##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-33718
 
 BIOHEART, INC.
  
 Florida
    
    65-0945967(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 13794 NW 4 th Street, Suite 212, Sunrise, Florida 33325
 (954) 835-1500
 
 þ o
  Large accelerated filer
o

  
  Accelerated filer
o

  
  Non-accelerated filer
þ
(Do not check if a smaller reporting company)

  
  Smaller reporting company
o
 o þ




---



##### 



BIOHEART, INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements1) Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31,
20072) Consolidated Statements of Operations for the three-month periods ended March
31, 2008 and 2007 (unaudited)3) Consolidated Statement of Shareholders Deficit for the three-month period
ended March 31, 2008 (unaudited)4) Consolidated Statements of Cash Flows for the three-month periods ended March
31, 2008 and 2007 (unaudited)5) Notes to Consolidated Interim Financial Statements (unaudited)Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4T. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesIndex to ExhibitsEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Balance Sheets
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    4,783,789
    
    
    $
    5,492,157Receivables
    
    
    24,605
    
    
    
    52,642Inventory
    
    
    390,074
    
    
    
    372,054Prepaid expenses and other current assets
    
    
    2,782,159
    
    
    
    261,030Total current assets
    
    
    7,980,627
    
    
    
    6,177,883Property and equipment, net
    
    
    416,438
    
    
    
    444,506Deferred offering costs
    
    
    
    
    
    
    3,484,070Deferred loan costs, net
    
    
    593,944
    
    
    
    1,146,716Other assets
    
    
    68,854
    
    
    
    71,148Total assets
    
    $
    9,059,863
    
    
    $
    11,324,323LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilitiesAccounts payable
    
    $
    2,178,068
    
    
    $
    2,134,256Accrued expenses
    
    
    4,296,348
    
    
    
    4,511,775Deferred revenue
    
    
    485,786
    
    
    
    547,286Notes payable  current
    
    
    6,725,374
    
    
    
    6,671,112Total current liabilities
    
    
    13,685,576
    
    
    
    13,864,429Deferred rent
    
    
    18,856
    
    
    
    21,426Note payable  long term
    
    
    2,491,199
    
    
    
    2,943,432Total liabilities
    
    
    16,195,631
    
    
    
    16,829,287Commitments and contingenciesShareholders deficitPreferred stock ($0.001 par value) 5,000,000
shares authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock ($0.001 par value) 50,000,000
shares authorized; 14,447,138 and 13,347,138
shares issued and outstanding as of March 31,
2008 and December 31, 2007, respectively
    
    
    14,447
    
    
    
    13,347Additional paid-in capital
    
    
    78,720,440
    
    
    
    77,061,296Deficit accumulated during the development stage
    
    
    (85,870,655
    )
    
    
    (82,579,607
    )Total shareholders deficit
    
    
    (7,135,768
    )
    
    
    (5,504,964
    )Total liabilities and shareholders deficit
    
    $
    9,059,863
    
    
    $
    11,324,323
  2




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Statements of Operations
 CumulativePeriod fromAugust 12,1999 (date ofFor the Three-Month Period
    
    
    inception) toEnded March 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008(Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    25,995
    
    
    $
    13,805
    
    
    $
    753,817Cost of sales
    
    
    3,125
    
    
    
    7,359
    
    
    
    317,524Gross profit
    
    
    22,870
    
    
    
    6,446
    
    
    
    436,293Development revenues
    
    
    61,500
    
    
    
    
    
    
    
    82,000Expenses:Research and development
    
    
    1,358,057
    
    
    
    1,400,590
    
    
    
    58,058,664Marketing, general and
administrative
    
    
    1,072,269
    
    
    
    877,376
    
    
    
    23,933,157Depreciation and amortization
    
    
    45,628
    
    
    
    46,447
    
    
    
    480,305Total expenses
    
    
    2,475,954
    
    
    
    2,324,413
    
    
    
    82,472,126Loss from operations
    
    
    (2,391,584
    )
    
    
    (2,317,967
    )
    
    
    (81,953,833
    )Interest income
    
    
    33,946
    
    
    
    40,624
    
    
    
    750,466Interest expense
    
    
    (933,410
    )
    
    
    (561
    )
    
    
    (4,667,288
    )Net interest (expense) income
    
    
    (899,464
    )
    
    
    40,063
    
    
    
