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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 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
(State or other jurisdiction of 
incorporation or organization)
    
    65-0945967
(I.R.S. Employer Identification No.)
 13794 NW 4 th Street, Suite 212, Sunrise, Florida 33325
 (954) 835-1500
 None
 Common Stock, $0.001 Par Value
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting
company þ o þ




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##### 



BIOHEART, INC. AND SUBSIDIARIES
 INDEX TO ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended December 31, 2008
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    34Item 1B.
    
    Unresolved Staff Comments
    
    
    42Item 2.
    
    Properties
    
    
    42Item 3.
    
    Legal Proceedings
    
    
    42Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    43PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    44Item 6.
    
    Selected Financial Data
    
    
    47Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    48Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    57Item 8.
    
    Financial Statements and Supplementary Data
    
    
    57Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    57Item 9A.
    
    Controls and Procedures
    
    
    58Item 9B.
    
    Other Information
    
    
    59PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    60Item 11.
    
    Executive Compensation
    
    
    60Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    60Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    60Item 14.
    
    Principal Accounting Fees and Services
    
    
    60PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    61EX-4.10EX-4.11EX-23.1EX-31.1EX-32.1
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PART I
   
 Item 1. Business
 Overview
  Biotechnology Product Candidates
   2




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®
 ®
 Intelligent Devices  Distribution Agreements
    3




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MyoCell
 ®
    4




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Business Strategy
  
    
    Obtain initial regulatory approval of MyoCell and/or MyoCell SDF-1 by targeting patients
with severe heart damage.In July 2007, we treated the final patient in the Phase II
SEISMIC Trial, which was comprised of 40 patients, including 26 treated patients. With the
final SEISMIC Trial data being generally consistent with the interim data, we filed in the fourth quarter of 2008 for approval for reimbursement from
various European bodies to market MyoCell to treat the Class III Subgroup. The SEISMIC study
results demonstrated that 94% of MyoCell treated patients improved or did not worsen in
heart failure class while only 6% worsened, while in the control group receiving only drugs
42% worsened. 84% of MyoCell treated patients improved or did not worsen in exercise
capacity and only 16% worsened, while 69% of the control patients worsened. The average
improvement in 6 minute walk was 62 meters. This compares very favorably with the current
gold standard in advanced heart failure treatemtn, Bi-V pacing, where they achieved 16 to 20
meters improvement over control patients in the Phase II MIRACLE trial that led to
commercial approval of this product. By targeting a class of patients for whom existing
therapies are very expensive, unavailable or not sufficiently effective, we hope to expedite
regulatory approval of MyoCell and/or MyoCell SDF-1. Assuming our U.S. clinical trial
experience is comparable to our experience to date in European trials, we anticipate
utilizing a similar strategy in our efforts to secure U.S. regulatory approval of our
MyoCell and/or MyoCell SDF-1 product candidates. We currently have 35 sites engaged in a
Phase II/II study for MyoCell and are in the process of initiating a dose escalation study
for
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the 2nd generation MyoCell SDF-1. We have announced that when one month data
is available on 15 patients in this MyoCell SDF-1 study, we intend to apply to the FDA to
move this composition into a Phase II/III study.
    
    Obtain regulatory approval of MyoCell and/or MyoCell SDF-1 to treat patients with less
severe heart damage.If we obtain initial regulatory approval of MyoCell for the Class III
Subgroup, we intend to continue to sponsor clinical trials in an effort to demonstrate that
MyoCell and/or MyoCell SDF-1 should receive regulatory approval to treat all patients in
NYHA Class II, NYHA Class III and NYHA Class IV heart failure and, provided we believe we
have a reasonable basis to support such an indication, we intend to seek regulatory
approval for these patients.
    
    Continue market release of the Bioheart 3370 heart failure monitoring productsand
services utilizing our proprietary software program. These products are fully approved for
commercial sale both in the United States and Europe. The Centers for Medicaid & Medicare
Services, or CMS, has approved reimbursement for home monitoring with this product. The
Bioheart 3370 monitor can receive up to 17 Bluetooth® signals at the same time from
compatible monitoring devices. We are building a catalog of approved and reimbursable
compatible monitoring products to complement the Bioheart 3370 and to build our sales
revenue further. We have set up through collaboration with a third party a 24-hour call
center which is staffed by a qualified heart failure nurse at all times to monitor all
information coming in from the patients. Our software is unique in that it converts the
words from the electronic heart failure questionnaire to numbers for better trending
analysis. Our data management software has a green light, yellow caution light, red
warning light system which allows physicians and nurses to monitor all their patients
conveniently. We can send this information to a doctors BlackBerry® or iPhone® to allow
for remote monitoring. Our leading competitor only offers the option of a black and white
fax transmission to one location once a day.
    
    Continue market release of the Bioheart-Monebo CardioBelt to monitor patients hearts.
The Bioheart-Monebo CardioBelt communicates via Bluetooth® with our Bioheart 3370 at home
heart failure monitoring system to provide 16 parameter analysis of the electrical activity
of a patients heart.
    
    Continue market release of Bioheart TGI 1200 bedside apparatus for preparing stem cells
and endothelial progenitor cells from adipose tissue which has received CE Mark commercial
approval with our corporate partner, Tissue Genesis, Inc. We are currently initiating
studies for the applications of lower limb ischemia, Acute MI and chronic ischemia which
are necessary to obtain reimbursement codes for these indications of use.
    
    Continue to develop our pipeline of cell-based therapies and related devices for the
treatment of chronic and acute heart damage.In parallel with our efforts to secure
regulatory approval of MyoCell, we intend to continue to develop and test other product
candidates for the treatment of chronic and acute heart damage. These efforts are expected
to initially focus on our Bioheart Acute Cell Therapy, TGI 1200, MyoCell SDF-1, MyoCath and
MyoCath II product candidates.
    
    Develop our sales and marketing capabilities.In advance of U.S. regulatory approval of
our MyoCell product candidate, we intend to internally build a sales force to cover the
U.S. market and to utilize dealers in foreign markets which we anticipate will market MyoCell, MyoCell SDF-1 and our heart failure focused
products primarily to interventional cardiologists and heart failure specialists.
    
    Continue to refine our MyoCell and MyoCell SDF-1 cell culturing processes.We are
seeking to automate a significant portion of our cell culturing processes in an effort to
further reduce our culturing costs and processing times. In addition, we are seeking to
further optimize our processing times by building our facilities, or contracting with a
small number of cell culturing facilities, in strategic regional locations.
    
    Expand and enhance our intellectual property rights.We intend to continue to expand and
enhance our intellectual property rights.
    
