a
system of internal controls that is adequate to satisfy our
reporting obligations as a public company. We cannot assure you
that the measures we will take will remediate any material
weaknesses that we may identify or that we will implement and
maintain adequate controls over our financial process and reporting
in the future.
Any failure to complete our assessment of our internal control over
financial reporting, to remediate any material weaknesses that we
may identify or to implement new or improved controls, or
difficulties encountered in their implementation, could harm our
operating results, cause us to fail to meet our reporting
obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the
results of the periodic management evaluations of our internal
controls and, in the case of a failure to remediate any material
weaknesses that we may identify, would adversely affect the annual
auditor attestation reports regarding the effectiveness of our
internal control over financial reporting that are required under
Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls
could also cause investors to lose confidence in our reported
financial information, which could have a negative effect on the
trading price of our common stock.
The systems of internal controls and procedures that we have
developed and implemented to date are adequate in a research and
development business. The current transaction volume and limited
transaction channels mean that operating management, financial
management, board members and auditor can, and do, efficiently
perform a very extensive and detailed transaction review to ensure
compliance with the Company’s established procedures and controls.
If our business grows rapidly, we may not be able to keep up with
recruiting and training personnel, and enhancing our systems of
internal control in line with the growth in transaction volumes and
compliance risks which could result in loss of assets, profit, and
ability to manage the daily operations of our Company.
Public disclosure requirements and compliance with changing
regulation of corporate governance pose challenges for our
management team and result in additional expenses and costs which
may reduce the focus of management and the profitability of our
company.
Changing laws, regulations and standards relating to corporate
governance and public disclosure, including the Dodd-Frank Wall
Street Reform and Consumer Protection Act and the rules and
regulations promulgated thereunder, the Sarbanes-Oxley Act and SEC
regulations, have created uncertainty for public companies and
significantly increased the costs and risks associated with
accessing the U.S. public markets. Our management team will need to
devote significant time and financial resources to comply with both
existing and evolving standards for public companies, which will
lead to increased general and administrative expenses and a
diversion of management time and attention from revenue generating
activities to compliance activities.
COVID-19.
We cannot, at this point, determine the extent to which COVID-19
outbreak will impact business or the economy as both are highly
uncertain and cannot be predicted.
THE OUTBREAK OF THE CORONAVIRUS MAY NEGATIVELY IMPACT SOURCING
AND MANUFACTURING OF THE PRODUCTS THAT WE SELL AS WELL AS CONSUMER
SPENDING, WHICH COULD ADVERSELY AFFECT OUR BUSINESS, RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
In December 2019, a novel strain of coronavirus was reported to
have surfaced in Wuhan, China, which has and is continuing to
spread throughout China and other parts of the world, including the
United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (COVID-19) a
“Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II
declared a public health emergency for the United States to aid the
U.S. healthcare community in responding to COVID-19, and on March
11, 2020 the World Health Organization characterized the outbreak
as a “pandemic”. The significant outbreak of COVID-19 has resulted
in a widespread health crisis that could adversely affect the
economies and financial markets worldwide, and could adversely
affect our business, results of operations and financial
condition.
THE OUTBREAK OF THE COVID-19 MAY ADVERSELY AFFECT OUR
MARKET.
Further, such risks as described above could also adversely affect
our market, resulting in reduced spending in non-COVID-19 health
care. Risks related to an epidemic, pandemic or other health
crisis, such as COVID-19, could also lead to the complete or
partial interruption of our operations. The ultimate extent of the
impact of any epidemic, pandemic or other health crisis on our
business, financial condition and results of operations will depend
on future developments, which are highly uncertain and cannot be
predicted, including new information that may emerge concerning the
severity of such epidemic, pandemic or other health crisis and
actions taken to contain or prevent their further spread, among
others. These and other potential impacts of an epidemic, pandemic
or other health crisis, such as COVID-19, could therefore
materially and adversely affect our business, financial condition
and results of operations.
The global impact of COVID-19 and actions taken to reduce its
spread continues to rapidly evolve and we will continue to monitor
the situation and the effects on our business and operations
closely. We do not yet know the full extent of potential impacts on
our business or operations or on the global economy as a whole,
particularly if the COVID-19 pandemic continues and persists for an
extended period of time. The length of time it may take for global
vaccine distribution and more normal economic and operating
conditions to resume remains uncertain and the economic recovery
period could continue for a prolonged period even after the health
risks of the pandemic subside. Given the uncertainty, we
cannot reasonably estimate the impact on our future results of
operations, cash flows or financial condition. To the extent the
ongoing COVID-19 pandemic adversely affects our business and
results of operations, it may also have the effect of heightening
many of the other risks and uncertainties described in this “Risk
Factors” section of this Annual Report. We will continue to
evaluate the nature and extent of COVID-19’s impact to our
business, consolidated results of operations, financial condition
and liquidity, and our results presented herein are not necessarily
indicative of the results to be expected for future years.
THE OUTBREAK OF COVID-19 HAS RESULTED IN A WIDESPREAD HEALTH CRISIS
THAT COULD ADVERSELY AFFECT THE ECONOMIES AND FINANCIAL MARKETS
WORLDWIDE AND COULD EXPONENTIALLY INCREASE THE RISK FACTORS
DESCRIBED HEREIN AND IN OUR PRIOR FILINGS.
SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES
MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED
Item 1B. Unresolved Staff Comments
This Item is not applicable to us as we are not an accelerated
filer, a large accelerated filer, or a well-seasoned issuer.
Item 2. Properties
Our headquarters are located in Sunrise, Florida which we currently
lease on a month-to-month basis at a monthly lease rate of $99.00
per month.
We believe the space available at our headquarters will be
sufficient to meet the needs of our operations for the foreseeable
future.
Item 3. Legal Proceedings
On December 12, 2017, a product liability lawsuit was filed in
Broward County, specifically Jeannine Mallard v. U.S. Stem Cell,
Inc., US Stem Cell Clinics LLC., Regenestem, LLC., Regenestem
Network, LLC., and Kristin C. Comella. The Company will continue to
defend it vigorously. On December 6, 2019, the Company was one of
the parties to a Settlement Agreement and General Release (the
“Agreement”) related to certain medical procedures. Without
admitting any liability, and as part of that Agreement, the Company
agreed to provide a five-year non-interest bearing unsecured
promissory note, dated December 6, 2019, in the principal amount of
$250,000, payable in monthly increments of $750 per month, with a
final balloon payment of $205,000 due on January 1, 2025.
On September 17, 2015, a product liability lawsuit was filed in
Broward County, specifically Patsy Bade v. Bioheart, Inc. US Stem
Cell Clinics LLC, Alejandro Perez, ARNP, and Shareen Greenbaum,
M.D., and on November 30, 2015, a product liability lawsuit was
filed in Broward County, specifically Elizabeth Noble v. Bioheart,
Inc. US Stem Cell Clinics LLC, Alejandro Perez, ARNP, and Shareen
Greenbaum, M.D. During the year ended December 31, 2016, both
matters settled by the Company’s insurance policy with no
additional cost to the Company, excluding the Company payment of
the $100,000 insurance company deductible of which $11,000 was paid
in fiscal 2017. As a result of the final settlement and
determination of insurance coverage, the Company recognized
$100,000 of expense due to litigation for the year ended December
31, 2017. The remaining amount due under this settlement is $26,600
and $28,850 as of December 31, 2021 and 2020, respectively, and is
included in accounts payable.
On June 3, 2019, the Company was one of the parties to a Settlement
Agreement and General Release (the “Agreement”) related to certain
medical procedures. Without admitting any liability, and as part of
that Agreement, the Company agreed to provide a five-year 5.25%
Promissory Note, dated June 15, 2019, in the principal amount of
Five Hundred Thousand Dollars ($500,000), payable in monthly
increments of Five Thousand ($5,000) per month.
On July 27, 2020, Brenda Leonhardt filed a lawsuit against U.S.
Stem Cell, Inc., Mike Tomas, Dr. William P. Murphy, Jr., Richard T.
Spencer, III, Mark Borman, Dr. Samuel S. Ahn, Charles Hart, Sheldon
T. Anderson, Greg Knutson, and Kristin Comella in Broward County
Court, Case No. CACE-10-012095. The lawsuit alleges breach of a
settlement agreement, breach of contract with respect to failure to
make a balloon payment under a promissory note, and several tort
theories such as misrepresentation and fraudulent transfer. The
Company denies most of the allegations in the lawsuit and moved to
dismiss almost all of the claims. The motions to dismiss was
recently denied. U.S. Stem Cell, Inc. does note that it provided a
promissory note to Ms. Leonhardt, which has not been fully
satisfied.
The Company is subject at times to other legal proceedings and
claims, which arise in the ordinary course of its business.
Although occasional adverse decisions or settlements may occur, the
Company believes that the final disposition of such matters should
not have a material adverse effect on its financial position,
results of operations or liquidity. There was no outstanding
litigation as of December 31, 2021 or subsequent to December 31,
2020 other than that described above.
Government Claim
On May 9, 2018, the U.S. Department of Justice filed an injunctive
action, specifically United States of America v. U.S. Stem Clinic,
LLC, U.S. Stem Cell, Inc., Kristin C. Comella, and Theodore Gradel.
The Complaint was filed at the request of the U.S. Food and Drug
Administration (FDA) and alleges that the respective defendants
manufacture “stromal vascular fraction” (SVF) products from patient
adipose (fat) tissue, which the companies then market as stem
cell-based treatments without first obtaining what the government
alleges are necessary FDA approvals. The Company has retained
counsel to defend in this action. . On June 25, 2019, the federal
court for the Southern District of Florida ruled in favor of the
government, enjoining the Company and the other defendants from
certain product sales and processes. The Company filed an appeal on
August 23, 2019 and attended oral argument on January 13, 2021. On
June 2, 2021, the Eleventh Circuit Court ruled to affirm lower
courts’ judgement. . The Company did not challenge the district
court’s judgment upon any other ground. The Company is not able to
predict the duration, scope, results, or consequences of the U.S.
Department of Justice actions and final rulings and management is
assessing its options on a going forward basis. The Company, in
having divested certain equipment and other assets and assigning
its lease, has and will continue to experience a decrease in
revenues as the Company both maintains the remainder of the
business and transitions into similar or unrelated business
opportunities as determined by management. After the Court’s
issuance of the Order of Permanent Injunction, the Company has
received demand letters for compensation from persons who store
their SVF Product and/or other tissue product with the tissue bank
(several of the persons have requested refunds of the monies paid
to the tissue bank and one person has requested a full refund of
monies paid to an altogether separate company due to her not
receiving the full amount of treatments she requested; such
requests for compensation, to date, have not been material) and
requests that the Company preserve cells in the Company’s
possession. The Company sought guidance from the Court, which
entered an order generally staying the requirement to destroy any
SVF Product, pending a decision on the Company’s appeal. However,
that appeal has now been concluded and the stay order is no longer
in place.
Item 4. Mine Safety Disclosures.
Not applicable
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock is listed on the OTC Markets, Inc. (OTC) under the
symbol “USRM”. For the periods indicated, the following table sets
forth the high and low bid prices per share of common stock, as
reported by the OTC Markets. These prices represent inter-dealer
quotations without retail markup, markdown, or commission and may
not necessarily represent actual transactions.
|
|
|
Fiscal Year 2020
|
|
|
|
|
High
|
|
|
Low |
|
|
First Quarter
|
|
$ |
0.0300 |
|
|
$ |
0.0175 |
|
|
Second Quarter
|
|
$ |
0.0255 |
|
|
$ |
0.0089 |
|
|
Third Quarter
|
|
$ |
0.0100 |
|
|
$ |
0.0041 |
|
|
Fourth Quarter
|
|
$ |
0.0064 |
|
|
$ |
0.0036 |
|
|
|
|
Fiscal Year 2021
|
|
|
|
|
High
|
|
|
Low
|
|
|
First Quarter
|
|
$ |
0.0872 |
|
|
$ |
0.0135 |
|
|
Second Quarter
|
|
$ |
0.0639 |
|
|
$ |
0.0120 |
|
|
Third Quarter
|
|
$ |
0.0165 |
|
|
$ |
0.0051 |
|
|
Fourth Quarter
|
|
$ |
0.0135 |
|
|
$ |
0.0055 |
|
Holders
As of December 31, 2021, there were approximately 459 shareholders
of record of our common stock.
Dividends
We have never declared or paid any cash dividends on our common
stock or other securities and do not currently anticipate paying
any cash dividends in the foreseeable future. The declaration and
payment of dividends by us are subject to the discretion of our
Board of Directors and the restrictions specified in our articles
of incorporation, any contractual limitations, and by applicable
law. Any future determination to pay cash dividends will depend on
our results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed
relevant by our Board of Directors.