    (3,916,822
    )Loss before income taxes
    
    
    (3,291,048
    )
    
    
    (2,277,904
    )
    
    
    (85,870,655
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (3,291,048
    )
    
    $
    (2,277,904
    )
    
    $
    (85,870,655
    )Loss per share  basic and diluted
    
    $
    (0.24
    )
    
    $
    (0.18
    )Weighted average shares
outstanding  basic and diluted
    
    
    13,854,830
    
    
    
    12,919,835
  3




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Statement of Shareholders Deficit
 (Unaudited)
 DeficitAccumulatedAdditional
    
    
    During theCommon Stock
    
    
    Paid-in
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    TotalBalance as of December 31, 2007
    
    
    13,347,138
    
    
    $
    13,347
    
    
    $
    77,061,296
    
    
    $
    (82,579,607
    )
    
    $
    (5,504,964
    )Proceeds from initial
public offering of common
stock (net of offering
costs of $4,327,171)
    
    
    1,100,000
    
    
    
    1,100
    
    
    
    1,446,729
    
    
    
    
    
    
    
    1,447,829Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    212,415
    
    
    
    
    
    
    
    212,415Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,291,048
    )
    
    
    (3,291,048
    )Balance as of March 31, 2008
    
    
    14,447,138
    
    
    $
    14,447
    
    
    $
    78,720,440
    
    
    $
    (85,870,655
    )
    
    $
    (7,135,768
    )
  4




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Statements of Cash Flows
 CumulativePeriod fromAugust 12, 1999For the Three-Month Period Ended
    
    
    (date of inception)March 31,
    
    
    to March 31,2008
    
    
    2007
    
    
    2008(Unaudited)
    
    
    (Unaudited)Cash flows from operating activitiesNet loss
    
    $
    (3,291,048
    )
    
    $
    (2,277,904
    )
    
    $
    (85,870,655
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    45,628
    
    
    
    46,447
    
    
    
    480,305Bad debt expense
    
    
    
    
    
    
    
    
    
    
    165,000Amortization of warrants granted in exchange for
licenses and intellectual property
    
    
    
    
    
    
    48,289
    
    
    
    5,413,156Amortization of warrants granted in connection with
notes payable
    
    
    456,540
    
    
    
    
    
    
    
    2,864,217Amortization of loan costs
    
    
    159,482
    
    
    
    
    
    
    
    646,021Amortization of warrants granted in exchange for services
    
    
    
    
    
    
    30,559
    
    
    
    30,559Equity instruments issued in connection with settlement
agreement
    
    
    
    
    
    
    
    
    
    
    3,294,429Common stock issued in exchange for services
    
    
    
    
    
    
    
    
    
    
    1,277,017Common stock issued in exchange for distribution rights
and intellectual property
    
    
    
    
    
    
    
    
    
    
    99,997Stock-based compensation
    
    
    212,415
    
    
    
    249,549
    
    
    
    7,814,386Changes in assets and liabilitiesReceivables
    
    
    28,037
    
    
    
    18,611
    
    
    
    (24,605
    )Inventory
    
    
    (18,020
    )
    
    
    44,052
    
    
    
    (390,074
    )Prepaid expenses and other current assets
    
    
    (2,521,129
    )
    
    
    (172,418
    )
    
    
    (2,782,159
    )Other assets
    
    
    2,294
    
    
    
    
    
    
    
    (68,854
    )Accounts payable
    
    
    258,800
    
    
    
    (205,959
    )
    
    
    2,132,559Accrued expenses and deferred rent
    
    
    264,002
    
    
    
    103,937
    
    
    
    4,692,990Deferred revenue
    
    
    (61,500
    )
    
    
    
    
    
    
    485,787Net cash used in operating activities
    
    
    (4,464,499
    )
    
    
    (2,114,837
    )
    
    
    (59,739,924
    )Cash flows from investing activitiesAcquisitions of property and equipment
    
    
    (17,560
    )
    
    
    (15,920
    )
    
    
    (896,742
    )Net cash used in investing activities
    
    
    (17,560
    )
    
    
    (15,920
    )
    
    
    (896,742
    )Cash flows from financing activitiesProceeds from (payments for) initial public offering
of common stock, net
    
    
    4,266,581
    
    
    
    (700,148
    )
    
    
    1,477,758Proceeds from private placements of common stock, net
    
    
    
    
    
    
    1,167,285
    
    
    