    License, acquire and/or develop complementary products and technologies.We intend to
strengthen and expand our product development efforts through the license, acquisition
and/or development of products and technologies that support our business strategy. We are
actively working on acquiring or developing with a partner and implantable heart failure
sensor that is compatible with our Bioheart 3370 heart failure monitoring system and a
heart pump on a catheter. We are also seeking a corporate partner to fund the development
of our patented_MyoStim bi-ventricular pacemaker with additional lead for enhancing cell
transplantation and our Bioheart AcBIO SVAD left ventricular assist device developed in
collaboration with our Korean partners. We
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are working to conclude a distribution rights
agreement to the AcBIO TPLS True Pulsatile Life Support system, developed by our Korean
partners, that has CE Mark commercial approval.
    
    Sell rights to our non-core intellectual property and product developmentsto increase
cash available for core heart failure focused developments; AortaCell, MyoValve, BioPace
and EndoCell.
 Industry Background
 Myocardial Infarction (Heart Attack)
  Congestive Heart Failure (CHF)
  Classifying Heart Failure
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NYHAClass
    
    NYHA Functional Classification(1)
    
    Specific Activity Scale(2)(3)
    
    Current Standard of Treatment(4)I
    
    Symptoms only with above normal physical
    
    Can perform more than 7 metabolic
    
    ACE Inhibitor, Beta-Blockeractivity
    
    equivalentsII
    
    Symptoms with normal physical activity
    
    Can perform more than 5 metabolic
    
    ACE Inhibitor, Beta-Blocker, DiureticsequivalentsIII
    
    Symptoms with minimal physical activity
    
    Can perform more than 2 metabolic
    
    ACE Inhibitor, Beta-Blocker, Diuretics,equivalents
    
    Digoxin, Bi-ventricular pacersIV
    
    Symptoms at rest
    
    Cannot perform more than 2 metabolic
    
    ACE Inhibitor, Beta-Blocker, Diuretics,equivalents
    
    Digoxin, Hemodynamic Support, MechanicalAssist Devices, Bi-ventricular pacers,Transplant
 
 (1)
    
    Symptoms include fatigue, palpitations, shortness of breath and chest pain; normal activity
is equivalent to walking one flight of stairs or several blocks.(2)
    
    Based upon the Goldman Activity Classification of Heart Failure, which classifies severity of
heart failure based on estimated metabolic cost of various activities; the four classes of the
Goldman Activity Classification system correlate to the NYHA Classes.(3)
    
    7 metabolic equivalents = shovel snow, carry 24 lbs. up 8 stairs, recreational sports; 5
metabolic equivalents = garden, rake, dance, walk 4 mph on level ground, have intercourse; 2
metabolic equivalents = shower without stopping, strip and make bed, dress without stopping.(4)
    
    Source: American College of Cardiology/ American Heart Association 2005 Guideline Update for
the Diagnosis and Management of Chronic Heart Failure in the Adult. Diagnosis and Management of Heart Failure
  Drug Therapies.
 Bi-ventricular Pacers.
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Implantable Cardioverter Defibrillators.
 Heart Transplantation and Other Surgical Procedures.
  Ventricular Assist Devices.
  9




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Our Proposed Solution
  MyoCell
   
    
    the engrafted muscle tissue can contract in unison with the other muscles in the heart
by stretching or by the channeling of electric currents;
    
    the myoblasts acquire certain characteristics of heart muscle or fuse with them; and/or
    
    the injected myoblasts release various proteins that indirectly result in a limit on
further scar tissue formation.
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
    
    transport muscle tissue and cultured cells;
    
    disassociate muscle tissue with manual and chemical processes;
    
    separate myoblasts from other muscle cells;
    
    culture and grow myoblasts;
    
    identify a cell population with the propensity to engraft, proliferate and adapt to the
cardiac environment, including areas of scar tissue; and
    
    maintain and test the cell quality and purity.
  
    
    package the cultured cells in a manner that facilitates shipping and use by the
physician administering MyoCell;
    
    methods of using MyoCath;
    
    the use of an injectate media that assists in the engraftment of myoblasts;
    
    cell injection techniques utilizing contrast media to assist in the cell injection
process; and
    
    cell injection protocols related to the number and location of injections.
   Clinical Trials and Planned Clinical Trials of MyoCell
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
 U.S. Focused Clinical Trials
 Number of
    
    Clinical TrialClinical Trial
    
    Patients
    
    Sites
    
    Objective
    
    StatusMARVEL
(Phase II/III 
Clinical Trial)
    
    330
anticipated,
including
110
controls
    
    35 sites in the
United States and
up to 15 sites in
Europe anticipated
    
    Designed to be a
double-blind,
randomized,
placebo-controlled,
multicenter trial
to evaluate the
safety and efficacy
of MyoCell
delivered via
MyoStar
    
    MyoCell
implantation
procedure completed
on first patient in
October 2007;
six-month interim
data anticipated in
the second quarter
of 2010 and final
trial results
anticipated in the
fourth quarter of
2010MYOHEART
(Phase I Clinical 
Trial)
    
    
    20
    
    
    5 sites in the
United States
    
    Phase I dose
escalation study to
assess safety,
feasibility and
efficacy of MyoCell
delivered via
MyoCath
    
    Trial commenced in
2003; treatment of
all 20 patients
completed in
October 2006; final
twelve-month data
presented in
January 2008
 European Clinical Trials
 Number of
    
    Clinical TrialClinical Trial
    
    Patients
    
    Sites
    
    Objective
    
    StatusSEISMIC
(Phase II 
Clinical Trial)
    
    40,
including
14 controls
    
    12 sites in the
Netherlands,
Germany, Belgium,
Spain, Poland and
the United Kingdom
    
    Phase II European
study to assess the
safety and efficacy
of MyoCell
delivered via
MyoCath
    
    Trial commenced in
November 2005;
treatment of all
patients completed
in July 2007; final
results completed
in March 2008Phase I/ II 
Clinical Trial
    
    
    15
    
    
    3 sites in the
Netherlands,
Germany and Italy
    
    Phase I/II European
study to assess the
safety and efficacy
of MyoCell
    
    Trial commenced in
2002; twelve-month
follow-up completed
in June 2004Netherlands 
Pilot Trial
    
    
    5
    
    
    1 site in the
Netherlands
    
    Pilot study to
assess safety and
feasibility of
MyoCell
    
    Trial commenced in
2001; six-month
follow-up completed
in October 20032002 Trial
    
    
    3
    
    
    1 site in the
Netherlands
    
    Designed to
evaluate the safety
and efficacy of
MyoCell delivered
via the TransAccess
catheter
    