Securities Authorized For Issuance Under Equity Compensation
Plans
The following table provides certain information regarding our
existing equity compensation plans as of December 31, 2021:
|
|
|
Number of
securities
to be issued upon
exercise of
outstanding
options
|
|
|
Weighted-
average
exercise
price of
outstanding
options
|
|
|
Number of
securities
remaining
available
for issuance under
equity
compensation
plans
|
|
|
Equity compensation plans approved by security holders (1)
|
|
|
112,969,663 |
|
|
|
0.033 |
|
|
|
75,069,100 |
|
|
Equity compensation plans not approved by security holders (2)
|
|
|
1,114,019 |
|
|
|
14.735 |
|
|
|
0 |
|
|
|
(1)
|
Consists of our 1999 Officers and Employees Stock Option Plan, 1999
Directors and Consultants Stock Option Plan and Omnibus Equity
Compensation Plan, 2013 Omnibus Equity Compensation Plan.
|
|
|
|
|
|
|
(2)
|
Includes:
|
|
●
|
8,000 warrants in connection with a joint venture agreement dated
March 10, 2014. The warrants are exercisable at $21.70 for four
years vesting from June 8, 2014 through March 10, 2016.
|
|
|
|
|
●
|
4,000 warrants in connection with use of certain intellectual
property. The warrants are exercisable at $48.10 for four years
vesting from July 6, 2014 through April 6, 2017.
|
|
|
|
|
●
|
4,000 warrants in connection with the termination of a joint
venture agreement. The warrants are exercisable at $15.70 for four
years vesting May 27, 2015.
|
|
|
|
|
●
|
Warrants issued in connection with our private placements in 2014
to purchase an aggregate of 41,592 shares of our common stock at
prices from $11.00 to $23.25 per share expiring ten years from the
date of issuance.
|
|
|
|
|
●
|
Warrants issued in connection with our private placements in 2015
to purchase 1,444 shares of our common stock at $11.27 per share
expiring ten years from date of issuance.
|
|
|
|
|
●
|
Warrants issued in connection with settlement of debt to purchase
628 shares of our common stock at $40.00 per share expiring four
years from date of issuance in 2014.
|
|
|
|
|
●
|
1,000,000 warrants issued for services at $0.2713 per share on
August 27, 2018 expiring ten years from date of issuance.
|
Recent Sales of Unregistered Securities
In fiscal 2021, we issued an aggregate of 6,642,197 shares of our
common stock, having a fair value of $231,742, in settlement of
outstanding accounts payable, we issued 930,916 shares of our
common stock, having a fair value of $19,800, in lieu of payment in
cash of accrued and unpaid interest of $18,340 and we issued an
aggregate of 4,000,000 shares of its common stock, having a fair
value of $128,000, for services. We have issued 27,500,000 common
shares under the Form 1-A for cash proceeds of $275,000. 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(b) 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.
Issuer Purchases of Equity Securities
None.
Transfer Agent:
Continental Stock Transfer & Trust Company, One State Street,
30th Floor, New York, NY 10004 acts as transfer agent for our
common stock.
Item 6. Selected Financial Data
Not required under Regulation S-K for “smaller reporting
companies.”
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following is management’s discussion and analysis (“MD&A”)
of certain significant factors that have affected our financial
position and operating results during the periods included in the
accompanying financial statements, as well as information relating
to the plans of our current management. This report includes
forward-looking statements. Generally, the words “believes,”
“anticipates,” “may,” “will,” “should,” “expect,” “intend,”
“estimate,” “continue,” and similar expressions or the negative
thereof or comparable terminology are intended to identify
forward-looking statements. Such statements are subject to certain
risks and uncertainties, including the matters set forth in this
report or other reports or documents we file with the Securities
and Exchange Commission from time to time, which could cause actual
results or outcomes to differ materially from those projected.
Undue reliance should not be placed on these forward-looking
statements which speak only as of the date hereof. We undertake no
obligation to update these forward-looking statements.
The following discussion and analysis should be read in conjunction
with our financial statements and the related notes thereto and
other financial information contained elsewhere in this Form
10-K
The Company’s MD&A is comprised of significant accounting
estimates made in the normal course of its operations, overview of
the Company’s business conditions, results of operations, liquidity
and capital resources and contractual obligations. The Company did
not have any off balance sheet arrangements as of December 31,
2021 or 2020.
The discussion and analysis of the Company’s financial condition
and results of operations is based upon its financial statements,
which have been prepared in accordance with generally accepted
accounting principles generally accepted in the United States (or
“GAAP”). The preparation of those financial statements requires us
to make estimates and judgments that affect the reported amount of
assets and liabilities at the date of its financial statements.
Actual results may differ from these estimates under different
assumptions or conditions.
Our Ability To Continue as a Going Concern
Our management has evaluated whether there is substantial doubt
about our ability to continue as a going concern and has determined
that substantial doubt existed as of the date of the end of the
period covered by this Annual Report on Form 10-K (the “Form
10-K”). This determination was based on the following factors, as
of December 31, 2021, the Company had cash on hand of $39,393 and a
working capital deficit (current liabilities in excess of current
assets) of $11,987,776. During the year ended December 31, 2021,
the net loss was $3,287,416 and net cash used in operating
activities was $1,057,939. The Company’s existence is dependent
upon management’s ability to develop profitable operations and to
obtain additional funding sources. There can be no assurance that
ourfinancing efforts will result in profitable operations or the
resolution of the Company’s liquidity problems. The accompanying
statements do not include any adjustments that might result should
the Company be unable to continue as a going concern. Along with
diversifying the portfolio of products distributed by the Company,
including equipment and biologics, it is the intention of our
management to both continue to adhere to the Court Order (see Note
12 of the Financial Statements) as well as re-establish its good
standing with the Agency (FDA). These points are not mutually
exclusive nor negotiable and management believes that there are
still business and patient goodness opportunities while still
abiding by all legal requirements As a result, management shall be
continuing with the development of US Stem Cell Training, Inc., an
operating division of the Company, that is a content developer of
regenerative medicine/cell therapy informational and training
materials for physicians and patients and complies with both
requirements--as well as Vetbiologics, an operating division of the
Company, that 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.
Overview
We are a biotechnology company focused on the discovery,
development and, subject to regulatory approval, commercialization
of autologous cell therapies for the treatment of chronic and acute
heart damage. Our lead product candidates are MyoCell™ and
Adipocell. MyoCell™ is an innovative clinical therapy designed to
populate regions of scar tissue within a patient’s heart with
autologous muscle cells, or cells from a patient’s body, for the
purpose of improving cardiac function in chronic heart failure
patients. Adipocell is an innovative cell therapy kit with multiple
possible treatment applications using autologous adipose cells. We
are presently investigating the use of adipose cells in a variety
of clinical applications.
Biotechnology Product Candidates
We are focused on the discovery, development and, subject to
regulatory approval, commercialization of autologous cell therapies
for the treatment of chronic and acute heart damage. In our
pipeline, we have multiple product Candidates for the treatment of
heart damage, including MyoCell, MyoCell™ SDF-1 and Adipocell.
MyoCell™ and MyoCell™ SDF-1 are clinical muscle-derived cell
therapies designed to populate regions of scar tissue within a
patient’s 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™ except that the myoblast
cells to be injected for use in MyoCell™ SDF-1 will be 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 kit to obtain
patient-derived cells proposed for various in clinic procedures. We
hope to demonstrate that these product candidates are safe and
effective complements to existing therapies for various
indications.
MyoCath Product Candidate
The MyoCath is a deflecting tip needle injection catheter that has
a larger (25 gauge) needle to allow for better flow rates and less
leakage than systems that are 27 gauge. This larger needle allows
for thicker compositions to be injected, which helps with cell
retention in the heart. Also, the MyoCath needle has more
fluoroscopic brightness than the normally used nitinol needle,
enabling superior visualization during the procedure. Seeing the
needle well during injections enables the physician who is
operating the catheter to pinpoint targeted areas more
precisely.
The MyoCath is used to inject cells into cardiac tissue in
therapeutic procedures to treat chronic heart ischemia and
congestive heart failure. Investigators in our MARVEL Trial may use
either our MyoCath catheters or Biosense Webster’s (a Johnson &
Johnson company) NOGA® Cardiac Navigation System along with the
MyoStar™ injection catheter for the delivery of MyoCell™ to
patients enrolled in the trial. This trial has not been enrolling
in 2021.
We conduct operations in one business segment. We may organize our
business into more discrete business units when and if we generate
significant revenue from the sale of our product candidates. Our
revenue since inception has been generated inside and outside the
United States, and the majority of our long-lived assets are
located in the United States.
GENERAL AMERICAN CAPITAL PARTNERS
On March 3, 2017, we entered into an asset sale and lease agreement
(sale/leaseback transaction; “Asset Sale and Lease Agreement”),
with GACP (General American Capital Partners) Stem Cell Bank LLC, a
Florida limited liability company (“GACP) whereby we sold certain
lab, medical and other equipment relating to the cell banking
business for $400,000 and leased back the sold equipment over a
three year term. The lease includes a base monthly rental payment
of $20,000, due the first day of each calendar month. In addition,
we are required to pay 2.3%, 22.5% and 31.6% of revenues collected
on deposits arising from cell banking business for years 1, 2 and
3, respectively. At the expiration of the lease, we returned all
leased equipment and along with any maintenance records, logs, etc.
in our possession to the lessor with no right of repurchase.
Further, as a consequence of the Court Order , the Company resolved
to divest itself of certain equipment and other assets (the
“Equipment Assets”) used in connection with the Company’s human
tissue banking business, but consistent however with the
requirements of the Court Order, and to adjust the business plan
and operations to accommodate this potential divesture. The
divestiture became effective October 10th, 2019.
U.S. Stem Cell Clinic, LLC
On February 10, 2021, as part of a settlement agreement, the
Company transferred its entire member interest in U.S. Stem Cell
Clinic, LLC to Dr. Kristen Comella as settlement for $100,000 of
accrued interest owed to Dr. Comella.
Results of Operations Overview
Comparison of Years Ended December 31, 2021 and December 31,
2020
Revenues
Our primary source of revenue is from the sale of test kits and
equipment, training services, patient treatments and laboratory
services, and cell banking. Our revenue may vary substantially from
quarter to quarter and from year to year. We believe that
period-to-period comparisons of our results of operations are not
meaningful and should not be relied upon as indicative of our
future performance. We do not expect to generate substantial
revenues until we obtain regulatory approval for and commercialize
our product candidates.
We recognized revenues of $200,749 in 2021 compared to revenues of
$277,087 in 2020. Our revenue in 2021 was generated from the sale
of test kits and equipment and training services. Our revenues for
2020 were generated from the sale, test kits and equipment, and
training services. Decrease in revenue due to court case
result.
As a consequence of the Court Order (see Note 12) the Company
divested itself of certain equipment and other assets (the
“Equipment Assets”) used in connection with the Company’s human
tissue banking business, but consistent however with the
requirements of the Court Order, and adjusted the business plan and
operations to accommodate this divesture.
Cost of Sales
Cost of sales consists of the costs associated with the production
of MyoCath and test kits, product costs, labor for production and
training and lab and banking costs consistent with products and
services provided.
Cost of sales was $52,030 in the year ended December 31,
2021 compared to $64,117 in the year ended December 31, 2020.
The decrease is due to the decrease in revenues.
Research and Development
Our research and development expenses consist of costs incurred in
identifying, developing and testing our product candidates. These
expenses consist primarily of costs related to our clinical trials,
the acquisition of intellectual property licenses and preclinical
studies. We expense research and development costs as incurred.
Research and development expenses were $0 in 2021 remaining the
same as $0 in 2020.
Selling, General and Administrative
Our selling, general and administrative expenses primarily consist
of the costs associated with our general management and clinical
marketing and trade 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.
Selling, general and administrative expenses were $2,284,577 in
2021, a decrease of $328,634 in selling, general and administrative
expenses of $2,613,211 in 2020. The decrease is due to reduced
operations due to the Court order.
Gain (loss) on settlement of debt
During the year ended December 31, 2021, we recognized a net loss
of $151,410 primarily related to interest. In 2020, we recognized a
gain of $182 primarily related to the settlement of accounts
payable and accrued interest.
Gain on sale of equipment
In March 2017, we entered a sale/leaseback transaction whereby we
sold our lab and other medical equipment and re-leased the
equipment back for 36 months. In connection with the
sale/leaseback, we realized a gain on sale of equipment of $0.
During the year ended December 31, 2021, we recognized $0 in
current period operations as compared to $21,474 for the previous
year.
Income from
equity investment
Our investment of a 49.9% member interest ownership of Regenerative
Wellness Clinic as well as a 49% interest in U.S. Stem Cell Clinic
of the Villages LLC are accounted for using the equity method of
accounting. As such, we report our pro rata share of income (loss)
from equity investments for the period. For the year ended December
31, 2021 and 2020 our pro rata share of income (loss) was $0 and
$(23,539), respectively. We divested ourselves of our member
interests in Regenerative Wellness Clinic, LLC in March 2021.
Interest Expense
Interest expense during the year ended December 31, 2021 was
$1,000,148 compared to $488,369 for the year ended December 31,
2020. Interest expense primarily consists of interest incurred on
the principal amount of the Northstar loan, the Seaside National
Bank loan, the Capital Lease with GACP, accrued fees and interest
payable to the Guarantors, imputed interest on non-interest bearing
debt, the amortization of debt discounts and non-cash interest
incurred relating to our issued convertible notes payable. There
was nominal change in interest year over year.
On January 3, 2018, we renewed the loan with Seaside National Bank
and Trust extend the maturity date to May 18, 2020 all other terms
and conditions remain unchanged. On May 18, 2020, the Seaside loan
was turned into a Demand Note with no fixed maturity date but with
a re-documentation requirement every four years. The new
re-documentation deadline is May 2022.
Stock-Based Compensation
Stock-based compensation which is included in the Selling, General
and Administrative above, 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 as determined by our Board of Directors, with input from
management.