    55,675,088Proceeds from notes payable
    
    
    
    
    
    
    
    
    
    
    10,200,000Repayment of notes payable
    
    
    (397,971
    )
    
    
    
    
    
    
    (983,427
    )Payment of loan costs
    
    
    (94,919
    )
    
    
    
    
    
    
    (948,964
    )Net cash provided by financing activities
    
    
    3,773,691
    
    
    
    467,137
    
    
    
    65,420,455Net (decrease) increase in cash and cash
equivalents
    
    
    (708,368
    )
    
    
    (1,663,620
    )
    
    
    4,783,789Cash and cash equivalents, beginning of period
    
    
    5,492,157
    
    
    
    5,025,383
    
    
    
    Cash and cash equivalents, end of period
    
    $
    4,783,789
    
    
    $
    3,361,763
    
    
    $
    4,783,789Disclosures of cash flow information:Interest paid
    
    $
    146,879
    
    
    $
    561
    
    
    $
    492,674Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    
  5




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Notes to Consolidated Interim Financial Statements
(Unaudited)
 1. Organization and Summary of Significant Accounting Policies
 Organization and Business
  Development Stage
 Accounting and Reporting by Development Stage
Enterprises ,
  Interim Financial Statements
  6




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
  Basis of Presentation
   Reverse Stock Split
  Initial Public Offering
    7




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
  Use of Estimates
  Prepaid Expenses and Other Current Assets
  Deferred Loan Costs
  Stock Options and Warrants
 Share-Based Payment
  8




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling Goods or Services
 Loss Per Share
 Earnings per Share
 Recent Accounting Pronouncements
 Recently Adopted Accounting Standards
 Fair Value Measurements Effective Date of FASB Statement No. 157
  
    
    Level 1  Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access at the measurement date.
    
    Level 2  Inputs include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets that are
not active, inputs other than quoted prices that are observable for the asset or liability
and inputs that are derived principally from or corroborated by observable market data by
correlation or other means (market corroborated inputs).
 9




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 
    
    Level 3  Unobservable inputs reflect the Companys judgments about the assumptions
market participants would use in pricing the asset or liability since limited market data
exists. The Company develops these inputs based on the best information available,
including the Companys own data.
  The Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Nonrefundable Advance Payments for Goods or
Services Received for Use in Future Research and Development Activities
 Share-Based
Payment Share-Based Payment
 Future Accounting Standards
 Business Combinations
 10




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
  Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets Business Combinations,
  Reclassifications
  11




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 2. Going Concern
  3. Collaborative License and Research/Development Agreements
    
    
    The parties agreed that the Company would issue, and the Company did issue, to the
collaborative research partner a five-year warrant exercisable for 1.2 million shares of
the Companys common stock at an exercise price of $8.00 per share instead of, as
originally contemplated under the Agreement, issuing 600,000 shares of the Companys common
stock and options to purchase 600,000 shares of the Companys common stock at an exercise
price of $1.80. These share amounts and exercise prices do not take into account any
subsequent recapitalizations or reverse stock splits.
    
    The parties agreed that the Companys obligation to pay a $3 million milestone payment
would be triggered upon the Companys commencement of a bona fide U.S. Phase II human
clinical trial that utilizes technology claimed under the patents instead of, as originally
contemplated under the
 12




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
      13




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 4. Notes Payable
  March 31,
    
    
    December 31,2008
    
    
    2007Eight-month note payable. Monthly payments
of principal and interest as described
below
    
    $
    5,000,000
    
    
    $
    5,000,000Three-year note payable. Monthly payments
of principal and interest as described
below
    
    
    4,216,573
    
    
    
    4,614,5449,216,573
    
    
    
    9,614,544Less current portion
    
    
    (6,725,374
    )
    
    
    (6,671,112
    )Notes payable  long term
    
    $
    2,491,199
    
    
    $
    2,943,432
  2008
    
    $
    6,273,1412009
    
    
    1,898,9602010
    
    
    1,044,472$
    9,216,573
 Eight-month note payable
     14




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
     15




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
     Three-year note payable
   16




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
    5. Related Party Transactions
     17




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 6. Shareholders Equity
   7. Stock Options and Warrants
   Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateShares Under
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOption
    
    
    Price
    
    
    Term (in years)
    
    
    ValueOptions outstanding at January 1, 2008
    
    
    2,160,199
    
    
    $
    5.34Granted
    
    
    1,000
    
    
    $
    5.25Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (1,158
    )
    