    Trial commenced in
2002; discontinued
upon
Transvasculars
acquisition by
Medtronic
 Other Clinical Trials
 Number of
    
    Clinical TrialClinical Trial
    
    Patients
    
    Sites
    
    Objective
    
    StatusPartial 
Reimbursement
Registry Studies
    
    Up to 10
in the next
two years
    
    6 sites in Korea,
Mexico,
Switzerland, The
Bahamas, Singapore
and South Africa
anticipated
    
    Designed to
generate additional
safety and efficacy
data and revenues
    
    Requisite
regulatory approval
to conduct trials
received at all
sites; contracts in
place with an
institution in each
of Mexico, the
Bahamas,
Switzerland and
Korea; MyoCell
implantation
procedure completed
for four patients
in Korea and one
patient in Mexico
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Metrics Used to Evaluate Safety and Efficacy of Heart Failure Treatments
  Metric
    
    DescriptionNYHA Class
    
    The NYHA heart failure classification system is a
functional and therapeutic classification system
based on how much cardiac patients are limited
during physical activity.Six-Minute Walk Distance
    
    Six-Minute Walk Distance is an objective
evaluation of functional exercise capacity which
measures the distance a patient can walk in six
minutes. The distance walked during this test has
been shown to correlate with the severity of
heart failure.LVEF
    
    LVEF is a measure of the hearts efficiency and
can be used to estimate the function of the left
ventricle, which pumps blood to the rest of the
body. The LVEF is the amount of blood pumped
divided by the amount of blood the ventricle
contains. A normal LVEF is more than 55% of the
blood volume. Damage to the heart impairs the
hearts ability to efficiently pump and therefore
reduces LVEF.Quality of Life
    
    Quality of Life is evaluated by patient
questionnaire, which measures subjective aspects
of health status in heart failure patients.Number of Hospital
Admissions and Mean
Length of Stay
    
    The Number of Hospital Admissions and Mean Length
of Stay measure the aggregate number of times
that a patient is admitted to the hospital during
a defined period and the number of days a patient
remains in the hospital during each such
admission.Total Days Hospitalized
    
    The Total Days Hospitalized measures the
aggregate number of days a patient is admitted to
the hospital during a defined period.End-Systolic Volume
    
    End-Systolic Volume is a measurement of the
adequacy of cardiac emptying, related to the
function of the heart during contraction.End-Diastolic Volume
    
    End-Diastolic Volume is the amount of blood in
the ventricle immediately before a cardiac
contraction begins and is used as a measurement
of the function of the heart at rest.LV Volume
    
    Left Ventricular Volume, or LV Volume, is
measured in terms of left ventricular
End-Diastolic Volume and left ventricular
End-Systolic Volume. Both measure the reduction
in volume of blood in the left ventricle of the
heart following expansion and contraction,
respectively. Reduction in volume generally is
reflective of positive ventricular remodeling and
improvement in the hearts ability to circulate
oxygenated blood through the arteries.Wall Motion
    
    Wall Motion is a test designed to show whether
the heart is receiving adequate quantities of
oxygen-rich blood. Wall motion is generally
measured by a stress echocardiography test.Cardiac Output
    
    Cardiac Output is a measure of the amount of
blood that is pumped by the heart per unit time,
measured in liters per minute.BNP Level
    
    B-Type Natriuretic Peptide, or BNP, is a
substance secreted from the ventricles or lower
chambers of the heart in response to changes in
pressure that occur when heart failure develops
and worsens. The level of BNP in the blood
increases when heart failure symptoms worsen and
decreases when the heart failure condition is
stable.
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MARVEL Phase II/III Clinical Trial in the United States, Canada and certain countries in Europe
       Primary Safety
    
    Primary Efficacy
    
    Secondary Efficacy
    
    Tertiary EfficacyEndpoint
    
    Endpoints
    
    Endpoints
    
    EndpointsNumber of serious
adverse events in
treatment group as
compared to control
group
    
    Change in
Six-Minute Walk
Distance from
baseline to six
months as compared
to control group,
or
Quality of Life
scores assessed
using Minnesota
Living with Heart
Failure
questionnaire from
baseline to six
months as compared
to control group
    
    Total Days
Hospitalized in
treatment group as
compared to control
group
Cause-specific
hospitalizations in
treatment group as
compared to control
group
Proportion of
patients with an
improved NYHA Class
from baseline to
six months as
compared to control
group
    
    Total cost and
healthcare
utilization within
six months
Time to death or
CHF hospitalization
Change in degree of
mitral
regurgitation from
baseline to six
months 
Change in
Six-Minute Walk
Distance from
baseline to three
months as compared
to control group
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Primary Safety
    
    Primary Efficacy
    
    Secondary Efficacy
    
    Tertiary EfficacyEndpoint
    
    Endpoints
    
    Endpoints
    
    EndpointsTotal days alive
out of hospital
over the six-month
study period
Change in LVEF from
baseline to six
months as compared
to control group
Change in LV Volume
and wall motion
from baseline to
six months as
compared to control
group
Change in BNP Level
from baseline to
six months as
compared to control
group
    
    Quality of Life
scores assessed
using Minnesota
Living with Heart
Failure
questionnaire from
baseline to three
months as compared
to control group 
Proportion of
patients with
improved NYHA Class
from baseline to
three months as
compared to control
group
 Pipeline
  Candidate
    
    Proposed Use or Indication
    
    Status/Phase
    
    CommentsBioheart 3370 Heart 
Failure Monitor
    
    At home monitoring for
monitoring for heart
failure patients
    
    510(k) and CE mark
approved. Fully
coded for US
reimbursement
    
    Currently
distributing to
heart failure
patients in USBioheart-Monebo 
CardioBelt
    
    Monitoring the electrical
activity of a patients
heart
    
    510(k) and CE mark
approved. Fully
coded for US
reimbursement
    
    Expect to begin
distribution by the
end of the second
quarter of 2009TGI 1200 Adipose 
Tissue Processing 
System
    
    Fully automated device
for the rapid processing
of patient derived fat
tissue for use in Acute
MI, Lower Limb Ischemia
and Chronic Ischemia
    
    CE mark approved
    
    Commercialization
and distribution in
EU commenced in the
first quarter of
2009; Anticipate
beginning physician
sponsored trials in
the US by the end
of the third
quarter of 2009MyoCell SDF-1
    
    Autologous cell therapy
treatment for severe
chronic damage to the
heart; cells modified to
express angiogenic
factors
    
    IND application
filed in May 2007.
Additional animal
studies complete.
Resubmitting to FDA
by end of April
2009.
    