In valuing our common stock, our Board of Directors considered a
number of factors, including, but not limited to:
|
|
●
|
our financial position and historical financial performance;
|
|
|
●
|
the illiquidity of our capital stock;
|
|
|
●
|
arm’s 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;
|
|
|
●
|
an evaluation and benchmark of our competitors; and
|
|
|
●
|
the prospects of a liquidity event.
|
On April 1, 2013, our Board of Directors approved, subject to
subsequently received shareholder approval, the establishment of
the Bioheart 2013 Omnibus Equity Compensation Plan, or the “2013
Omnibus Plan” (replacing the 1999 Officers and Employees Stock
Option Plan, or the Employee Plan, and the 1999 Directors and
Consultants Stock Option Plan). The 2013 Omnibus Plan initially
reserved up to fifty thousand (50,000) shares of common stock for
issuance. On August 4, 2014, the Board of Directors approved to set
the reserve to one hundred thousand (100,000) 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. On November 2, 2015, the Board of
Directors approved the increase of the reserve under the 2013
Omnibus Plan to five hundred million (500,000,000) shares of common
stock for issuance, effective September 16, 2016, approved an
addition of twenty five million (25,000,000) shares of common stock
to the reserve, effective April 21, 2017, approved an addition of
twenty five million (25,000,000) shares of common stock to the
reserve, effective August 7, 2017, approved an addition of thirty
million (30,000,000) shares of common stock to the reserve and
effective May 7, 2018, approved an addition of one hundred million
(100,000,000) shares of common stock to reserve.
A summary of options at December 31, 2021 and activity during the
year then ended is presented below:
|
|
|
Shares
|
|
|
Weighted-
Average
Exercise Price
|
|
|
Weighted-
Average
Remaining
Contractual
Term (in years)
|
|
|
Options outstanding at December 31, 2020
|
|
|
111,119,914 |
|
|
$ |
0.0247 |
|
|
|
7.2 |
|
|
Granted
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Forfeited/Expired
|
|
|
(476,030 |
)
|
|
$ |
0.0298 |
|
|
|
|
|
|
Options outstanding at December 31, 2021
|
|
|
110,643,884 |
|
|
$ |
0.0247 |
|
|
|
6.3 |
|
|
Options exercisable at December 31, 2021
|
|
|
93,491,384 |
|
|
$ |
0.0256 |
|
|
|
6.1 |
|
|
Available for grant at December 31, 2021
|
|
|
34,168,070 |
|
|
|
|
|
|
|
|
|
The following information applies to stock options outstanding and
exercisable at December 31, 2021:
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
Exercise
Price
|
|
|
Outstanding Number
of Options
|
|
|
Weighted Average
Remaining Life
In Years
|
|
|
Weighted Average
Exercise price
|
|
|
Exercisable Number
of Options
|
|
|
Weighted Average
Exercise price
|
|
|
$0.004 to $0.010
|
|
|
|
41,800,000
|
|
|
|
7.0
|
|
|
$
|
0.0051
|
|
|
|
30,150,000
|
|
|
$
|
0.0050
|
|
|
$0.011 to $0.020
|
|
|
|
16,250,000
|
|
|
|
4.7
|
|
|
|
0.0196
|
|
|
|
16,250,000
|
|
|
|
0.0196
|
|
|
$0.021 to $0.030
|
|
|
|
9,510,000
|
|
|
|
6.9
|
|
|
|
0.0252
|
|
|
|
9,007,500
|
|
|
|
0.0252
|
|
|
$0.0363
|
|
|
|
22,635,000
|
|
|
|
5.6
|
|
|
|
0.0363
|
|
|
|
22,635,000
|
|
|
|
0.0363
|
|
|
$0.0536
|
|
|
|
20,000,000
|
|
|
|
6.4
|
|
|
|
0.0536
|
|
|
|
15,000,000
|
|
|
|
0.0536
|
|
|
$0.1540
|
|
|
|
448,884
|
|
|
|
3.8
|
|
|
|
0.1540
|
|
|
|
448,884
|
|
|
|
0.1540
|
|
|
Total
|
|
|
|
110,643,884
|
|
|
|
6.3
|
|
|
$
|
0.0247
|
|
|
|
93,491,384
|
|
|
$
|
0.0256
|
|
The aggregate intrinsic value of outstanding stock options was
$36,686, based on options with an exercise price less than the
Company’s stock price of $0.0060 as of December 31, 2021, which
would have been received by the option holders had those option
holders exercised their options as of that date.
The fair value of all options that vested during the years ended
December 31, 2021 and 2020 was $428,556 and $685,939, respectively.
As of December 31, 2021, the Company had $157,289 of total
unrecognized compensation cost related to non-vested awards granted
under the 2013 Omnibus Plan, which the Company expects to recognize
over a weighted average period of 0.55 years.
Warrants
A summary of warrant activity for the year ended December 31, 2021
is presented below:
|
|
|
Number of Warrants
|
|
|
Weighted-Average
Exercise
Price
|
|
|
Weighted-Average
Remaining
Life in Years
|
|
|
Outstanding at December 31, 2020
|
|
|
1,110,468 |
|
|
$ |
12.84 |
|
|
|
7.1 |
|
|
Issued
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(7,341 |
) |
|
$ |
77.88 |
|
|
|
|
|
|
Outstanding at December 31, 2021
|
|
|
1,103,127 |
|
|
$ |
12.41 |
|
|
|
6.2 |
|
|
Exercisable at December 31, 2021
|
|
|
1,101,582 |
|
|
$ |
1.64 |
|
|
|
6.2 |
|
The following information applies to warrants outstanding and
exercisable at December 31, 2021:
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
Exercise
Price
|
|
|
Outstanding Number of Warrants
|
|
|
Weighted Average
Remaining
Life in Years
|
|
|
Weighted Average
Exercise
Price
|
|
|
Exercisable Number
of Warrants
|
|
|
Weighted Average
Exercise
Price
|
|
|
$0.03 –20.00
|
|
|
|
1,081,036
|
|
|
|
6.3
|
|
|
$
|
1.17
|
|
|
|
1,081,036
|
|
|
$
|
1.17
|
|
|
$20.01 –30.00
|
|
|
|
19,543
|
|
|
|
2.2
|
|
|
$
|
25.06
|
|
|
|
19,543
|
|
|
$
|
25.06
|
|
|
$49.86
|
|
|
|
1,003
|
|
|
|
2.2
|
|
|
$
|
49.86
|
|
|
|
1,003
|
|
|
$
|
49.86
|
|
|
$7,690.00 |
|
|
$
|
1,545
|
|
|
|
5.0
|
|
|
$
|
7,690.00
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
1,103,127
|
|
|
|
6.2
|
|
|
$
|
12.41
|
|
|
$
|
1,101,582
|
|
|
$
|
1.64
|
|
Interest Expense
Interest expense during the year ended December 31, 2021 was
$1,000,148 compared to $488,369 for the year ended December 31,
2020. Interest expense primarily consists of interest incurred on
the principal amount of the Northstar loan, the Seaside National
Bank loan, the Capital Lease with GACP, accrued fees and interest
payable to the Guarantors, imputed interest on non-interest bearing
debt, the amortization of debt discounts and non-cash interest
incurred relating to our issued convertible notes payable. There
was nominal change in interest year over year.
On January 3, 2018, we renewed the loan with Seaside National Bank
and Trust extend the maturity date to May 18, 2020 all other terms
and conditions remain unchanged. On May 18, 2020, the Seaside loan
was turned into a Demand Note with no fixed maturity date but with
a re-documentation requirement every four years. The new
re-documentation deadline is May 2022.
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
Effective January 1, 2018, we recognize revenue in accordance with
Accounting Standards Codification 2014-09, Revenue from Contracts
with Customers (Topic 606), which supersedes the revenue
recognition requirements in Topic 605, Revenue Recognition, and
most industry-specific revenue recognition guidance throughout the
Industry Topics of the Accounting Standards Codification. The
updated guidance states that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The
guidance also provides for additional disclosures with respect to
revenues and cash flows arising from contracts with customers.
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.
Our primary sources of revenue are from the sale of test kits and
equipment, training services, patient treatments, laboratory
services and cell banking.
Revenues for kits and equipment sold are not recorded until kits
and equipment are received by the customer. Revenues from in-person
trainings are recognized when the training occurs and revenues from
on demand online trainings are recognized when the customer
purchases the rights to the training course. Any cash received as a
deposit for trainings are recorded by the Company as a
liability.
Patient treatments and laboratory services revenue are recognized
when those services have been completed or satisfied.
Revenues for cell banking sales are accounted for as multiple
performance obligations as described in 606 and addresses
accounting for arrangements that may involve the delivery or
performance of multiple products, services and/or rights to use
assets. Because the Company sells its services separately, on more
than a limited basis and at a price within a narrow range, our
company was able to allocate revenue based on stand-alone pricing.
The multiple performance obligations include stem cell banking,
dose retrieval and yearly storage fees. Revenues for stem cell
banking and dose retrieval is recognized at the point of service
and revenues for the yearly storage fees is recognized over the
term of the banking contract, which is typically one year with
annual renewals.
Stock-based compensation
We measure 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 our company in the same expense classifications in the
statements of operations, as if such amounts were paid in cash.
Income taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss carry
forwards that are available to be carried forward to future years
for tax purposes. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. When it is not considered
to be more likely than not that a deferred tax asset will be
realized, a valuation allowance is provided for the excess.
Although we have significant loss carry forwards available to
reduce future income for tax purposes, no amount has been reflected
on the balance sheet for deferred income taxes as any deferred tax
asset has been fully offset by a valuation allowance.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates include stock-based
compensation, debt discounts and the valuation allowance related to
deferred tax assets. Actual results may differ from these
estimates.
Research and Development Costs
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.
Depreciation
Depreciation is computed using the straight-line method over the
assets’ expected useful lives or the term of the lease, for assets
under capital leases.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits in banks
with maturities of three months or less, and all highly liquid
investments which are unrestricted as to withdrawal or use, and
which have original maturities of three months or less.
Options and warrants issued
We allocate the proceeds received from equity financing and the
attached options and warrants issued, based on their relative fair
values, at the time of issuance. The amount allocated to the
options and warrants is recorded as additional paid in capital.
Related Parties
For the purposes of these financial statements, parties are
considered to be related if one party has the ability, directly or
indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where our company and the party are subject to common
control or common significant influence. Related parties may be
individuals or other entities.
Results of Operations
We are a research and development stage company and our MyoCell™
product candidate has not received regulatory approval or generated
any material revenues and is not expected to until late 2019, 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.
Selling, General and Administrative
Selling, general and administrative expenses were $2,284,577 in
2021, a decrease of $328,634 in selling, general and administrative
expenses of $2,613,211 in 2020. The decrease is due to reduced
operations due to the Court order.
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.
Liquidity and Capital Resources
In 2021, we continued to finance our operational cash needs with
cash generated from financing activities.
Economic Injury Disaster
Loan (EIDL)
On June 20, 2020, the Company executed the standard loan documents
for an EIDL from the U.S. Small Business Administration in light of
the impact of the COVID-19 pandemic on our business. Pursuant to
that certain Loan Authorization and Agreement (the “SBA Loan
Agreement”), the principal amount of the EIDL received was
$150,000, with proceeds to be used for working capital purposes.
Interest accrues at the rate of 3.75% per annum. Installment
payments, including principal and interest, are due monthly
beginning June 20, 2021 (twelve months from the date of the SBA
Loan Agreement) in the amount of $731. On March 15, 2021, the
initial payment date was extended 12 months to June 20, 2022. The
balance of principal and interest is payable thirty years from the
date of the SBA Loan Agreement. As of December 31, 2021 and 2020,
the remaining carrying value of the note was $150,000. At December
31, 2021 and 2020, accrued interest on the note was $8,615 and
$2,990, respectively, and is included in accrued expenses on the
accompanying balance sheet.
Operating Activities
Net cash used in operating activities was $1,057,939 in 2021 as
compared to $478,886 of net cash used in operations in 2020. Our
net cash used in operations in 2021 resulted primarily from a net
loss of $3,287,416, partially offset by non-cash items including
interest and amortization of debt discount of $977,386, stock-based
compensation of $556,556, related party notes payable issued for
services rendered of $422,722, loss on settlement of accounts
payable and accrued interest of $151,410 and bad debts of $93,241,
as well as an increase in accounts payable of $73,195.
Investing Activities
Net cash provided by investing activities was $0 for the year ended
December 31, 2021.
Financing Activities
Net cash provided by financing activities was $1,078,762 in the
year ended December 31, 2021 as compared to net cash provided of
$497,456 in the year ended December 31, 2020. Our net cash provided
by financing activities in 2021 resulted from proceeds of received
from the issuance of convertible notes payable of $766,000,
proceeds from the sale of common shares of $275,000 and proceeds
received from related party advances of $90,000, partially offset
by repayments of notes payable of 52,238.
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.
At December 31, 2021, we had cash and cash equivalents totaling
$39,393; our working capital deficit as of such date was
$11,987,776. Our independent registered public accounting firm has
issued its report dated March 31, 2022 in connection with the audit
of our financial statements as of December 31, 2021 that included
an explanatory paragraph describing the existence of conditions
that raise substantial doubt about our ability to continue as a
going concern.
As of December 31, 2021, we had $8,016,314 in outstanding debt, net
of debt discount of $273,216.
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.
Recent Accounting Pronouncements
Refer to Note 1. Organization and Summary of Significant
Accounting Policies in the notes to our financial statements
for a discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Not required for smaller reporting companies.
Item 8. Financial Statements and Supplementary Data
Our Financial Statements begin on page F-1 of this Annual Report on
Form 10-K and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Our
management, with the participation of our Chief Executive Officer
and Principal Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15 under
the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the
end of the period covered by this Annual Report on Form 10-K. In
designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the
fact that there are resource constraints and that management is
required to apply its judgment in evaluating the benefits of
possible controls and procedures relative to their costs.
Our disclosure controls and procedures are designed to provide
reasonable, not absolute, assurance that the objectives of our
disclosure control system are met. Because of inherent limitations
in all control systems, no evaluation of controls can provide
absolute assurance that all control issues, if any, within a
company have been detected. Our Chief Executive Officer and
Principal Financial Officer have concluded, based on their
evaluation as of the end of the period covered by this report, that
our disclosure controls and procedures were not effective.