    $
    7.69Options outstanding at March 31, 2008
    
    
    2,160,041
    
    
    $
    5.34
    
    
    
    6.1
    
    
    $
    993,476Options exercisable at March 31, 2008
    
    
    1,706,475
    
    
    $
    4.85
    
    
    
    5.4
    
    
    $
    993,476Available for grant at March 31, 2008
    
    
    895,689
  18




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards.
  Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageContractual
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Life
    
    Price
    
    Shares
    
    Price$1.28
    
    
    347,196
    
    
    
    1.8
    
    
    $
    1.28
    
    
    
    347,196
    
    
    $
    1.28$2.83
    
    
    41,701
    
    
    
    1.9
    
    
    $
    2.83
    
    
    
    41,701
    
    
    $
    2.83$5.25 - $5.67
    
    
    1,417,063
    
    
    
    6.5
    
    
    $
    5.67
    
    
    
    1,214,112
    
    
    $
    5.67$7.69
    
    
    73,507
    
    
    
    8.4
    
    
    $
    7.69
    
    
    
    52,342
    
    
    $
    7.69$8.47
    
    
    280,574
    
    
    
    9.0
    
    
    $
    8.47
    
    
    
    51,124
    
    
    $
    8.472,160,041
    
    
    
    6.1
    
    
    $
    5.34
    
    
    
    1,706,475
    
    
    $
    4.85
   For the three months ended March 31,2008
    
    2007Expected dividend yield
    
    
    00.0
    %
    
    
    00.0
    %Expected price volatility
    
    
    100.0
    %
    
    
    100.0
    %Risk free interest rate
    
    
    3.0
    %
    
    
    6.0
    %Expected life of options in years
    
    
    6.25
    
    
    
    5.0
 19




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
   Warrants Outstanding
    
    Warrants ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageContractual
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Life
    
    Price
    
    Shares
    
    Price$5.67
    
    
    192,834
    
    
    
    8.4
    
    
    $
    5.67
    
    
    
    192,834
    
    
    $
    5.67$6.56
    
    
    77,000
    
    
    
    4.5
    
    
    $
    6.56
    
    
    
    
    
    
    
    $7.69
    
    
    2,059,002
    
    
    
    16.4
    
    
    $
    7.69
    
    
    
    32,515
    
    
    $
    7.692,328,836
    
    
    
    15.3
    
    
    $
    7.49
    
    
    
    225,349
    
    
    $
    5.96
  8. Legal Proceedings
    20




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
     Other
  9. Contingency
  21




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Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Interim Financial Statements  (Continued)
(Unaudited)
 10. Supplemental Disclosure of Cash Flow Information
   22




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Unless otherwise indicated, references in this quarterly report to we, us and our are to
the Company. The following discussion and analysis by our management of our financial condition and
results of operations should be read in conjunction with our unaudited consolidated interim
financial statements and the accompanying related notes included in this quarterly report and our
audited consolidated financial statements and related notes and Managements Discussion and
Analysis of Financial Condition and Results of Operations included in our annual report on Form
10-K, as amended by Amendment No. 1 on Form 10-K/A filed with the Securities and Exchange
Commission.
 Cautionary Statement Regarding Forward-Looking Statements
   
    
    our ability to obtain additional financing;
    
    our ability to meet our obligations on our outstanding indebtedness, certain of which
indebtedness imposes restrictions on how we conduct our business and is secured by all of
our assets except our intellectual property;
    
    our ability to timely and successfully initiate and complete our clinical trials;
    
    the announcement of data concerning the results of clinical trials for MyoCell®;
    
    our estimates regarding future revenues and timing thereof, expenses, capital
requirements and needs for additional financing;
    
    our ongoing and planned discovery programs, preclinical studies and additional clinical
trials;
    
    the timing of and our ability to obtain and maintain regulatory approvals for our
product candidates;
    
    the rate and degree of market acceptance and clinical utility of our products;
    
    our ability to quickly and efficiently identify and develop product candidates;
    
    our commercialization, marketing and manufacturing capabilities and strategy; and
    
    our intellectual property position.
  23




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Our Ability To Continue as a Going Concern
  Overview
    24