    Assuming approval
of IND
resubmission,
anticipate
commencing Phase I
clinical trials by
the end of the
third quarter of
2009MyoCath
    
    Disposable
endoventricular catheter
used for the delivery of
biologic solutions to the
myocardium
    
    Used in European
Phase II clinical
trials of MyoCell;
used in Phase I
clinical trials of
MyoCell
    
    Anticipate seeking
certification to
apply the CE mark
for commercial sale
and distribution
within the European
Union in 2010
provided we enter
into a long term
manufacturing
contract with an
entity that
satisfies the
requirements of the
International
Standards
Organization
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Candidate
    
    Proposed Use or Indication
    
    Status/Phase
    
    CommentsMyoCath II
    
    Second generation
disposable
endoventricular catheter
modified to provide
multidirectional cell
injection and used for
the delivery of biologic
solutions to the
myocardium
    
    Preclinical
    
    Laboratory studies
currently being
conducted;
commenced animal
studies in the
third quarter of
2007BioPace
    
    Treatment of chronic
abnormal heart rhythm due
to electrical
disturbances in the upper
chambers of the heart
    
    Preclinical
    
    Preclinical
development by
Bioheart
 Bioheart 3370 Heart Failure Monitor
  Bioheart-Monebo CardioBelt
  TGI 1200 Adipose Tissue Processing System
   
    
    the TGI 1200 and certain disposable products used in conjunction with the TGI 1200, or
the TGI Licensed Products;
    
    the processes that use the TGI Licensed Products, or the TGI Licensed Processes; and
    
    the cells derived using the TGI Licensed Products and/or TGI Licensed Processes.
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MyoCell SDF-1
    MyoCath and MyoCath II
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BioPace
  Research
   
    
    preclinical small and large animal testing for product candidate enhancements and
pipeline product candidate development; and
    
    contract research for clinical and preclinical testing of our pipeline product
candidates.
 Cell Culturing
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
    
    culture in excess of 800 million myoblast cells per biopsy; and
    
    produce cell cultures with a high percentage of viable myoblast cells.
    Third Party Reimbursement
    Research Grants
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Patents and Proprietary Rights
   Expiration Date AssumingPatent
    
    Subject Matter
    
    Potential Application(s)
    
    No Patent ExtensionUS5,130,141
(licensed)
    
    Compositions for
and methods of
treating muscle
degeneration and
weakness
    
    MyoCell
    
    July 14, 2009US5,972,013
(licensed)
    
    Direct Pericardial
Access Device with
Deflecting
Mechanism and
Method
    
    MyoCath; MyoCath II
    
    Sep. 19, 2017US6,241,710
(licensed)
    
    Hypodermic Needle
with Weeping Tip
and Method of Use
    
    MyoCath II
    
    Dec. 20, 2019US6,547,769
(licensed)
    
    Catheter Apparatus
with Weeping Tip
and Method of Use
    
    MyoCath II
    
    Dec. 20, 2019US6,855,132
(licensed)
    
    Apparatus with
Weeping Tip and
Method of Use
    
    MyoCath II
    
    Dec. 20, 2019 (with 101
day adjustment: Mar.
30, 2020)US6,949,087
(licensed)
    
    Apparatus with
Weeping Tip and
Method of Use
    
    MyoCath II
    
    Dec. 20, 2019
 Patent Application
    
    Subject Matter
    
    Related Product(s)WO 04/056186
(US03/34411)(PCT)
(licensed)
    
    Cell-Based VEGF Delivery
    
    MyoCell SDF-1US2004/0037811 (licensed)
    
    Stromal Cell-Derived Factor-1 Mediates Stem
Cell Homing and Tissue Regeneration in Ischemic
Cardiomyopathy
    
    MyoCell SDF-1WO 04/017978
(US03/26013) (PCT)
(licensed)
    
    Stromal Cell-Derived Factor-1 Mediates Stem Cell
Homing and Tissue Regeneration in Ischemic
Cardiomyopathy
    
    MyoCell SDF-1
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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:
    
    obtain additional patent and other proprietary protection for MyoCell and our other
product candidates;
    
    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;
    
    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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Primary MyoCath Patent
     MyoCell SDF-1 Patents
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MilestoneMilestone Activity
    
    Payment
    
    Target Completion DateFDA or foreign equivalent
approval of an IND
application covering
product candidates derived
from the Cleveland Clinic
IP
    
    $
    200,000
    
    
    60 days following completion
of FDA required safety study,
or IND Target Completion Date
of August 1, 2009Full enrollment of an FDA
approved Phase I clinical
trial for the first product
candidate derived from the
Cleveland Clinic IP
    
    $
    300,000
    
    
    August 1, 2010Full enrollment of the last
clinical trial needed prior
to a Biologic License
Application submission to
the FDA or foreign
equivalent related to the
first product candidate
derived from the Cleveland
Clinic IP
    
    $
    750,000
    
    
    January 31, 2013Biologic License Application approval by the FDA (or foreign equivalent)
    
    $
    1,000,000
    
    
    January 31, 2014
      MyoCath II Patents
  23




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##### Table of Contents



TGI 1200 Patent
  
    
    the TGI 1200 and certain disposable products used in conjunction with the devices, or,
the TGI Licensed Product Candidates;
    
    processes that use the TGI Licensed Product Candidates, or the TGI Licensed Processes;
and
    
    the cells derived using the TGI Licensed Product Candidates and/or the TGI Licensed
Processes, or the TGI Licensed Cells.
      24




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##### Table of Contents




    
    $500,000 within two years of the Effective Date;
    
    $1,250,000 within three years of the Effective Date;
    
    $2,000,000 within four years of the Effective Date; and
    
    an additional $100,000 each year after four years of the Effective Date.
   