Management’s Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is
defined In Exchange Act Rule 13a-15(f). The term “internal control
over financial reporting” is defined as a process designed by, or
under the supervision of, the registrant’s principal executive and
principal financial officers, or persons performing similar
functions, and effected by the registrant’s board of directors,
management and other personnel,
|
|
● 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 and includes those policies and procedures that:
|
|
|
● pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
dispositions of the assets of the registrant;
|
|
|
● provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures of the registrant are being made only in
accordance with authorizations of management and directors of the
registrant; and
|
|
|
● provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
registrant’s assets that could have a material effect on the
financial statements.
|
Our internal control system is designed to provide reasonable
assurance to our management and board of directors regarding the
preparation and fair presentation of published financial
statements. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.
Further, the design of a control system must reflect the fact that
there are resource constraints and the benefits of controls must be
considered relative to their costs. In addition, because of changes
in conditions, the effectiveness of internal control may vary over
time.
We carried out an evaluation, with the participation of our
management, including our Chief Executive Officer (“CEO”) who also
acts as our Chief Financial Officer (CFO) of the effectiveness our
disclosure controls and procedures (as defined under Rule 13a-15(e)
under the Exchange Act) as of December 31, 2021. Based upon that
evaluation, our CEO/ CFO concluded that our disclosure controls and
procedures are not effective at the reasonable assurance level due
to the following material weaknesses:
We do not have sufficient segregation of duties within accounting
functions, which is a basic internal control. Due to our size and
nature, segregation of all conflicting duties may not always be
possible and may not be economically feasible. However, to the
extent possible, the initiation of transactions, the custody of
assets and the recording of transactions should be performed by
separate individuals. Management evaluated the impact of our
failure to have segregation of duties on our assessment of our
disclosure controls and procedures and has concluded that the
control deficiency that resulted represented a material
weakness.
To address these material weaknesses, management performed
additional analyses and other procedures to ensure that the
financial statements included herein fairly present, in all
material respects, our financial position, results of operations
and cash flows for the periods presented.
Remediation of Material Weaknesses
We intend to remediate the material weaknesses in our disclosure
controls and procedures identified above by hiring a full-time CFO
with SEC reporting experience in the future and expanding
accounting staff when working capital permits and by working with
our independent registered public accounting firm to refine our
internal procedures. We currently address the limitations through a
separately-designated standing Audit Committee established in
accordance with Section 3(a) (58) (A) of the Exchange Act. The
members of our Audit Committee are Mr. Borman, who serves as
Chairperson of the Audit Committee, Dr. Murphy, and Mr. Anderson.
Our Board of Directors has determined that Mr. Borman qualifies as
a “financial expert” as that term is defined in the rules of the
SEC implementing requirements of the Sarbanes-Oxley Act of
2002.
The Company is a smaller reporting company and is not subject to
Section 404(b) of the Sarbanes Oxley Act. Accordingly, this Annual
Report does not contain an attestation report of our independent
registered public accounting firm regarding internal control over
financial reporting, since the rules for smaller reporting
companies provide for this exemption.
(b) Changes in internal control over financial reporting.
There have been no changes in our internal control over financial
reporting that occurred during the quarter ended December 31, 2021,
that have materially affected or are reasonably likely to
materially affect our internal control over financial
reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate
Governance
Executive Officers and Directors
Set forth below is information regarding our current executive
officers and directors
|
Mike Tomas
|
57
|
Director, President and Chief Executive Officer, Chief Financial
Officer
|
|
William P. Murphy, Jr., M.D.
|
98
|
Director, Chairman Emeritus
|
|
Mark P. Borman
|
67
|
Director, Chairman of the Board
|
|
Sheldon T. Anderson
|
71
|
Director
|
|
Greg Knutson
|
70
|
Director
|
Our Bylaws provide that we shall have that number of directors
determined by the majority vote of the board of directors.
Currently we have six directors. Each director will serve until our
next annual shareholder meeting. Directors are elected for one-year
terms. Our Board of Directors elects our officers at the regular
annual meeting of the Board of Directors following the annual
meeting of shareholders. Vacancies may be filled by a majority vote
of the remaining directors then in office. Our directors and
executive officers are as follows:
Executive Officers and Directors
Mike Tomas. Mike Tomas, President & CEO of U.S. Stem
Cell Inc, is considered by many in the industry as one of the most
experienced marketers and operating executives for
IT/Communications and Biotech/Life Sciences private equity and
venture groups portfolio companies. The son of a serial
entrepreneur, he spent nearly 20 years driving the evolution of
telecommunications technology in the U.S. and Mexico in leadership
roles ranging from sales, marketing, customer service,
telemarketing, engineering, and operations. Upon retiring as Chief
Marketing Officer of Avantel, MCI/Worldcom’s Global Ventures $1B
investment with Banamex (at the time, the largest bank in Latin
America), Mr. Tomás joined other former-MCI executives (including
MCI CEO Jerry Taylor) and helped form an integrated customer
communications software solution that was named on Red Herring
magazine’s “Top Ten to Watch” list.
Upon the successful sale of that company in 2001, Mr. Tomas helped
launch The ASTRI Group, an early-stage private equity investment
company providing capital, business development and strategic
marketing support to emerging private companies. Mr. Tomas sits on
the board of U.S. Stem Cell Inc. (adult stem cell development and
applications) and has sat on the boards of The IDEA Center (Miami
Dade College’s entrepreneurial institute), Career Source Florida
(appointed by Florida Governor Rick Scott to his statewide
workforce investment board) and is the past chairman of Florida
International University’s Global Entrepreneurship Center. Mr.
Tomas is an inductee into the Miami-Dade College and WACE Halls of
Fame for business, an FIU Torch Award winner--and winner of top
communications, medical innovations, education and entrepreneurial
awards. An avid athlete, Mr. Tomas was also a Miami-Dade County
Sports Commissioner.
William P. Murphy, Jr., M.D. Dr. Murphy has served as a
member of our Board of Directors since June 2003. Dr. Murphy
founded Small Parts, Inc., a supplier of high quality mechanical
components for design engineers, in 1964 and served as its Chairman
until his retirement in April 2005. Small Parts, Inc. was acquired
by Amazon.com, Inc. in March 2005. From October 1999 until October
2004, Dr. Murphy served as the Chairman and Chief Executive Officer
of Hyperion, Inc., a medical diagnosis company which had an
involuntary bankruptcy filed against it in December 2003. Dr.
Murphy is the founder of Cordis Corporation (now Cordis Johnson
& Johnson) which he led as President, Chairman and Chief
Executive Officer at various times during his 28 years at Cordis
until his retirement in October 1985. Cordis Johnson & Johnson
is a leading firm in cardiovascular instrumentation.
Dr. Murphy received an M.D. in 1947 from the University of Illinois
and a B.S. in pre-medicine from Harvard College in 1946. He also
studied physiologic instrumentation at Massachusetts Institute of
Technology, or MIT. After a two year rotating internship at St.
Francis Hospital in Honolulu, he became a Research Fellow in
Medicine at the Peter Bent Brigham Hospital in Boston where he was
the dialysis engineer on the first clinical dialysis team in the
United States. He continued as an Instructor in Medicine and then a
research associate in Medicine at Harvard Medical School. Dr.
Murphy is the author of numerous papers and owns 17 patents.
He is the recipient of a number of honors, including the
prestigious Lemelson-MIT Lifetime Achievement Award, the MIT
Corporate Leadership Award, the Distinguished Service Award from
North American Society of Pacing and Electrophysiology, and the Jay
Malina Award from the Beacon Council of Miami, Florida. He is also
a member of the Inventors Hall of Fame.
Mark P. Borman. Mr. Borman has served as a member of the
Company’s Board of Directors since May 2009. He is a seasoned
financial officer with more than 30 years of broad-based financial
and investor relations experience. Mr. Borman brings small-company
entrepreneurial passion and larger-company disciplines. In addition
to the valuable experience he gained working with entrepreneurs and
their startups from 2009 to present, Mr. Borman has experience with
global, NASDAQ- and NYSE-listed companies in various executive and
financial roles. He serves and has served as a board member with
public and private companies, and on advisory and non-profit
boards. During his career, Mr. Borman has held positions with ADC
Telecommunications, General Instrument Corporation, First Chicago
Corporation, FMC Corporation, Price Waterhouse, and KPMG. Mr.
Borman received his B.A. in Accounting from Michigan State
University and his M.B.A. in Finance from the University of Chicago
Booth School of Business. He is an Audit Committee Financial
Expert under SEC rules and was a Certified Public Accountant and
Chartered Financial Analyst.
Sheldon T. Anderson. Mr. Anderson is Chairman of the Florida
Advisory Board of Northern Trust Corporation. From 1992 through
December 31, 2012, Mr. Anderson served in a variety of executive
capacities with Northern Trust Corporation, including his most
recent position as Chairman and Chief executive Officer Southeast
Region of Northern Trust Corporation. Mr. Anderson is the
Chair-elect of the Beacon Council, Miami-Dade County’s economic
development agency. He is a Board member of the Miami-Dade College
Foundation, Inc.; Museum of Contemporary Art (MOCA); the New World
Symphony; Baptist Health Systems Governing Board and Carrollton
School of the Sacred Heart. He is Past Chair and a member of the
Advisory Council of the United Way of Miami-Dade County. Anderson
is President of the Board of Cleveland Orchestra Miami / Miami
Music Association and also serves on the Advisory Board of the
University of Miami School of Law for Ethics& Public Service.
He is a member of the Orange Bowl Committee and the President’s
Council of Florida International University. A Miami native,
Sheldon holds a degree in International Studies from Ohio State
University.
Greg Knutson. Mr. Knutson founded Concrete Specialists, Inc.
in 1985 and continues to serve as its President. Mr. Knutson
founded Sunwood Properties in 2009 and continues to serve as its
President. Mr. Knutson founded G&G Land Development, LLC and
continues to serve as its Managing Partner. Mr. Knutson, a holder
of Member Interests in Northstar, was appointed as a Manager of
Northstar Biotech Group, LLC in late 2014.
Family Relationships
There are no family relationships among our executive officers and
directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and
executive officers, and persons who own more than ten percent (10%)
of our outstanding Common Stock, or the Reporting Persons, to file
with the SEC initial reports of ownership on Form 3 and reports of
changes in ownership of Common Stock on Forms 4 or 5. Such persons
are required by SEC regulation to furnish us with copies of all
such reports they file. Based solely on a review of Forms 3 and 4
furnished to us by the Reporting Persons or prepared on behalf of
the Reporting Persons by the Company and on written representations
from certain Reporting Persons that no Forms 5 was required, the
Company believes that the Reporting Persons have complied with
reporting requirements applicable to them.
Conflicts of Interest
Members of our management are associated with other firms involved
in a range of business activities. Consequently, there are
potential inherent conflicts of interest in their acting as
officers and directors of our company. Although the officers and
directors are engaged in other business activities, we anticipate
they will devote an important amount of time to our affairs.
Our officers and directors are now and may in the future become
shareholders, officers or directors of other companies, which may
be formed for the purpose of engaging in business activities
similar to ours. Accordingly, additional direct conflicts of
interest may arise in the future with respect to such individuals
acting on behalf of us or other entities. Moreover, additional
conflicts of interest may arise with respect to opportunities which
come to the attention of such individuals in the performance of
their duties or otherwise. Currently, we do not have a right of
first refusal pertaining to opportunities that come to their
attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or
directors, subject to the restriction that all opportunities
contemplated by our plan of operation which come to their
attention, either in the performance of their duties or in any
other manner, will be considered opportunities of, and be made
available to us and the companies that they are affiliated with on
an equal basis. A breach of this requirement will be a breach of
the fiduciary duties of the officer or director. If we or the
companies with which the officers and directors are affiliated both
desire to take advantage of an opportunity, then said officers and
directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take
advantage of opportunities if we should decline to do so. Except as
set forth above, we have not adopted any other conflict of interest
policy with respect to such transactions.
Involvement in Certain
Legal Proceedings
None of the following events have occurred during the past ten
years and are material to an evaluation of the ability or integrity
of any director or officer of the Company:
|
|
1.
|
A petition under the Federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent
or similar officer was appointed by a court for the business or
property of such person, or any partnership in which he was a
general partner at or within two years before the time of such
filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing;
|
|
|
2.
|
Such person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
|
|
|
3.
|
Such person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him
from, or otherwise limiting, the following activities:
|
|
|
a.
|
Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
|
|
|
b.
|
Engaging in any type of business practice; or
|
|
|
c.
|
Engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of
Federal or State securities laws or Federal commodities laws;
|
|
|
4.
|
Such person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or
State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity
described in paragraph (f)(3)(i) of this section, or to be
associated with persons engaged in any such activity;
|
|
|
5.
|
Such person was found by a court of competent jurisdiction in a
civil action or by the Commission to have violated any Federal or
State securities law, and the judgment in such civil action or
finding by the Commission has not been subsequently reversed,
suspended, or vacated;
|
|
|
6.
|
Such person was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
|
|
|
7.
|
Such person was the subject of, or a party to, any Federal or State
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of:
|
|
|
a.
|
Any Federal or State securities or commodities law or regulation;
or
|
|
|
b.
|
Any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or
|
|
|
c.
|
Any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
|
|
|
8.
|
Such person was the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29)), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member.
|
Code of Ethics
As part of our system of corporate governance, our Board of
Directors has adopted a code of ethics that is specifically
applicable to our Chief Executive Officer and senior financial
officers. This Code of Ethics for Senior Financial Officers, as
well as our Code of Business Conduct and Ethics, applicable to all
directors, officers and employees. If we make substantive
amendments to the Code of Ethics for Senior Financial Officers or
the Code of Business Conduct and Ethics or grant any waiver,
including any implicit waiver, we will disclose the nature of such
amendment or waiver on our website or in a report on Form 8-K
within four days of such amendment or waiver.