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Critical Accounting Policies
  Share-Based Compensation
 Share-Based Payment
  Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling Goods or Services
 Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
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Research and Development Activities
  Results of Operations
 Revenues
  Development revenues
  Cost of Sales
  Research and Development
 Existing Capital Resources and Future Capital Requirements We will need to secure additional financing within the next three months in order to
continue to finance our operations....
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Marketing, General and Administrative
  Interest Income
  Interest Expense
   Liquidity and Capital Resources
      27




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Existing Capital Resources and Future Capital Requirements
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
    
    costs related to our commencement of full scale enrollment of the MARVEL Trial;
    
    costs related to our continued research and development and new clinical trials with
respect to our pipeline product candidates;
    
    costs of applying for regulatory approvals;
    
    capital expenditures to increase our research and development and cell-culturing
capabilities;
    
    costs associated with our addition of operational, financial and management information
systems and personnel and development and protection of our intellectual property;
    
    our obligations to make payments pursuant to license agreements upon achievement of
certain milestones, including a $3 million payment to Cell Transplants International; and
    
    costs associated with our establishment of sales and marketing capabilities to
commercialize products for which we obtain regulatory approval, if any.
  
    
    resolution, whether by mutual agreement or court order, of our payment obligations under
the license agreement with Peter K. Law, Ph.D. and Cell Transplants International and the
timing of such payments;
    
    the scope, rate of scientific progress, results and cost of our clinical trials and
other research and development activities;
    
    the costs and timing of seeking FDA and other regulatory approvals;
    
    our ability to obtain sufficient third-party insurance coverage or reimbursement for our
product candidates;
    
    the effectiveness of commercialization activities (including the volume and
profitability of any sales achieved);
    
    our ability to establish additional strategic, collaborative and licensing relationships
with third parties with respect to the sales, marketing and distribution of our products,
research and development and other matters and the economic and other terms and timing of
any such relationships;
    
    the ongoing availability of funds from foreign governments to build new manufacturing
facilities;
    
    the costs involved in any potential litigation that may occur;
    
    decisions by us to pursue the development of new product candidates or technologies or
to make acquisitions or investments; and
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
    
    the effect of competing products, technologies and market developments.
  BlueCrest Loan
    
    
    incur additional indebtedness, except for certain permitted indebtedness. Permitted
indebtedness is defined to include accounts payable incurred in the ordinary course of
business, leases of equipment or
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property incurred in the ordinary course of business not to exceed, in the aggregate,
$250,000, any unsecured debt less than $20,000 or any debt not secured by the collateral
pledged to BlueCrest that is subordinated to the rights of BlueCrest pursuant to a
subordination agreement satisfactory to BlueCrest in its sole discretion;
    
    make any principal, interest or other payments arising under or in connection with our
loan from Bank of America or any other debt subordinate to the BlueCrest Loan;
    
    incur additional liens on any of our assets, including any liens on our intellectual
property, except for certain permitted liens including but not limited to non-exclusive
licenses or sub-licenses of our intellectual property in the ordinary course of business
and licenses or sub-licenses of intellectual property in connection with joint ventures and
corporate collaborations (provided that any proceeds from such licenses be used to pay down
the BlueCrest Loan);
    
    voluntarily prepay any debt prior to maturity, except for accounts payable incurred in
the ordinary course of business, leases of equipment or property incurred in the ordinary
course of business not to exceed, in the aggregate, $250,000 and any unsecured debt less
than $20,000;
    
    convey, sell, transfer or otherwise dispose of property, except for sales of inventory
in the ordinary course of business, sales of obsolete or unneeded equipment and transfers
of our intellectual property related to product candidates other than MyoCell or MyoCell
SDF-1 to a currently operating or newly formed wholly owned subsidiary;
    
    merge with or acquire any other entity if we would not be the surviving person following
such transaction;
    
    pay dividends (other than stock dividends) to our shareholders;
    
    redeem any outstanding shares of our common stock or any outstanding options or warrants
to purchase shares of our common stock except in connection with a share repurchase
pursuant to which we offer to pay our then existing shareholders not more than $250,000;
    
    enter into transactions with affiliates other than on arms-length terms; and
    
    make any change in any of our business objectives, purposes and operations which has or
could be reasonably expected to have a material adverse effect on our business.
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Bank of America Loan
   
    
    a $3.3 million limited personal guarantee provided by Mr. Howard J. Leonhardt, our
Chairman and Chief Technology Officer, and his spouse, which guarantee is secured by
the Leonhardts pledge of securities accounts with Bank of America;
    