    
    617,780 shares will vest upon our successful completion of any internationally
recognized Phase I clinical trial of a TGI Licensed Product Candidate;
    
    463,335 shares will vest upon the earlier of our net sales of $10 million of TGI
Licensed Product Candidates or our receipt of $2 million of net profits from the sale of
TGI Licensed Product Candidates; and
    
    463,335 shares will vest upon the earlier of our net sales of $100 million of TGI
Licensed Product Candidates or our receipt of $20 million of net profits from the sale of
TGI Licensed Product Candidates.
    25




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##### Table of Contents




    
    substitute a substantially equivalent non-infringing product for the infringing product;
    
    modify the infringing product so that it no longer infringes but remains functionally
equivalent; or
    
    obtains for us the right to continue using such item.
  Other License Agreements
   Sales and Marketing
 MyoCell and MyoCell SDF-1
    26




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##### Table of Contents



Medical Devices
   Collaborative Arrangements for Seeking Regulatory Approvals and Distribution of Products Outside of
the United States and Europe
 Korea
      Government Regulation
  27




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##### Table of Contents



FDA Regulation  Approval of Biological Products
  
    
    completion of preclinical studies according to good laboratory practice regulations;
    
    the submission of an IND application to the FDA, which must become effective before
human clinical trials may commence;
    
    performance of adequate and well-controlled human clinical trials according to good
clinical practices to establish the safety and efficacy of the proposed biological product
for its intended use;
    
    satisfactory completion of an FDA pre-approval inspection of the manufacturing facility
or facilities at which the product is manufactured, processes, packaged or held to assess
compliance cGMP; and
    
    the submission to, and review and approval by, the FDA of a biologics license
application, or BLA, that includes satisfactory results of preclinical testing and clinical
trials.
       28




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FDA Regulation  Approval of Medical Devices
     29




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##### Table of Contents



FDA Regulation  Post-Approval Requirements
    International Regulation
   30




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##### Table of Contents



Competition
     
    
    the safety and efficacy of our product candidates;
    
    the freedom to develop and commercialize cell-based therapies, including appropriate
patent and proprietary rights protection;
    
    the timing and scope of regulatory approvals;
 31




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##### Table of Contents




    
    the cost and availability of our products;
    
    the availability and scope of third party reimbursement programs; and
    
    the availability of alternative treatments.
  
    
    if MyoCell is safe and effective;
    
    the timing and scope of regulatory approvals; and
    
    the availability and scope of third party reimbursement programs.
        Our Executive Officers
  32




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##### Table of Contents



Name
    
    Age
    
    Position with the CompanyHoward J. Leonhardt
    
    
    47
    
    
    Chairman of the Board, Chief Executive Officer and
Chief Technology OfficerScott Bromley
    
    
    47
    
    
    Vice President of Public RelationsKristin Comella
    
    
    32
    
    
    Vice President of Research and Corporate DevelopmentMatt Fendrich
    
    
    41
    
    
    Vice President of Sales and MarketingCatherine Sulawske-Guck
    
    
    40
    
    
    Vice President of Administration and Human Resources
 Howard J. Leonhardt
 Scott Bromley.
 Kristin Comella
 Matt Fendrich.
 Catherine Sulawske-Guck.
 33




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##### Table of Contents



Item 1A. Risk Factors
 s
  Risks Related to Our Financial Position and Need for Additional Financing
 We
will need to secure additional financing in April 2009 in order
to continue to finance our operations. If we are unable to secure additional financing on acceptable terms, we may be forced
to curtail or cease our operations.
    
    
    curtail or abandon our existing business plan,
    
    reduce our headcount;
    
    default on our debt obligations under the BlueCrest Loan;
    
    file for bankruptcy;
    
    seek to sell some or all of our assets; and/or
    
    cease our operations.
    34




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##### Table of Contents



We have a substantial
amount of debt
   Our independent registered public accounting firm has expressed substantial doubt about our ability
to continue as a going concern.
  Current Adverse Economic Conditions have had a negative impact on our ability to obtain additional
financing. Our inability to obtain additional financing would have a significant adverse effect on
our operations.
  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.
  35




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##### Table of Contents




    
    establish a distribution network for and commence distribution of certain products for
which we have acquired distribution rights;
    
    commence full scale enrollment of the MARVEL Trial;
    
    continue research and development and undertake new clinical trials with respect to our
pipeline product candidates, including clinical trials related to MyoCell SDF-1;
    
    seek to raise additional capital;
    
    apply for regulatory approvals;
    
    make capital expenditures to increase our research and development and cell culturing
capabilities;
    
    add operational, financial and management information systems and personnel and develop
and protect our intellectual property;
    
    make payments pursuant to license agreements upon achievement of certain milestones; and
    
    establish sales and marketing capabilities to commercialize products for which we obtain
regulatory approval, if any.
    We have a substantial amount of debt and may incur substantial additional debt, which could
adversely affect our ability to pursue certain business objectives, obtain financing in the future
and/or react to changes in our business.
  36




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##### Table of Contents




    
    requiring the dedication of a portion of our available cash to service our indebtedness,
thereby reducing the amount of our cash available for other purposes, including funding our
research and development programs and other capital expenditures;
    
    increasing our vulnerability to general adverse economic and industry conditions;
    
    limiting our ability to obtain additional financing;
    
    limiting our ability to react to changes in technology or our business; and
    
    placing us at a possible competitive disadvantage to less leveraged competitors.
 Risks Related to Product Development
 All of our biologic product candidates are in an early stage of development and we may never
succeed in developing and/or commercializing them. We depend 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.
   
    
    our product candidates will be deemed ineffective, unsafe or will not receive regulatory
approvals;
    
    our product candidates will be too expensive to manufacture or market or will not
achieve broad market acceptance;
    
    others will hold proprietary rights that will prevent us from marketing our product
candidates; or
    
    our competitors will market products that are perceived as equivalent or superior.
 Risks Related to Commercialization of our Product Candidates
 Our success will depend in part on establishing and maintaining effective strategic partnerships,
collaborations and licensing agreements.
  37




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##### Table of Contents




    
    our collaboration agreements are likely to be for fixed terms and subject to termination
by our collaborators in the event of a material breach or lack of scientific progress by
us;
    
    our collaborators are likely to have the first right to maintain or defend our
intellectual property rights and, although we would likely seek to secure the right to
assume the maintenance and defense of our intellectual property rights if our collaborators
do not, our ability to do so may be compromised by our collaborators acts or omissions;
    
    our collaborators may utilize our intellectual property rights in such a way as to
invite litigation that could jeopardize or invalidate our intellectual property rights or
expose us to potential liability;
    
    our collaborators may underfund or not commit sufficient resources to the testing,
marketing, distribution or development of our product candidates; and
    
    our collaborators may develop alternative products either on their own or in
collaboration with others, or encounter conflicts of interest or changes in business
strategy or other business issues, which could adversely affect their willingness or
ability to fulfill their obligations to us.
  Risks Related to Our Intellectual Property
 We license substantially all of the intellectual property that is critical to our business. Any
events or circumstances that result in the termination or limitation of our rights to such
intellectual property could have a material adverse effect on our business.
   38




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Risks Related to Our Common Stock
 An active, liquid and orderly trading market for our common stock may not develop.
     