Shareholder Recommendations for Board Nominees
There have been no material changes to the procedures by which
security holders may recommend nominees to the Company’s Board of
Directors.
Audit Committee
The Board of Directors has a separately-designated standing Audit
Committee established in accordance with Section 3(a) (58) (A) of
the Exchange Act. The members of our Audit Committee are Mr.
Borman, who serves as Chairperson of the Audit Committee, Dr.
Murphy, and Mr. Anderson. Our Board of Directors has determined
that Mr. Borman qualifies as a “financial expert” as that term is
defined in the rules of the SEC implementing requirements of the
Sarbanes-Oxley Act of 2002.
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth, for the fiscal years ended December
31, 2021 and 2020, the aggregate compensation awarded to/earned by
or paid to our Chief Executive Officer and our two most highly
compensated officers (other than the Chief Executive Officer), who
were serving as executive officers as of December 31, 2021, or the
Named Executive Officers.
|
Name and
Principal
Position
|
|
Fiscal
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards ($)
|
|
|
|
|
Non-
Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value
and Non-
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Mike Tomas
CEO, President,
|
|
2021
|
|
$
|
327,279
|
|
|
$
|
0
|
|
|
|
$
|
—
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
327,279
|
|
|
CFO and Director
|
|
2020
|
|
$
|
130,385 |
|
|
$
|
500,000
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
630,385 |
|
|
(1)
|
On July 1, 2020, Mr. Tomas received a $500,000 promissory note for
a bonus awarded. The promissory note bears 5% interest per annum,
is unsecured and is due on demand.
|
Our Stock Option Plans
On April 1, 2013, the Board of Directors approved, subject to
subsequently received shareholder approval, the establishment of
the Bioheart 2013 Omnibus Equity Compensation Plan, or the “2013
Omnibus Plan” (replacing the 1999 Officers and Employees Stock
Option Plan, or the Employee Plan, and the 1999 Directors and
Consultants Stock Option Plan).. The 2013 Omnibus Plan initially
reserved up to fifty thousand (50,000) shares of common stock for
issuance. On August 4, 2014, the Board of Directors approved to set
the reserve to one hundred thousand (100,000) 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. On November 2, 2015, the Board of
Directors approved the increase of the reserve under the 2013
Omnibus Plan to five hundred million (500,000,000) shares of common
stock for issuance, effective September 16, 2016, approved an
addition of twenty five million (25,000,000) shares of common stock
to the reserve, effective April 21, 2017, approved an addition of
twenty five million (25,000,000) shares of common stock to the
reserve, effective August 7, 2017, approved an addition of thirty
million (30,000,000) shares of common stock to the reserve and
effective May 7, 2018, approved an addition of one hundred million
(100,000,000) shares of common stock to reserve.
Employment Agreements
Employment
Agreements
On July 1, 2019, the Company’s Board of Directors approved the
2019/2020 salary for Mike Tomas, Chief Executive Officer, for
$750,000 per year, beginning July 1, 2019 with an incentive bonus
ranging from $150,000 to $500,000. In addition, the Board of
Directors approved a bonus of $500,000 and options to acquire
20,000,000 shares of the Company’s common stock for ten years with
four-year vesting and a cashless exercise provision. The cash bonus
may be paid in the form a six-month promissory note bearing
interest at 5% per annum. On May 7, 2018, the Company’s Board of
Directors approved the 2018/2019 salary for Mike Tomas, Chief
Executive Officer, for $750,000 per year, beginning July 1, 2018
with an incentive bonus ranging from $150,000 to $500,000. In
addition, the Board of Directors approved a bonus of $500,000 and
options to acquire 20,000,000 shares of the Company’s common stock
for ten years with four-year vesting and a cashless exercise
provision. The cash bonus may be paid in the form a six-month
promissory note bearing interest at 5% per annum. There were no
increases in salary or cash bonuses in 2021.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth outstanding equity awards held by
our Named Executive Officers as of December 31, 2021
|
|
|
Number of Securities Underlying
|
|
|
Option
|
|
Option
|
|
|
|
Unexercised Options and Warrants
|
|
|
Exercise Price
|
|
Expiration
|
|
Name
|
|
Total (#)
|
|
|
Unexercisable (#)
|
|
|
($/per share)
|
|
Date
|
|
Mike Tomas
|
|
|
500
|
|
|
|
-
|
|
|
|
0.15402
|
|
1/16/2022
|
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
0.15402
|
|
8/6/2022
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
0.15402
|
|
8/1/2023
|
|
|
|
|
400
|
|
|
|
-
|
|
|
|
0.15402
|
|
9/1/2023
|
|
|
|
|
10,800
|
|
|
|
-
|
|
|
|
0.15402
|
|
2/24/2024
|
|
|
|
|
4,299
|
|
|
|
-
|
|
|
|
0.15402
|
|
5/12/2024
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
0.15402
|
|
8/1/2024
|
|
|
|
|
400
|
|
|
|
-
|
|
|
|
0.15402
|
|
11/3/2024
|
|
|
|
|
291,885
|
|
|
|
-
|
|
|
|
0.15402
|
|
11/2/2025
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
0.15402
|
|
11/2/2025
|
|
|
|
|
11,500,000
|
|
|
|
-
|
|
|
|
0.01960
|
|
9/19/2026
|
|
|
|
|
10,000,000
|
|
|
|
- |
|
|
|
0.00430
|
|
2/6/2027
|
|
|
|
|
16,500,000
|
|
|
|
-
|
|
|
|
0.03626
|
|
8/7/2027
|
|
|
|
|
20,000,000
|
|
|
|
5,000,000
|
|
|
|
0.05360
|
|
5/7/2028
|
|
|
|
|
1,500,000
|
|
|
|
-
|
|
|
|
0.02511
|
|
12/3/2028
|
|
|
|
|
20,000,000
|
|
|
|
10,000,000
|
|
|
|
0.00557
|
|
9/1//2029
|
|
|
|
|
1,500,000
|
|
|
|
-
|
|
|
|
0.00495
|
|
11/18/2029
|
Options Exercises and Stocks Vested
Options exercised and stocks vested as at December 31, 2021 are as
follows:
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
Name
|
|
Number of Shares
Acquired
on Exercise (#)
|
|
|
Value Realized
on Exercise ($)
|
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
Value
Realized on
Investing ($)
|
|
|
Mike Tomas, CEO
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Grants of Plan-Based Awards
Grants of plan-based awards as at December 31, 2021 are as
follows:
|
|
|
Estimated future payouts
under non-equity incentive
plan awards
|
|
|
Estimated future payouts
under equity incentive
plan awards
|
|
|
All other stock
awards:
Number of shares of stock
or units
(#)
|
|
|
All other option
awards:
Number of securities underlying
options
(#)
|
|
|
Exercise or base price of option
awards
($/Sh)
|
|
|
Grant date fair value of stock and
option awards
|
|
|
Name
|
|
Grant
date
|
|
|
Threshold ($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
|
|
|
|
|
|
Mike Tomas, CEO
|
|
|
n/a
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Reference – Grant Date - n/a = not applicable.
Non-Qualified Deferred Compensation
As at December 31, 2021 the Company had no formalized deferred
compensation plan.
|
Name
|
|
Executive
contributions
in last FY ($)
|
|
|
Registrant
contributions in
last FY ($)
|
|
|
Aggregate
earnings in last
FY ($)
|
|
|
Aggregate
withdrawals/
distributions ($)
|
|
|
Aggregate
balance at last
FYE ($)
|
|
|
Mike Tomas, CEO
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Golden Parachute Compensation
As at December 31, 2021, the Company had no arrangements in place
relating to the termination of employees.
|
Name
|
|
Cash
($)
|
|
|
Equity
($)
|
|
|
Pension/NQDC
($)
|
|
|
Perquisites/benefits
($)
|
|
|
Tax
reimbursement
($)
|
|
|
Other
($)
|
|
|
Total
($)
|
|
|
Mike Tomas, CEO
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Compensation of Directors
The following table sets forth summary information concerning the
total compensation paid to our non-employee directors during the
fiscal year ended December 31, 2021 for services to our
company.
|
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
|
Equity
Awards ($)
|
|
|
Total ($)
|
|
|
William P Murphy, Jr.
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Sheldon T. Andersen
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Mark Borman
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Gregory Knutson
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Total:
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Pension Benefits
As of December 31, 2021, the Company had no pension or retirement
plans.
|
Name
|
|
Plan name
|
|
|
Number of years
credited service
(#)
|
|
|
Present value of
accumulated benefit
($)
|
|
|
Payments during last
fiscal year ($)
|
|
|
Mike Tomas,CEO
|
|
not applicable |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2021
for all compensation plans under the Company’s Stock Option
Plan:
|
Name
|
|
No. of
Shares of Common
Stock Underlying
Unexercised
Common Stock
Purchase Options
Exercisable (#)
|
|
Date of
Grant
|
|
Additional
Consideration
to be Received
Upon Exercise
or Material
Conditions
Required to
Exercise
|
|
|
Option
Exercise
Price ($)
|
|
|
Value
Realized if
Exercised ($)
|
|
Option
Expiration
Date
|
|
Mike Tomas, CEO
|
|
|
500 |
|
1/16/2012
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
1/16/2022
|
|
|
|
|
2,000 |
|
8/6/2012
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
8/6/2022
|
|
|
|
|
10,000 |
|
8/01/2013
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
8/1/2023
|
|
|
|
|
400 |
|
9/1/2013
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
9/1/2023
|
|
|
|
|
10,000 |
|
2/24/2014
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
2/24/2024
|
|
|
|
|
800 |
|
2/24/2014
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
2/24/2024
|
|
|
|
|
3,225 |
|
5/12/2014
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
5/12/2014
|
|
|
|
|
10,000 |
|
8/01/2014
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
8/1/2024
|
|
|
|
|
400 |
|
11/3/2014
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
11/3/2024
|
|
|
|
|
291,885 |
|
11/2/2015
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
11/2/2025
|
|
|
|
|
5,000 |
|
11/2/2015
|
|
|
— |
|
|
|
0.15402 |
|
|
|
— |
|
11/2/2025
|
|
|
|
|
1,500,000 |
|
9/19/2016
|
|
|
— |
|
|
|
0.01960 |
|
|
|
— |
|
9/19/2026
|
|
|
|
|
2,500,000 |
|
9/19/2016
|
|
|
— |
|
|
|
0.01960 |
|
|
|
— |
|
9/19/2026
|
|
|
|
|
1,500,000 |
|
8/7/2017
|
|
|
— |
|
|
|
0.03626 |
|
|
|
— |
|
8/7/2027
|
|
|
|
|
20,000,000 |
|
5/7/2018
|
|
|
— |
|
|
|
0.05360 |
|
|
|
— |
|
5/7/2028
|
|
|
|
|
1,500,000 |
|
12/3/2018
|
|
|
— |
|
|
|
0.02511 |
|
|
|
— |
|
12/3/2028
|
|
|
|
|
20,000,000 |
|
9/1/2019
|
|
|
— |
|
|
|
0.00557 |
|
|
|
— |
|
09/01/2029
|
|
|
|
|
1,500,000 |
|
11/18/2019
|
|
|
— |
|
|
|
0.00495 |
|
|
|
— |
|
11/18/2029
|
Director Compensation
As of December 31, 2021, we had five directors that qualified for
compensation. Our non-employee directors do not receive cash
compensation for their services as directors. However, it is
generally our policy to annually grant each non-employee director
options to purchase shares of our common stock provided that he or
she has served as a member of our Board of Directors for at least
six months and one day of the twelve month period immediately
preceding the date of grant. In addition, we reimburse non-employee
directors for actual out-of-pocket expenses incurred.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
The following table sets forth the beneficial ownership (1) of our
common stock as of March 25th, 2022 based on an aggregate of
566,550,051 common shares issued, for each of our greater than 5%
shareholders, directors, named executive officers that continue to
serve as executive officers of U.S. Stem Cell and by all of our
directors and named executive officers as a group as of December
31, 2021. Unless otherwise indicated, the address of each of the
individuals and entities named below is: c/o U.S. Stem Cell, Inc.,
1560 Sawgrass Corporate Parkway, 4th FL Sunrise FL 33323. Except as
noted below, to our knowledge, each person named in the table has
sole voting and investment power with respect to all shares of our
common stock beneficially owned by them.
|
|
(1)
|
The number and percentage of shares beneficially owned is
determined in accordance with Rule 13d-3 under the Exchange Act,
and the information is not necessarily indicative of beneficial
ownership for any other purpose. The Company believes that each
individual or entity named has sole investment and voting power
with respect to the securities indicated as beneficially owned by
them, subject to community property laws, where applicable, except
where otherwise noted. The “Amount of Beneficial Ownership” in
calculated based on total shares held plus warrants held (plus
stock options entitled to exercise). The aggregate of these items
will be used as the denominator each for the percentage calculation
below.