    $750,000 of collateral provided by Dr. Samuel S. Ahn, who is a member of our Board
of Directors;
    
    $400,000 of collateral provided by Dr. William Murphy, who is a member of our Board
of Directors; and
    
    an aggregate of $1.1 million of collateral provided by two of our current
shareholders.
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Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Organization and Summary of Significant Accounting Policies
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
   
 Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
  Changes In Internal Control Over Financial Reporting
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
    
    The parties agreed that we would issue, and we did issue, to Cell Transplants
International a five-year warrant exercisable for 1.2 million shares of our common stock at
an exercise price of $8.00 per share instead of, as originally contemplated under the
Original Law License Agreement, issuing to Cell Transplants International or Dr. Law
600,000 shares of our common stock and options to purchase 600,000 shares of our common
stock at an exercise price of $1.80. The share amounts and exercise prices do not take into
account any subsequent recapitalizations or reverse stock splits.
    
    The parties agreed that our obligation to pay Cell Transplants International a $3
million milestone payment would be triggered upon our commencement of a bona fide U.S.
Phase II human clinical trial that utilizes technology claimed under the Law IP instead of,
as originally contemplated under the Original Law License Agreement, upon initiation of an
FDA approved human clinical study of such technology in the United States.
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Item 1A. Risk Factors
   Risks Related to Our Financial Position and Potential Need for Additional Financing
 We will need to secure additional financing within the next three months in order to continue to
finance our operations and will need substantial additional capital to develop our business and
product candidates as otherwise planned. We may be unable to secure additional capital when
needed. An inability to obtain additional financing on acceptable terms could adversely affect our
business, financial condition, results of operations, and could even prevent us from continuing our
business.
 We have licensed and therefore do not
own the intellectual property that is critical to our business
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
    
    resolution, whether by mutual agreement or court order, of our payment obligations under
the Law License Agreement and the timing of such payments;
    
    the scope, rate of scientific progress, results and cost of our clinical trials and
other research and development activities;
    
    the costs and timing of seeking FDA and other regulatory approvals;
    
    our ability to obtain sufficient third-party insurance coverage or reimbursement for our
product candidates;
    
    the effectiveness of commercialization activities (including the volume and
profitability of any sales achieved);
    
    our ability to establish additional strategic, collaborative and licensing relationships
with third parties with respect to the sales, marketing and distribution of our products,
research and development and other matters and the economic and other terms and timing of
any such relationships;
    
    the ongoing availability of capital from foreign governments to build new manufacturing
facilities;
    
    the costs involved in any potential litigation that may occur;
    
    decisions by us to pursue the development of new product candidates or technologies or
to make acquisitions or investments; and
    
    the effect of competing products, technologies and market developments.
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We have a
substantial amount of debt Our outstanding indebtedness to BlueCrest Capital Finance,
L.P. imposes certain restrictions
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Use of Proceeds
   
    
    we raised approximately $1.5 million in net proceeds from the sale of shares of our
common stock in the offering, after deducting underwriting discounts and commissions and
offering costs of approximately $4.3 million; and
    
    we generated approximately $4.6 million of cash proceeds from the offering, which is
approximately $3.1 million greater than the net proceeds of this offering due to our
payment of $3.1 million of various offering expenses prior the completion of the offering.
  
 Item 4. Submission of Matters to a Vote of Security Holders
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Item 5. Other Information
 Supply Agreement with Bioheart Manufacturing, Inc.
   Distribution Agreement with BHK, Inc.
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SEISMIC Trial Results
  39




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Item 6. Exhibits
 ExhibitNo.
    
    Exhibit Description3.1(6)
    
    Amended and Restated Articles of Incorporation of the registrant, as amended.3.2(1)
    
    Amended and Restated Bylaws4.1(5)
    
    Loan and Security Agreement, dated as of May 31, 2007 by and between BlueCrest Capital Finance, L.P. and the registrant10.1**(1)
    
    1999 Officers and Employees Stock Option Plan10.2**(1)
    
    1999 Directors and Consultants Stock Option Plan10.3(1)
    
    Form of Option Agreement under 1999 Officers and Employees Stock Option Plan10.4(3)
    
    Form of Option Agreement under 1999 Directors and Consultants Stock Option Plan10.5**(4)
    
    Employment Letter Agreement between the registrant and Scott Bromley, dated August 24, 2006.10.6(1)
    