    
    publications of clinical trial results by clinical investigators or others about our
products and competitors products and/or our industry;
    
    changes by securities analysts in financial estimates of our operating results and the
operating results of our competitors;
    
    publications of research reports by securities analysts about us, our competitors or our
industry;
    
    fluctuations in the valuation of companies perceived by investors to be comparable to
us;
    
    actual or anticipated fluctuations in our quarterly or annual operating results;
    
    retention and departures of key personnel;
 39




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##### Table of Contents




    
    our failure or the failure of our competitors to meet analysts projections or guidance
that we or our competitors may give to the market;
    
    strategic decisions by us or our competitors, such as acquisitions, divestitures,
spin-offs, joint ventures, strategic investments or changes in business strategy;
    
    the passage of legislation or other regulatory developments affecting us or our
industry;
    
    speculation in the press or investment community; and
    
    natural disasters, terrorist acts, acts of war or periods of widespread civil unrest.
  Anti-takeover provisions of Florida law, our articles of incorporation and our bylaws may prevent
or delay an acquisition of us that shareholders may consider favorable or attempts to replace or
remove our management that could be beneficial to our shareholders.
  We do not intend to pay cash dividends on our common stock in the foreseeable future and,
accordingly, capital appreciation of our common stock, if any, will be a shareholders sole source
of gain from an investment in our common stock.
  40




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##### Table of Contents



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.
  41




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##### Table of Contents



Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
    
    our MyoCell cell culturing facility for supply within the United States; and
    
    a fully equipped cell culturing laboratory where we perform experimental work in the
areas of cell culturing, cell engraftment, and other advanced research projects related to
our core business.
  
 Item 3. Legal Proceedings
      42




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  43




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information
  Sales PricePeriod
    
    High
    
    LowFebruary 19, 2008 through March 31, 2008
    
    $
    5.25
    
    
    $
    3.61Second quarter ended June 30, 2008
    
    
    4.56
    
    
    
    2.27Third quarter ended September 30, 2008
    
    
    5.20
    
    
    
    2.05Fourth quarter ended December 31, 2008
    
    
    2.62
    
    
    
    0.74
   Holders
  Dividends
  Securities Authorized For Issuance Under Equity Compensation Plans
  44




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##### Table of Contents



Weighted-
    
    Number of securitiesNumber of securities
    
    average exercise
    
    remaining availableto be issued upon
    
    price of
    
    for issuance underexercise of
    
    outstanding
    
    equity compensationoutstanding options
    
    options
    
    plansEquity compensation
plans approved by
security holders
(1)
    
    
    2,279,619
    
    
    $
    5.11
    
    
    
    5,714,333Equity compensation
plans not approved
by security holders
(2)
    
    
    2,951,018
    
    
    $
    6.65
    
    
    
    0
 
 (1)
    
    Consists of our 1999 Officers and Employees Stock Option Plan, 1999 Directors and
Consultants Stock Option Plan and Omnibus Equity Compensation Plan(2)
    
    Includes: 
    
    a warrant issued to Tissue Genesis, Inc. to purchase 1,544,450 shares of our common
stock at $7.69 per share, which expires in December 2026 (See Note 3 Collaborative License
and Research/Development Agreementsof the Notes to the Consolidated Financial
Statements);
    
    warrants issued to the Guarantors in connection with the Bank of America Loan to
purchase an aggregate of 495,780 shares of our common stock at $7.69 per share, which
expire at various dates from May 2017 through October 2017 (See Note 6 Notes Payable 
Bank of America Note Payable of the Notes to the Consolidated Financial Statements);
    
    a warrant issued to one of our officers to purchase 188,423 shares of our common stock
at $5.67 per share, which expires in August 2016;
    
    a warrant issued to BlueCrest Capital in connection with the BlueCrest Loan to purchase
an aggregate of 65,030 shares of our common stock at $7.69 per share, which expire in May
2017 (See Note 6 Notes Payable  BlueCrest Capital Finance Note Payable of the Notes to
the Consolidated Financial Statements);
    
    a warrant issued to a strategic partner to purchase 32,515 shares of our common stock at
$7.69 per share, which expires in February 2016;
    
    warrants issued to consultants to purchase an aggregate of 154,411 shares of our common
stock at prices ranging from $1.09 to $6.00 per share, which expire at various dates from
April 2013 through September 2017;
    
    warrants issued to the underwriters of our initial public offering in February 2008 to
purchase an aggregate of 77,000 shares of our common stock at $6.56 per share, which expire
in February 2013; and
    
    warrants issued in connection with our private placement in October 2008 to purchase an
aggregate of 393,409 shares of our common stock at prices ranging from $1.90 to $2.60 per
share, which expire in October 2011;
 Recent Sales of Unregistered Securities
    45




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Issuer Purchases of Equity Securities
  Use of Proceeds
   
    
    we raised approximately $1.45 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 $4.32 million; and
    
    we generated approximately $4.56 million of cash proceeds from the offering, which was
approximately $3.11 million greater than the net proceeds of this offering due to our
payment of $3.11 million of various offering expenses prior the completion of the offering.
  46




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Item 6. Selected Financial Data
  Year Ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008(In thousands, except per share data)Consolidated Statement of Operations
Data:Revenues
    
    $
    86
    
    
    $
    135
    
    
    $
    106
    
    
    $
    292
    
    
    $
    57Cost of sales
    
    
    46
    
    
    
    87
    
    
    
    73
    
    
    
    66
    
    
    
    11Gross profit
    
    
    40
    
    
    
    48
    
    
    
    33
    
    
    
    226
    
    
    
    46Development revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    97Expenses:Research and development
    
    
    3,787
    
    
    
    4,534
    
    
    
    6,878
    
    
    
    11,314
    
    
    
    6,167Marketing, general and administrative
    
    
    1,731
    
    
    
    2,831
    
    
    
    6,372
    
    
    
    3,436
    
    
    
    5,644Depreciation and amortization
    
    
    34
    
    
    
    46
    
    
    
    91
    
    
    
    184
    
    
    
    182Total expenses
    
    
    5,552
    
    
    
    7,411
    
    
    
    13,341
    
    
    
    14,934
    
    
    
    11,993Loss from operations
    
    
    (5,512
    )
    
    
    (7,363
    )
    
    
    (13,308
    )
    
    
    (14,687
    )
    
    
    (11,850
    )Net interest income (expense)
    
    
    (7
    )
    
    
    36
    
    
    
    127
    
    
    
    (3,380
    )
    
    
    (2,355
    )Loss before income taxes
    
    
    (5,519
    )
    
    
    (7,327
    )
    
    
    (13,181
    )
    
    
    (18,067
    )
    
    
    (14,205
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (5,519
    )
    
    $
    (7,327
    )
    
    $
    (13,181
    )
    
    $
    (18,067
    )
    