|
|
Name and Address of Beneficial Owner
|
|
Amount of Beneficial Ownership
|
|
|
|
|
Percent of Class
|
|
|
Mike Tomas, President, CEO, CFO, and Director
|
|
|
38,596,563 |
|
(1 |
)
|
|
|
6.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
William P. Murphy, Chairman Emeritus**
|
|
|
6,066,121 |
|
(2 |
)
|
|
|
1.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Mark P. Borman, Chairman of the Board of Directors
|
|
|
6,529,562 |
|
(3 |
)
|
|
|
1.1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Sheldon T. Anderson, Director
|
|
|
6,005,282 |
|
(4 |
)
|
|
|
1.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Greg Knutson**
|
|
|
41,125,000 |
|
(5 |
)
|
|
|
6.7 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
All officers and directors as a group (6 persons)
|
|
|
92,322,528 |
|
(6 |
)
|
|
|
14.8 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Northstar Biotechnology Group, LLC
|
|
|
38,005,331 |
|
(7 |
)
|
|
|
6.2 |
|
* less than 1%
** Excludes Northstar Biotechnology Group, LLC (“Northstar”), owned
partly by certain directors and existing shareholders of the
Company, including Dr. William P. Murphy Jr. and controlled by
Gregory Knutson, a member of the Board of Directors appointed on
March 5, 2017.
|
(1)
|
Includes shares are held by The Astri Group over which Mr. Tomas
has shared voting and investment power and includes (i) includes
8,279 shares of common stock and (ii) 28,588,284 shares of common
stock issuable upon exercise of presently exercisable stock options
.
|
|
(2)
|
Includes (i) 63,481 shares of common stock and (ii) 6,002,640
shares of common stock issuable upon exercise of presently
exercisable stock options. Shares are directly owned by trusts
controlled by Dr. Murphy and his spouse.
|
|
(3)
|
Includes (i) 526,942 shares of common stock and (ii) 6,002,620
shares of common stock issuable upon exercise of presently
exercisable stock options
|
|
(4)
|
Includes (i) 1,941 shares of common stock and (ii) 6,003,341 shares
of common stock issuable upon exercise of presently exercisable
options and warrants.
|
|
(5)
|
Includes (i) 26,675,000shares of common stock and (ii) 44,750,000
shares of common stock issuable upon exercise of presently
exercisable options and warrants.
|
|
(6)
|
Includes an aggregate of (i) 27,275,643shares of common stock and
(ii) 65,609,975 shares of common stock issuable upon exercise of
presently exercisable stock options and warrants.
|
|
(7)
|
Includes 38,005,331shares of common stock and (ii) 20,000 shares of
common stock issuable upon exercise of warrants.
|
DESCRIPTION OF SECURITIES
The following statements relating to the capital stock set forth
the material terms of our securities; however, reference is made to
the more detailed provisions of, and such statements are qualified
in their entirety by reference to, the Certificate of
Incorporation, amendment to the Certificate of Incorporation and
the By-laws, copies of which are filed as exhibits to this
registration statement.
COMMON STOCK
The holders of our Common Stock are entitled to one vote per share
on all matters to be voted on by our stockholders, including the
election of directors. Our stockholders are not entitled to
cumulative voting rights, and, accordingly, the holders of a
majority of the shares voting for the election of directors can
elect the entire board of directors if they choose to do so and, in
that event, the holders of the remaining shares will not be able to
elect any person to our board of directors.
On February 4, 2013, effective with the filing of the amendment to
the Company’s Articles of Incorporation with the Florida Secretary
of State (confirmed as filed on February 11, 2013), the Company
amended its Articles of Incorporation to increase the authorized
shares of capital stock of the Company to nine hundred and seventy
million (970,000,000) shares of capital stock consisting of nine
hundred and fifty million (950,000,000) shares of common stock and
twenty million (20,000,000) shares of preferred stock, both $.001
par value respectively.
Effective May 22, 2014, the Company amended its articles of
incorporation to increase the authorized shares of capital stock of
the Company from nine hundred and fifty million (950,000,000)
shares of common stock and twenty million (20,000,000) shares of
preferred stock, both $.001 par value respectively, to two billion
(2,000,000,000) shares of shares of common stock and twenty million
(20,000,000) shares of preferred stock, both $.001 par value
respectively.
On October 12, 2015, the Company filed an amendment to its Articles
of Incorporation and affected a 1-for-1,000 reverse stock split of
its issued and outstanding shares of common stock, $0.001 par
value, and effective November 19, 2015. The Financial Industry
Regulatory Authority (“FINRA”) declared the ex-dividend date for
the dividend date as November 4, 2015 (the “2015 Reverse
Split”).
The holders of the Company’s Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to
time by the board of directors, in its discretion, from funds
legally available there for and subject to prior dividend rights of
holders of any shares of our Preferred Stock which may be
outstanding and any contractual limitations. Upon the Company’s
liquidation, dissolution or winding up, subject to prior
liquidation rights of the holders of our Preferred Stock, if any,
the holders of our Common Stock are entitled to receive on a pro
rata basis our remaining assets available for distribution. Holders
of the Company’s Common Stock have no preemptive or other
subscription rights, and there are no conversion rights or
redemption or sinking fund provisions with respect to such shares.
All outstanding shares of the Company’s Common Stock are, fully
paid and not liable to further calls or assessment by the
Company.
Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred
stock, par value $0.001. The designations, rights, and preferences
of such preferred stock are to be determined by the Board of
Directors. Subsequently and prior to the 2015 “Reverse Split”,
20,000,000 shares were designated as Series A Preferred Stock.
The Series A Preferred Stock collectively has voting rights equal
to 25 votes on all matters presented to be voted by the holders of
common stock per share of preferred stock and the right to convert
to one share of common stock for each share of preferred stock.
Northstar Biotechnology Group, LLC was issued, prior to the 2015
“Reverse Split” , an aggregate of 20,000,000 shares of Series A
Preferred Stock which were converted to common stock pursuant to a
Settlement Agreement dated March 1, 2017. As of the date of this
report, no shares of preferred stock are issued and
outstanding.
DIVIDENDS
Dividends, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and financial conditions.
The payment of dividends, if any, will be within the discretion of
our Board of Directors. We presently intend to retain all earnings,
if any, for use in its business operations and accordingly, the
Board of Directors does not anticipate declaring any dividends
prior to a business combination.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We are incorporated under the laws of the State of Florida. Our
articles of incorporation require us to indemnify and limit the
liability of directors to the fullest extent permitted by the
Florida Business Corporation Act, or the “FBCA”, as it currently
exists or as it may be amended in the future.
Pursuant to the FBCA, a Florida corporation may indemnify any
person who may be a party to any third party proceeding by reason
of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or
agent of another entity, against liability incurred in connection
with such proceeding (including any appeal thereof) if he or she
acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
In addition, in accordance with the FBCA, a Florida corporation is
permitted to indemnify any person who may be a party to a
derivative action if such person acted in any of the capacities set
forth in the preceding paragraph, against expenses and amounts paid
in settlement not exceeding, in the judgment of the board of
directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the
defense or settlement of such proceeding (including appeals),
provided that the person acted under the standards set forth in the
preceding paragraph. However, no indemnification shall be made for
any claim, issue, or matter for which such person is found to be
liable unless, and only to the extent that, the court determines
that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which the court deems
proper.
Any indemnification made under the above provisions, unless
pursuant to a court’s determination, may be made only after a
determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be
made by a majority vote of a quorum consisting of the disinterested
directors of the board of directors, by duly selected independent
legal counsel, or by a majority vote of the disinterested
shareholders. The board of directors also may designate a special
committee of disinterested directors to make this determination.
Notwithstanding the foregoing, a Florida corporation must indemnify
any director, officer, employee or agent of a corporation who has
been successful in the defense of any proceeding referred to
above.
Generally, pursuant to the FBCA, a director of a Florida
corporation is not personally liable for monetary damages to our
company or any other person for any statement, vote, decision, or
failure to act, regarding corporate management or policy, unless:
(a) the director breached or failed to perform his duties as a
director; and (b) the director’s breach of, or failure to perform,
those duties constitutes (i) a violation of criminal law, unless
the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful,
(ii) a transaction from which the director derived an improper
personal benefit, either directly or indirectly, (iii) an approval
of an unlawful distribution, (iv) with respect to a proceeding by
or in the right of the company to procure a judgment in its favor
or by or in the right of a shareholder, conscious disregard for the
best interest of the company, or willful misconduct, or (v) with
respect to a proceeding by or in the right of someone other than
the company or a shareholder, recklessness or an act or omission
which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights,
safety, or property. The term “recklessness,” as used above, means
the action, or omission to act, in conscious disregard of a risk:
(a) known, or so obvious that it should have been known, to the
directors; and (b) known to the director, or so obvious that it
should have been known, to be so great as to make it highly
probable that harm would follow from such action or omission.
Furthermore, under the FBCA, a Florida corporation is authorized to
make any other further indemnification or advancement of expenses
of any of its directors, officers, employees or agents under any
bylaw, agreement, vote of shareholders or disinterested directors,
or otherwise, both for actions taken in an official capacity and
for actions taken in other capacities while holding such office.
However, a corporation cannot indemnify or advance expenses if a
judgment or other final adjudication establishes that the actions
of the director, officer, employee, or agent were material to the
adjudicated cause of action and the director, officer, employee, or
agent (a) violated criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his or her
conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c) was or is a director in a circumstance where the
liability for unlawful distributions applies, or (d) engaged in
willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation
to procure a judgment in its favor.
At present, there is no pending litigation or proceeding involving
any of our directors or executive officers as to which
indemnification is required or permitted and we are not aware of
any threatened litigation or proceeding that may result in a claim
for indemnification.
We maintain a liability insurance policy, pursuant to which our
directors and officers may be insured against liability they incur
for serving in their capacities as directors and officers of our
company, including liabilities arising under the Securities Act or
otherwise.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, we have been
informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is
against public policy as expressed hereby in the Securities Act and
we will be governed by the final adjudication of such issue.
Amendment of our Bylaws
Our bylaws may be adopted, amended or repealed by the affirmative
vote of a majority of our outstanding shares. Subject to applicable
law, our bylaws also may be adopted, amended or repealed by our
Board of Directors.
Item 13. Certain Relationships and Related Transactions and
Director Independence.
Certain Relationships and Related Party Transactions
Advances
As of December 31, 2021 and 2020, our officers and directors have
provided net advances in the aggregate of $90,000 and $349,688, for
working capital purposes, respectively. The advances are unsecured,
due on demand and non-interest bearing.
Northstar Biotechnology Group, LLC-Preferred stock
On March 1, 2017, the Series A Preferred share were converted to
common stock pursuant to a Settlement Agreement dated March 1,
2017. In addition, and separate and apart from the conversion,
Northstar will receive Ten Million (10,000,000) shares of common
stock. Northstar will receive ten percent (10%) of all Company
international sales (based on a gross sales basis). Furthermore, a
Northstar designee, Greg Knutson, was appointed to the Board of
Directors of the Company (see Item 5.02The parties agreed to a
mutual release and Northstar agreed to terminate any UCC lien on
the Company assets previously filed for the benefit of
Northstar.
Notes payable-related party
Northstar Biotechnology Group, LLC
On February 29, 2012, a promissory 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 at the time, 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
the (“Note”).
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 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
shares 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.
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 was 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 agreed to modify the
voting rights of the subsequently cancelled 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.
On March 1, 2017, Northstar and the Company entered into a
settlement agreement (“Settlement Agreement”) related to then
pending litigation (See Note 10). Pursuant to the terms and
conditions of the Settlement Agreement, Northstar converted its
outstanding Series A Convertible preferred stock, into twenty
million (20,000,000) shares of common stock according to the
original conversion terms. In addition, and separate and apart from
the conversion, Northstar received Eleven Million (11,000,000)
shares of the Company’s common stock. Northstar will receive ten
percent (10%) of all Company international sales (based on a gross
sales basis). There was no effect of the 10% obligation as there
were no international sales in 2017 or, to date, in 2018
Furthermore, a Northstar designee, Greg Knutson, was appointed as a
member of the Board of Directors of the Company and two Company
directors, Michael Tomas and Kristin Comella, each exercised their
prior Northstar options to each receive a Five percent (5%) Member
Interest in Northstar. The parties agreed to a mutual release and
Northstar agreed to terminate any UCC lien on the Company assets
previously filed for the benefit of Northstar. On March 9, 2017 and
April 1, 2017, the Company issued 30,000,000 and 1,000,000 shares
of its common stock, respectively, as described above. In
connection with the settlement, the Company recorded a loss on
litigation settlement of $316,800.
On September 30, 2013, the Company issued 8,772 shares of its
common stock as payment of $100,000 towards cash advances.
On December 24, 2013, the Company issued 3,916 shares of its common
stock as payment of accrued interest through June 30, 2013 of
$85,447.
On April 2, 2014, the Company issued 275 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, the 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 on
the condition that Northstar provide certain financing, which
financing the Company, in its sole discretion, could decline and
retain the license.
On October 3, 2014, the Company issued 515 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 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 October 2, 2015, the Company issued 4,156 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$12,705 due October 1, 2015 per the forbearance agreement.
On October 7, 2015, the Company issued 34,522 shares of its common
stock in settlement of $100,000 principal payment towards the
outstanding debt.
On April 7, 2016, the Company issued 57,778 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$12,705 due April 1, 2016 per the forbearance agreement.
On October 6, 2016, the Company issued 848,490 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$12,705 due October 1, 2016 per the forbearance agreement.
On April 1, 2017, the Company issued 286,315 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$12,703 due October 1, 2016 per the forbearance agreement.
On October 2, 2017, the Company issued 559,187 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$12,705 due October 1, 2016 per the forbearance agreement.
On October 19, 2018, the Company issued 164,523 shares of its
common stock in lieu of payment in cash of accrued and unpaid
interest of $9,195 due October 1, 2016 per the forbearance
agreement.