    Lease Agreement between the registrant and Sawgrass Business Plaza, LLC, as amended, dated November 14, 2006.10.7(1)
    
    Asset Purchase Agreement between the registrant and Advanced Cardiovascular Systems, Inc., dated June 24, 2003.10.8(4)
    
    Conditionally Exclusive License Agreement between the registrant, Dr. Peter Law and Cell Transplants International, LLC, dated February 7, 2000, as amended.10.9(4)
    
    Loan Guarantee, Payment and Security Agreement, dated as of June 1, 2007, by and between the registrant, Howard J. Leonhardt and Brenda Leonhardt10.10(4)
    
    Loan Guarantee, Payment and Security Agreement, dated as of June 1, 2007, by and between the registrant and William P. Murphy Jr., M.D.10.11(4)
    
    Loan Agreement, dated as of June 1, 2007, by and between the registrant and Bank of America, N.A.10.12(4)
    
    Warrant to purchase shares of the registrants common stock issued to Howard J. Leonhardt and Brenda Leonhardt10.13(4)
    
    Warrant to purchase shares of the registrants common stock issued to Howard J. Leonhardt and Brenda Leonhardt10.14(4)
    
    Warrant to purchase shares of the registrants common stock issued to William P. Murphy Jr., M.D.10.15(4)
    
    Warrant to purchase shares of the registrants common stock issued to the R&A Spencer Family Limited Partnership10.16(4)
    
    Material Supply Agreement, dated May 10, 2007, by and between the registrant and Biosense Webster10.17(4)
    
    Supply and License Agreement, dated June 7, 2007, by and between the registrant and BioLife Solutions, Inc.***10.18(5)
    
    Warrant to purchase shares of the registrants common stock issued to BlueCrest Capital Finance, L.P.10.19(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 12, 2007, by and between the registrant and Samuel S. Ahn, M.D.10.20(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 12, 2007, by and between the registrant and Dan Marino10.21(6)
    
    Warrant to purchase shares of the registrants common stock issued to Samuel S. Ahn, M.D.10.22(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 19, 2007, by and between the registrant and Jason Taylor10.23(7)
    
    Loan Guarantee, Payment and Security Agreement, dated as of October 10, 2007, by and between the registrant and Howard and Brenda Leonhardt
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ExhibitNo.
    
    Exhibit Description10.24(7)
    
    Warrant to purchase shares of the registrants common stock issued to Howard and Brenda Leonhardt10.25(7)
    
    Second Amendment to Loan Guarantee, Payment and Security Agreement, dated as of October 10, 2007, by and between the registrant and Howard and Brenda Leonhardt10.26(7)
    
    Second Amendment to Loan Guarantee, Payment and Security Agreement, dated as of October 10, 2007, by and between the registrant and William P. Murphy, Jr., M.D.31.1*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith**
    
    Indicates management contract or compensatory plan.***
    
    Portions of this document have been omitted and were filed separately with the SEC on August
9, 2007 pursuant to a request for confidential treatment.(1)
    
    Incorporated by reference to the Companys Form S-1 filed with the Securities and Exchange
Commission on February 13, 2007(2)
    
    Incorporated by reference to Amendment No. 1 to the Companys Form S-1 filed with the
Securities and Exchange Commission on June 5, 2007(3)
    
    Incorporated by reference to Amendment No. 2 to the Companys Form S-1 filed with the
Securities and Exchange Commission on July 12, 2007(4)
    
    Incorporated by reference to Amendment No. 3 to the Companys Form S-1 filed with the
Securities and Exchange Commission on August 9, 2007(5)
    
    Incorporated by reference to Amendment No. 4 to the Companys Form S-1 filed with the
Securities and Exchange Commission on September 6, 2007(6)
    
    Incorporated by reference to Amendment No. 5 to the Companys Form S-1 filed with the
Securities and Exchange Commission on October 1, 2007(7)
    
    Incorporated by reference to Post-effective Amendment No. 1 to the Companys Form S-1 filed
with the Securities and Exchange Commission on October 11, 2007 41




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SIGNATURES
  Bioheart, Inc.Date: May 14, 2008
    By:
    /s/ William H. KlineWilliam H. KlineChief Financial Officer and
Principal Financial Officer 42




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INDEX OF EXHIBITS
 ExhibitNo.
    
    Exhibit Description31.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002