    $
    (14,205
    )Basic and diluted net loss per share
    
    $
    (0.60
    )
    
    $
    (0.69
    )
    
    $
    (1.10
    )
    
    $
    (1.37
    )
    
    $
    (0.97
    )Weighted average shares outstanding 
basic and diluted
    
    
    9,189
    
    
    
    10,653
    
    
    
    12,015
    
    
    
    13,210
    
    
    
    14,593
 As of December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    182
    
    
    $
    5,158
    
    
    $
    5,025
    
    
    $
    5,492
    
    
    $
    50Working capital (deficit)
    
    
    (2,000
    )
    
    
    4,210
    
    
    
    3,204
    
    
    
    (7,687
    )
    
    
    (13,809
    )Total assets
    
    
    729
    
    
    
    5,869
    
    
    
    6,508
    
    
    
    11,324
    
    
    
    1,855Notes payable  current (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,671
    
    
    
    7,899Note payable  long-term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,943
    
    
    
    1,044Deficit accumulated during the
development stage
    
    
    (44,005
    )
    
    
    (51,332
    )
    
    
    (64,513
    )
    
    
    (82,580
    )
    
    
    (96,785
    )Total shareholders equity (deficit)
    
    
    (1,857
    )
    
    
    4,586
    
    
    
    4,311
    
    
    
    (5,505
    )
    
    
    (14,236
    )
 
 (a)
    
    Subsequent to December 31, 2008, we triggered an event of default on the BlueCrest Loan. In
April 2009, we executed an amendment to the BlueCrest Loan in order to prevent immediate
repayment of the outstanding principal balance of the BlueCrest Loan. The portion of the
principal amount of the BlueCrest Loan that matures subsequent to December 31, 2009 is
included in Note payable  long-term. 47




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis by our management of our financial condition and results
of operations should be read in conjunction with our consolidated financial statements and the
accompanying notes included in this Annual Report on Form 10-K .
 Cautionary Statement Regarding Forward-Looking Statements
   Our Ability To Continue as a Going Concern
  Overview
  Biotechnology Product Candidates
  48




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##### Table of Contents



®
 ®
 Intelligent Devices  Distribution Agreements
   49




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##### Table of Contents



Financial Operations Overview
 Revenues
   Cost of Sales
  Research and Development
    50




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##### Table of Contents



Marketing, General and Administrative
  Stock-Based Compensation
   
    
    our financial position and historical financial performance;
    
    the illiquidity of our capital stock as a private company prior to our IPO;
    
    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, such as our initial public offering in February
2008.
  51




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##### Table of Contents



Interest Expense
  Critical Accounting Policies
  Stock-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
  52




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##### Table of Contents



Research and Development Activities
  Results of Operations
  Comparison of Years Ended December 31, 2008 and December 31, 2007
 Revenues
  Development Revenues
  Cost of Sales
  Research and Development
  53




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##### Table of Contents



Existing Capital Resources and Future Capital
Requirements Risk Factors  We will need to secure additional financing ...
 Marketing, General and Administrative
  Interest Income
  Interest Expense
   Liquidity and Capital Resources
  Operating Activities
   54




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##### Table of Contents




    
    an increase in accrued expenses and deferred rent of $3.4 million; and
    
    an increase in accounts payable of $1.3 million.
  Investing Activities
  Financing Activities
      Existing Capital Resources and Future Capital Requirements
  55




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Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Organization and Summary of Significant Accounting Policies
 Effects of Being a Public Company
    56




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
   
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     57




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Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Internal
Control-Integrated Framework
       Limitations in Control Systems
  58




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Changes In Internal Control Over Financial Reporting
  
 Item 9B. Other Information
   59




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  60




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
      Exhibit No.
    
    Exhibit Description3.1(6)
    
    Amended and Restated Articles of Incorporation of the registrant, as amended3.2(9)
    
    Articles of Amendment to the Articles of Incorporation of the registrant3.2(8)
    
    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 registrant4.2(12)
    
    Notice of Event of Default, from BlueCrest Venture Finance Master Fund Limited to the
Company, dated January 28, 20094.3(12)
    
    Notice of Acceleration, from BlueCrest Venture Finance Master Fund Limited to the Company,
dated February 2, 20094.4(13)
    
    Amendment to Loan and Security Agreement, between the Company and BlueCrest Venture Finance
Master Fund Limited, dated as of April 2, 20094.5(13)
    
    Grant of Security Interest (Patents), between the Company and BlueCrest Venture Finance
Master Fund Limited, dated as of April 2, 20094.6(13)
    
    Security Agreement (Intellectual Property), between the Company and BlueCrest Venture
Finance Master Fund Limited, dated as of April 2, 20094.7(13)
    
    Subordination Agreement, by Hunton & Williams, LLP in favor of BlueCrest Venture Finance
Master Fund Limited, entered into and effective April 2, 20094.8(13)
    
    Amended and Restated Promissory Note, dated April 2, 2009, by the Company to BlueCrest
Venture Finance Master Fund Limited4.9(13)
    
    Warrant to purchase 1,315,542 shares of the registrants common stock, dated April 2, 2009,
issued to BlueCrest Venture Finance Master Fund Limited4.10*
    
    Warrant to purchase 451,043 shares of the registrants common stock, dated April 2, 2009,
issued to Rogers Telecommunications Limited4.11*
    
    Warrant to purchase 173,638 shares of the registrants common stock, dated April 2, 2009,
issued to Hunton & Williams, LLP10.1**(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 Leonhardt
 61




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Exhibit No.
    
    Exhibit Description10.10(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(5)
    
    Warrant to purchase shares of the registrants common stock issued to BlueCrest Capital
Finance, L.P.10.18(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 12, 2007, by and
between the registrant and Samuel S. Ahn, M.D.10.19(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 12, 2007, by and
between the registrant and Dan Marino10.20(6)
    
    Warrant to purchase shares of the registrants common stock issued to Samuel S. Ahn, M.D.10.21(6)
    
    Loan Guarantee, Payment and Security Agreement, dated as of September 19, 2007, by and
between the registrant and Jason Taylor10.22(7)
    
    Loan Guarantee, Payment and Security Agreement, dated as of October 10, 2007, by and
between the registrant and Howard and Brenda Leonhardt10.23(7)
    
    Warrant to purchase shares of the registrants common stock issued to Howard and Brenda
Leonhardt10.24(7)
    
    Second Amendment to Loan Guarantee, Payment and Security Agreement, dated as of October 10,
2007, by and between the registrant and Howard and Brenda Leonhardt10.25(7)
    