On April 1, 2019, the Company issued 379,141 shares of its common
stock in lieu of payment in cash of accrued and unpaid interest of
$9,145.
On October 2, 2019, the Company issued 1,692,353 shares of its
common stock in lieu of payment in cash of accrued and unpaid
interest of $9,195.
On April 1, 2020, the Company issued 1,445,647 shares of its common
stock, having a fair value of $11,565, in lieu of payment in cash
of accrued and unpaid interest of $9,145, resulting in a loss on
settlement of $2,420.
On October 1, 2020, the Company issued 2,035,820 shares of its
common stock, having a fair value of $10,179, in lieu of payment in
cash of accrued and unpaid interest of $9,195, resulting in a loss
on settlement of $984.
As of December 31, 2021 and 2020, the remaining carrying value of
the note was $262,000. At December 31, 2021 and 2020, accrued
interest on the note was $8,751 and $8,751, respectively, and is
included in accrued expenses on the accompanying balance sheet.
Officer and Director Notes
|
|
|
2021
|
|
|
2020
|
|
|
Note payable, Mr. Tomas
|
|
|
161,786 |
|
|
|
161,786 |
|
|
Note payable, Mr. Tomas
|
|
|
500,000 |
|
|
|
500,000 |
|
|
Note payable, Mr. Tomas
|
|
|
500,000 |
|
|
|
500,000 |
|
|
Note payable, Mr. Tomas
|
|
|
178,077 |
|
|
|
178,077 |
|
|
Note payable, Mr. Tomas
|
|
|
187,500 |
|
|
|
187,500 |
|
|
Note payable, Mr. Tomas
|
|
|
187,500 |
|
|
|
187,500 |
|
|
Note payable, Mr. Tomas
|
|
|
500,000 |
|
|
|
500,000 |
|
|
Note payable, Mr. Tomas
|
|
|
100,962 |
|
|
|
100,962 |
|
|
Note payable, Mr. Tomas
|
|
|
143,653 |
|
|
|
143,654 |
|
|
Note payable, Mr. Tomas
|
|
|
90,990 |
|
|
|
|
|
|
Note payable, Mr. Tomas
|
|
|
43,270 |
|
|
|
|
|
|
Note payable, Mr. Tomas
|
|
|
187,500 |
|
|
|
|
|
|
Note payable, Mr. Tomas
|
|
|
100,931 |
|
|
|
|
|
|
Total
|
|
$ |
3,144,201 |
|
|
$ |
2,459,479 |
|
* Kristin Comella ceased to be a member of the Board of Director or
an officer as of September 1, 2019.
Notes payable, Mr. Tomas
On August 7, 2017, the Company issued a $500,000 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due one year from date of issuance.
During the year ended December 31, 2021 and 2020, the Company paid
principal of $0 and $0, respectively, of this note. As of December
31, 2021 and 2020, the remaining carrying value of the note was
$161,786.
On May 7, 2018, the Company issued a $500,000 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due six months from date of
issuance. As of December 31, 2021 and 2020, the remaining carrying
value of the note was $500,000.
On July 1, 2019, the Company issued a $500,000 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due November 7, 2019. As of
December 31, 2021 and 2020, the remaining carrying value of the
note was $500,000.
On December 31, 2019, the Company issued a $178,077 promissory note
in exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021 and 2020, the remaining carrying value of the note was
$178,077.
On March 31, 2020, the Company issued a $187,500 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $187,500.
On June 30, 2020, the Company issued a $187,500 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $187,500.
On July 1, 2020, the Company issued a $500,000 promissory note as
payment of an annual bonus awarded. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $500,000.
On September 30, 2020, the Company issued a $100,962 promissory
note in exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $100,962.
On December 31, 2020, the Company issued a $143,654 promissory note
in exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $143,654.
On March 31, 2021 the Company issued a $90,991 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $90,991.
On June 30 2021 the Company issued a $43,270 promissory note in
exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $43,270.
On September 30 2021 the Company issued a $187,500 promissory note
in exchange for compensation earned. The promissory note bears
interest of 5% per annum and is due on demand. As of December 31,
2021, the remaining carrying value of the note was $187,500.
At December 31, 2021 and 2020, accrued interest on the notes was
$612,323 and $482,468, respectively, and is included in accrued
expenses on the accompanying balance sheet.
Item 14. Principal Accounting Fees and Services. Independent
Registered Public Accounting Firm Fees
Aggregate fees billed to us for the fiscal years ended December 31,
2021 and 2020 by our independent registered public accounting firms
are as follows:
|
Types of Fees
|
|
2021
|
|
|
2020
|
|
|
Audit Fees (1)
|
|
$ |
80,000 |
|
|
$ |
130,000 |
|
|
Audit Related Fees
|
|
$ |
— |
|
|
$ |
— |
|
|
Tax Fees
|
|
|
|
|
|
$ |
0 |
|
|
All Other Fees
|
|
|
— |
|
|
|
— |
|
|
(1)
|
This category also includes advice on audit and accounting matters
that arose during, or as a result of, the audit of the annual
financial statements or the reviews of the interim financial
statements.
|
Audit Committee Pre-Approval Policy
Consistent with policies of the SEC regarding auditor independence,
the Audit Committee has responsibility for the appointment,
compensation and oversight of the work of the independent auditor.
As part of this responsibility, the Audit Committee has adopted,
and our Board has ratified, an Audit and Non-Audit Services
Pre-Approval Policy pursuant to which the Audit Committee is
required to pre-approve the audit and non-audit services performed
by our independent registered public accounting firm in order to
assure that these services do not impair the auditor’s independence
from us.
Prior to engagement of the independent auditor for the next year’s
audit, the independent auditor and the Audit Committee will review
a list of services and related fees expected to be rendered during
that year within each of four categories of services to the Audit
Committee for approval:
(i) Audit Services: Audit services include the annual financial
statement audit (including required quarterly reviews), equity
investment audits and other procedures required to be performed by
the independent auditor to be able to form an opinion on our
financial statements. Audit Services also include information
systems and procedural reviews and testing performed in order to
understand and place reliance on the systems of internal control,
and consultations relating to the audit or quarterly review as well
as the attestation engagement for the independent auditor’s report
on management’s report on internal controls for financial
reporting.
(ii) Audit-Related Services: Audit-related services are assurance
and related services that are reasonably related to the performance
of the audit or review of our financial statements, including due
diligence related to potential business acquisitions/dispositions,
accounting consultations related to accounting, financial reporting
or disclosure matters not classified as “Audit Services,”
assistance with understanding and implementing new accounting and
financial reporting guidance from rulemaking authorities, financial
audits of employee benefit plans, agreed-upon or expanded audit
procedures related to accounting and/or billing records required to
respond to or comply with financial, accounting or regulatory
reporting matters and assistance with internal control reporting
requirements.
(iii) Tax Services: Tax services include services such as tax
compliance, tax planning and tax advice; however, the Audit
Committee will not permit the retention of the independent
registered public accounting firm in connection with a transaction
initially recommended by the independent registered public
accounting firm, the sole business purpose of which may be tax
avoidance and treatment which may not be supported in the Internal
Revenue Code and related regulations.
(iv) All Other Services: All other services are those permissible
non-audit services that the Audit Committee believes are routine
and recurring and would not impair the independence of the auditor
and are consistent with the SEC’s rules on auditor
independence.
Prior to engagement, the Audit Committee pre-approves the services
and fees of the independent auditor within each of the above
categories. During the year, it may become necessary to engage the
independent auditor for additional services not previously
contemplated as part of the engagement. In those instances, the
Audit and Non-Audit Services Pre-Approval Policy requires that the
Audit Committee specifically approve the services prior to the
independent auditor’s commencement of those additional services.
Under the Audit and Non-Audit Services Pre-Approval Policy, the
Audit Committee may delegate the ability to pre-approve audit and
non-audit services to one or more of its members provided the
delegate reports any pre-approval decision to the Audit Committee
at its next scheduled meeting. As of the date hereof, the Audit
Committee has not delegated its ability to pre-approve audit.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a)(1) Financial Statements
See Item 8. “Financial Statements and Supplementary Data” for
Financial Statements included with this Annual Report on Form
10-K.
(a)(2) Financial Statement Schedules
All schedules have been omitted because the required information is
not applicable or the information is included in the financial
statements or the notes thereto.
(a)(3) Exhibits
|
Exhibit No.
|
Exhibit Description
|
|
|
|
|
2.1(20)
|
Asset Sale and Lease Agreement between
U.S. Stem Cell, Inc. and GACP Stem Cell Bank LLC., dated March 3,
2017.
|
|
2.2(20)
|
Asset Purchase Agreement between U.S.
Stem Cell, Inc. and GACP Stem Cell Bank LLC., dated March 3,
2017.
|
|
2.3(20)
|
Customer Purchase Agreement between
U.S. Stem Cell, Inc. and GACP Stem Cell Bank LLC., dated March 3,
2017.
|
|
3.1 (1)
|
Articles of
Incorporation
|
|
3.2(5)
|
Amended and Restated Articles of
Incorporation
|
|
3.3(8)
|
Articles of Amendment to the Articles
of Incorporation
|
|
3.4(17)
|
Articles of Amendment to the Articles
of Incorporation
|
|
3.5 (7)
|
Amended and Restated
Bylaws
|
|
3.6(19)
|
Amendment to Bylaws
|
|
4.1(4)
|
Loan and Security Agreement, dated as
of May 31, 2007 by and between BlueCrest Capital Finance, L.P. and
the Registrant
|
|
4.2(9)
|
Amendment to Loan and Security
Agreement, between the Company and BlueCrest Venture Finance Master
Fund Limited, dated as of April 2, 2009
|
|
4.3(9)
|
Grant of Security Interest (Patents),
between the Company and BlueCrest Venture Finance Master Fund
Limited, dated as of April 2, 2009
|
|
4.4(9)
|
Security Agreement (Intellectual
Property), between the Company and BlueCrest Venture Finance Master
Fund Limited, dated as of April 2, 2009
|
|
4.5(9)
|
Subordination Agreement, by Hunton
& Williams, LLP in favor of BlueCrest Venture Finance Master
Fund Limited, entered into and effective April 2, 2009
|
|
4.6(9)
|
Amended and Restated Promissory Note,
dated April 2, 2009, by the Company to BlueCrest Venture Finance
Master Fund Limited
|
|
4.7(9)
|
Warrant to purchase shares of
the Registrant’s common stock, dated April 2, 2009, issued to
BlueCrest Venture Finance Master Fund Limited
|
|
4.8(10)
|
Warrant to purchase shares of the
Registrant’s common stock, dated April 2, 2009, issued to Rogers
Telecommunications Limited
|
|
4.9(10)
|
Warrant to purchase shares of the
Registrant’s common stock, dated April 2, 2009, issued to Hunton
& Williams, LLP
|
|
4.10 (15)
|
Series A Convertible Preferred
Stock
|
|
10.1(1)
|
Lease Agreement between the Registrant
and Sawgrass Business Plaza, LLC, as amended, dated November 14,
2006.
|
|
10.2(3)
|
Loan Guarantee, Payment and Security
Agreement, dated as of June 1, 2007, by and between the Registrant,
Howard J. Leonhardt and Brenda Leonhardt
|
|
10.3(3)
|
Loan Guarantee, Payment and Security
Agreement, dated as of June 1, 2007, by and between the Registrant
and William P. Murphy Jr., M.D.
|
|
10.4(3)
|
Loan Agreement, dated as of June 1,
2007, by and between the Registrant and Bank of America,
N.A.
|
|
10.5(5)
|
Loan Guarantee, Payment and Security
Agreement, dated as of September 12, 2007, by and between the
Registrant and Samuel S. Ahn, M.D.
|
|
10.6(5)
|
Loan Guarantee, Payment and Security
Agreement, dated as of September 12, 2007, by and between the
Registrant and Dan Marino
|
|
10.7(5)
|
Loan Guarantee, Payment and Security
Agreement, dated as of September 19, 2007, by and between the
Registrant and Jason Taylor
|
|
10.8(6)
|
Loan Guarantee, Payment and Security
Agreement, dated as of October 10, 2007, by and between the
Registrant and Howard and Brenda Leonhardt
|
|
10.9(6)
|
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
|
|
10.10(6)
|
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.
|
|
10.11(11)
|
Loan Agreement with Seaside National
Bank and Trust, dated October 25, 2010.
|
|
10.12(11)
|
Promissory Note with Seaside National
Bank and Trust, dated October 25, 2010.
|
|
10.13(11)
|
Amended and Restated Loan and Security
Agreement with BlueCrest Venture Finance Master Fund Limited, dated
October 25, 2010.
|
|
10.14(12)
|
Unsecured Convertible Promissory Note
for $25,000, with Magna Group, LLC, dated January 3,
2011.
|
|
10.15(12)
|
Promissory Note for $139,728.82 with
Magna Group, LLC, dated January 3, 2011.
|
|
10.16(13)
|
Unsecured Convertible Promissory Note
for $34,750, with Magna Group, LLC, dated May 16, 2011.
|
|
10.17(13)
|
Promissory Note for $139,728.82 with
Magna Group, LLC, dated May 16, 2011.
|
|
10.18**(14)
|
2013 U.S. Stem Cell, Inc. Omnibus
Equity Compensation Plan
|
|
10.19(16)
|
Senior Convertible Note with Magna
Equities II, LLC, dated October 1, 2015
|
|
10.20(16)
|
Securities Purchase Agreement, dated as
of October 1, 2015, by and between Magna Equities II, LLC and U.S.
Stem Cell, Inc.
|
|
10.21(16)
|
Registration Rights Agreement, dated as
of October 1, 2015, by and between Magna Holdings I, LLC and U.S.
Stem Cell, Inc.
|
|
10.22(18)
|
Senior Convertible Note Magna Equities
II, LLC, dated December 3, 2015
|
|
10.23(18)
|
Amended and Restated Senior Convertible
Note, dated December 3, 2015.
|
|
10.24(18)
|
Securities Purchase Agreement, dated
as of December 3, 2015, by and between Magna Equities II, LLC and
U.S. Stem Cell, Inc.
|
|
10.25(18)
|
Registration Rights Agreement, dated as
of December 3, 2015, by and between Magna Holdings I, LLC and U.S.
Stem Cell, Inc.
|
|
10.26(20)
|
Non-Competition and Non-Solicitation
Agreement between U.S. Stem Cell, Inc. and GACP Stem Cell Bank
LLC., dated March 3, 2017.
|
|
10.27(21)
|
First Amendment to Lease Agreement
between the Registrant and Sawgrass Business Plaza, LLC, as
amended, dated November 17, 2017
|
|
14.1(2)
|
Code of Business Conduct and
Ethics
|
|
21.0*
|
Subsidiary
List
|
|
31.1*
|
Certification of Chief Executive Officer
and Chief Financial Officer (Principal Accounting Officer) pursuant
to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1*
|
Certifications of Chief Executive Officer
and Chief Financial Officer (Principal Accounting Officer) pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
101 INS
|
Inline XBRL Instance Document
|
|
101 SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101 CAL
|
Inline XBRL Taxonomy Calculation Linkbase Document
|
|
101 DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101 LAB
|
Inline XBRL Taxonomy Labels Linkbase Document
|
|
101 PRE
|
Inline XBRL Taxonomy Presentation Linkbase Document
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
|
|
*
|
Filed herewith
|
|
|
|
|
|
|
|
|
|
|
**
|
Indicates management contract or compensatory plan.
|
|
|
|
|
|
|
(1)
|
Incorporated by reference to the Company’s 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 Company’s Form
S-1 filed with the SEC on June 5, 2007.
|
|
(3)
|
Incorporated by reference to Amendment No. 3 to the Company’s Form
S-1 filed with the SEC on August 9, 2007.
|
|
(4)
|
Incorporated by reference to Amendment No. 4 to the Company’s Form
S-1 filed with the SEC on September 6, 2007.
|
|
(5)
|
Incorporated by reference to Amendment No. 5 to the Company’s Form
S-1 filed with the SEC on October 1, 2007.
|
|
(6)
|
Incorporated by reference to Post-effective Amendment No. 1 to the
Company’s Form S-1 filed with the SEC on October 11, 2007.
|
|
(7)
|
Incorporated by reference to the Company’s Current Report on Form
8-K filed with the SEC on July 3, 2008.
|
|
(8)
|
Incorporated by reference to the Company’s Current Report on Form
8-K filed with the SEC on August 8, 2008.
|
|
(9)
|
Incorporated by reference to the Company’s Current Report on Form
8-K filed with the SEC on April 8, 2009.
|
|
(10)
|
Incorporated by reference to the Company’s Annual Report on Form
10-K filed with the SEC on April 15, 2009.
|
|
(11)
|
Incorporated by reference to the Company’s Current Report on Form
8-K filed with the SEC on October 29, 2010.
|
|
(12)
|
Incorporated by reference to the Company’s Current Report on Form
8-K filed with the SEC on January 12, 2011.
|
|
(13)
|
Incorporated by reference to the Company Current Report on Form 8-K
filed with the SEC on May 25, 2011.
|
|
(14)
|
Incorporated by reference to the Company Quarterly Report on Form
10-Q filed with the SEC on May 9, 2013.
|
|
(15)
|
Incorporated by reference to the Company’s Definitive Proxy
Statement on Schedule 14A filed with the SEC on April 28, 2014.
|
|
(16)
|
Incorporated by reference to the Company Current Report on Form 8-K
filed with the SEC on October 2, 2015.
|
|
(17)
|
Incorporated by reference to the Company Current Report on Form 8-K
filed with the SEC on November 4, 2015.
|
|
(18)
|
Incorporated by reference to the Company Current Report on Form 8-K
filed with the SEC on December 4, 2015.
|
|
(19)
|
Incorporated by reference to the text of the Company Current Report
on Form 8-K filed with the SEC on August 3, 2016.
|
|
(20)
|
Incorporated by reference to the Company Current Report on Form 8-K
filed with the SEC on March 8, 2017.
|
|
(21)
|
Incorporated by reference to the Company Annual Report on Form 10-K
filed with the SEC on April 16, 2018.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
U.S. STEM CELL, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mike Tomas
|
|
|
|
|
Mike Tomas
Chief Executive Officer & President
|
|
| |
|
|
|
|
March 31, 2022
|
|
|
|
By:
|
/s/ Mike Tomas
|
|
|
|
|
Mike Tomas
Chief Financial Officer (Principal Accounting Officer)
|
|
|
|
|
|
|
March 31, 2022
|
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Each person whose signature appears below, hereby authorizes Mike
Tomas, as attorney in fact to sign on his or her behalf,
individually, in each capacity stated below, and to file all
amendments or supplements to this annual report on Form 10-K.
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
| |
|
|
|
|
|
/s/ Mark P. Borman
|
|
Director, Chairman of the Board
|
|
March 31, 2022
|
|
Mark P. Borman
|
|
|
|
|
| |
|
|
|
|
|
/s/ William P. Murphy Jr., MD
|
|
Director, Chairman Emeritus
|
|
March 31, 2022
|
|
William P. Murphy Jr., MD
|
|
|
|
|
| |
|
|
|
|
|
/s/ Mike Tomas
|
|
Chief Executive Officer, Chief Financial Officer, &
Director
|
|
March 31, 2022
|
|
Mike Tomas
|
|
|
|
|
| |
|
|
|
|
|
/s/ Sheldon Anderson
|
|
Director
|
|
March 31, 2022
|
|
Sheldon Anderson
|
|
|
|
|
| |
|
|
|
|
|
/s/ Greg Knutson
|
|
Director
|
|
March 31, 2022
|
|
Greg Knutson
|
|
|
|
|
FORM 10-K—ITEM 8
U.S. STEM CELL, INC.
TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of U.S Stem Cell, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of U.S Stem Cell,
Inc. (the Company) as of December 31, 2021 and 2020, and the
related statements of operations, stockholders’ deficit, and cash
flow for each of the two years in the period ended December 31,
2021, and the related notes (collectively referred to as the
financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for each of the two years in the
period ended December 31, 2021, in conformity with accounting
principles generally accepted in the United States of America.
The Company's Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has suffered
recurring losses from operations, generated negative cash flows
from operating activities, will require additional capital to fund
its current operating plan, and has stated that substantial doubt
exists about the Company’s ability to continue as a going concern.
Management's evaluation of the events and conditions and
management’s plans regarding these matters are also described in
Note 2. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period
audit of the financial statements that were communicated or
required to be communicated to the audit committee and that (1)
relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there were no
critical audit matters.
/s/ RBSM LLP
We have served as the Company’s auditor since 2018.
PCAOB ID 587
New York, NY
March 31, 2022
U.S. STEM CELL, INC.
BALANCE SHEETS
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
| |
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
39,393 |
|
|
$ |
18,570 |
|
|
Accounts receivable, net of allowance of $75,000 and $13,203,
respectively
|
|
|
1,213 |
|
|
|
54,164 |
|
|
Inventories
|
|
|
393 |
|
|
|
5,418 |
|
|
Prepaid expenses and other current assets
|
|
|
10,000 |
|
|
|
10,000 |
|
|
Total current assets
|
|
|
50,999 |
|
|
|
88,152 |
|
| |
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
50,999 |
|
|
$ |
88,152 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
1,373,413 |
|
|
$ |
1,282,010 |
|
|
Accrued expenses
|
|
|
1,951,390 |
|
|
|
1,511,281 |
|
|
Advances - related parties
|
|
|
951,432 |
|
|
|
861,432 |
|
|
Deferred revenue, current portion
|
|
|
3,000 |
|
|
|
3,000 |
|
|
Deposits
|
|
|
465,286 |
|
|
|
465,286 |
|
|
Notes payable - related parties
|
|
|
3,144,200 |
|
|
|
2,721,478 |
|
|
Notes payable, current portion, net of debt discount of $10,052 and
$9,610, respectively
|
|
|
2,557,881 |
|
|
|
2,562,149 |
|
|
Promissory note payable
|
|
|
1,397,762 |
|
|
|
1,397,762 |
|
|
Convertible notes payable, net of debt discount of $241,589 and
$1,874, respectively
|
|
|
194,411 |
|
|
|
43,126 |
|
|
Total current liabilities
|
|
|
12,038,775 |
|
|
|
10,847,524 |
|
| |
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
56,500 |
|
|
|
59,500 |
|
|
Notes payable, net of debt discount of $21,575 and $31,627,
respectively
|
|
|
722,060 |
|
|
|
760,420 |
|
|
Total long-term liabilities
|
|
|
778,560 |
|
|
|
819,920 |
|
| |
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
12,817,335 |
|
|
|
11,667,444 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and contingencies (See Note 12)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001; 20,000,000 shares authorized,
-0- issued and outstanding
|
|
|
- |
|
|
|
- |
|
|
Common stock, par value $0.001; 2,000,000,000 shares authorized,
503,525,051 and 435,560,794 shares issued and outstanding,
respectively
|
|
|
503,525 |
|
|
|
435,561 |
|
|
Additional paid-in capital
|
|
|
126,532,063 |
|
|
|
124,499,655 |
|
|
Accumulated deficit
|
|
|
(139,801,924 |
) |
|
|
(136,514,508 |
) |
|
Total stockholders' deficit
|
|
|
(12,766,336 |
) |
|
|
(11,579,292 |
) |
| |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$ |
50,999 |
|
|
$ |
88,152 |
|
The accompanying notes are an integral part of these financial
statements.
U.S. STEM CELL, INC.
STATEMENTS OF OPERATIONS
|
|
|
For the Year Ended December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Products
|
|
$ |
180,894 |
|
|
$ |
209,696 |
|
|
Services
|
|
|
19,855 |
|
|
|
67,391 |
|
|
Total revenue
|
|
|
200,749 |
|
|
|
277,087 |
|
| |
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
52,030 |
|
|
|
64,117 |
|
| |
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
148,719 |
|
|
|
212,970 |
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
2,284,577 |
|
|
|
2,613,211 |
|
|
Total operating expenses
|
|
|
2,284,577 |
|
|
|
2,613,211 |
|
| |
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,135,858 |
) |
|
|
(2,400,241 |
) |
| |
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Gain (loss) on settlement of accounts payable and accrued interest,
net
|
|
|
(151,410 |
) |
|
|
182 |
|
|
Gain on sale of equipment
|
|
|
- |
|
|
|
21,474 |
|
|
Income (loss) from equity investments
|
|
|
- |
|
|
|
(23,539 |
) |
|
Interest expense
|
|
|
(1,000,148 |
) |
|
|
(488,369 |
) |
|
Total other income (expense)
|
|
|
(1,151,558 |
) |
|
|
(490,252 |
) |
| |
|
|
|
|
|
|
|
|
|
Net loss before income taxes
|
|
|
(3,287,416 |
) |
|
|
(2,890,493 |
) |
| |
|
|
|
|
|
|
|
|
|
Income taxes (benefit)
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$ |
(3,287,416 |
) |
|
$ |
(2,890,493 |
) |
| |
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and
diluted
|
|
|
460,794,491 |
|
|
|
429,291,011 |
|
The accompanying notes are an integral part of these financial
statements.
U.S. STEM CELL, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE TWO YEARS ENDED DECEMBER 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2019
|
|
|
- |
|
|
$ |
- |
|
|
|
417,724,767 |
|
|
$ |
417,725 |
|
|
$ |
123,726,894 |
|
|
$ |
(133,624,015 |
) |
|
$ |
(9,479,396 |
) |
|
Common stock issued in settlement of accounts payable
|
|
|
- |
|
|
|
- |
|
|
|
10,354,560 |
|
|
|
10,355 |
|
|
|
41,559 |
|
|
|
- |
|
|
|
51,914 |
|
|
Common stock issued in lieu of interest
|
|
|
- |
|
|
|
- |
|
|
|
3,481,467 |
|
|
|
3,481 |
|
|
|
18,263 |
|
|
|
- |
|
|
|
21,744 |
|
|
Common stock issued for services
|
|
|
- |
|
|
|
- |
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
12,000 |
|
|
|
- |
|
|
|
16,000 |
|
|
Beneficial conversion feature recognized on convertible note
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,000 |
|
|
|
- |
|
|
|
15,000 |
|
|
Stock-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
685,939 |
|
|
|
- |
|
|
|
685,939 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,890,493 |
) |
|
|
(2,890,493 |
) |
|
Balance, December 31, 2020
|
|
|
- |
|
|
|
- |
|
|
|
435,560,794 |
|
|
|
435,561 |
|
|
|
124,499,655 |
|
|
|
(136,514,508 |
) |
|
|
(11,579,292 |
) |
|
Common stock issued in settlement of accounts payable
|
|
|
- |
|
|
|
- |
|
|
|
6,642,197 |
|
|
|
6,642 |
|
|
|
225,100 |
|
|
|
- |
|
|
|
231,742 |
|
|
Common stock issued in lieu of interest
|
|
|
- |
|
|
|
- |
|
|
|
930,916 |
|
|
|
931 |
|
|
|
18,869 |
|
|
|
- |
|
|
|
19,800 |
|
|
Common stock issued for services
|
|
|
- |
|
|
|
- |