    Second Amendment to Loan Guarantee, Payment and Security Agreement, dated as of October 10,
2007, by and between the registrant and William P. Murphy, Jr., M.D.10.26**(10)
    
    Bioheart, Inc. Omnibus Equity Compensation Plan10.27(11)
    
    Form of Warrant Agreement for October 2008 Private Placement10.28(11)
    
    Form of Registration Rights Agreement for October 2008 Private Placement14.1(2)
    
    Code of Ethics for Chief Executive Officer, Chief Financial Officer, Chief Accounting
Officer and persons performing similar functions14.2(2)
    
    Code of Business Conduct and Ethics23.1*
    
    Consent of Jewett, Schwartz, Wolfe & Associates31.1*
    
    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 2002
 
 *
    
    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 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 62




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##### Table of Contents



(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(8)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on July 3, 2008(9)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 8, 2008(10)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on August 14, 2008(11)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 14, 2008(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 3, 2009(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 8, 2009 63




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##### Table of Contents



SIGNATURES
  BIOHEART, INC.By:
    /s/ Howard J. LeonhardtHoward J. LeonhardtChairman of the Board, Chief Executive
Officer and Chief Technology Officer
(Principal Executive Officer, Principal
Financial Officer and Principal Accounting
Officer)   SIGNATURE
    
    TITLE
    
    DATE/s/
Howard J. Leonhardt

Howard J. Leonhardt
    
    Chairman of the
Board, Chief
Executive Officer and
Chief Technology
Officer
(Principal Executive
Officer, Principal
Financial Officer and
Principal Accounting
Officer)
    
    April 15, 2009Bruce C. Carson
    
    Director/s/ Peggy A. Farley

Peggy A. Farley
    
    Director
    
    April 15, 2009/s/ Karl E. Groth, Ph.D.

Karl E. Groth, Ph.D.
    
    Director
    
    April 15, 2009/s/ William P. Murphy, Jr., M.D.

William P. Murphy, Jr., M.D.
    
    Director
    
    April 15, 2009/s/ Richard T. Spencer III

Richard T. Spencer III
    
    Director
    
    April 15, 2009
 64




---



##### 



FORM 10-K  ITEM 8
 BIOHEART, INC. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    F-3Consolidated Statements of Operations for the years ended December 31,
2008 and 2007 and the cumulative period from August 12, 1999 (date of
inception) to December 31, 2008
    
    F-4Consolidated Statement of Shareholders (Deficit) Equity for the period
from August 12, 1999 (date of inception) through December 31, 2008
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31,
2008 and 2007 and the cumulative period from August 12, 1999 (date of
inception) to December 31, 2008
    
    F-8Notes to Consolidated Financial Statements
    
    F-9
   F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 F-2




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Balance Sheets
 As of December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    50,091
    
    
    $
    5,492,157Receivables
    
    
    57,258
    
    
    
    52,642Inventory
    
    
    395,034
    
    
    
    372,054Prepaid expenses and other current assets
    
    
    723,882
    
    
    
    261,030Total current assets
    
    
    1,226,265
    
    
    
    6,177,883Property and equipment, net
    
    
    281,107
    
    
    
    444,506Deferred offering costs
    
    
    
    
    
    
    3,484,070Deferred loan costs, net
    
    
    278,945
    
    
    
    1,146,716Other assets
    
    
    68,854
    
    
    
    71,148Total assets
    
    $
    1,855,171
    
    
    $
    11,324,323LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilitiesAccounts payable
    
    $
    1,700,841
    
    
    $
    2,134,256Accrued expenses
    
    
    4,970,518
    
    
    
    4,511,775Deferred revenue
    
    
    465,286
    
    
    
    547,286Notes payable  current
    
    
    7,898,960
    
    
    
    6,671,112Total current liabilities
    
    
    15,035,605
    
    
    
    13,864,429Deferred rent
    
    
    11,141
    
    
    
    21,426Note payable  long term
    
    
    1,044,472
    
    
    
    2,943,432Total liabilities
    
    
    16,091,218
    
    
    
    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) 75,000,000 and
50,000,000 shares authorized as of December 31,
2008 and 2007, respectively; 15,739,196 and
13,347,138 shares issued and outstanding as of
December 31, 2008 and December 31, 2007,
respectively
    
    
    15,739
    
    
    
    13,347Additional paid-in capital
    
    
    82,532,746
    
    
    
    77,061,296Deficit accumulated during the development stage
    
    
    (96,784,532
    )
    
    
    (82,579,607
    )Total shareholders deficit
    
    
    (14,236,047
    )
    
    
    (5,504,964
    )Total liabilities and shareholders deficit
    
    $
    1,855,171
    
    
    $
    11,324,323
  F-3




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Consolidated Statements of Operations
 CumulativePeriod fromAugust 12,1999 (date ofinception) toYears Ended December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008Revenues
    
    $
    57,051
    
    
    $
    292,309
    
    
    $
    784,873Cost of sales
    
    
    10,962
    
    
    
    65,830
    
    
    
    325,361Gross profit
    
    
    46,089
    
    
    
    226,479
    
    
    
    459,512Development revenues
    
    
    97,000
    
    
    
    20,500
    
    
    
    117,500Expenses:Research and development
    
    
    6,166,777
    
    
    
    11,313,554
    
    
    
    62,867,384Marketing, general and administrative
    
    
    5,643,916
    
    
    
    3,435,991
    
    
    
    28,504,804Depreciation and amortization
    
    
    182,329
    
    
    
    184,391
    
    
    
    617,006Total expenses
    
    
    11,993,022
    
    
    
    14,933,936
    
    
    
    91,989,194Loss from operations
    
    
    (11,849,933
    )
    
    
    (14,686,957
    )
    
    
    (91,412,182
    )Interest income
    
    
    45,733
    
    
    
    327,636
    
    
    
    762,253Interest expense
    
    
    (2,400,725
    )
    
    
    (3,707,763
    )
    
    
    (6,134,603
    )Net interest (expense) income
    
    
    (2,354,992
    )
    
    
    (3,380,127
    )
    
    
    (5,372,350
    )Loss before income taxes
    
    
    (14,204,925
    )
    
    
    (18,067,084
    )
    
    
    (96,784,532
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (14,204,925
    )
    
    $
    (18,067,084
    )
    
    $
    (96,784,532
    )Loss per share  basic and diluted
    
    $
    (0.97
    )
    
    $
    (1.37
    )Weighted average shares outstanding  basic and diluted
    
    
    14,593,387
    
    
    
    13,210,347
  F-4




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Consolidated Statement of Shareholders (Deficit) Equity
 DeficitAccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    During theCommon Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Contributed
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Capital
    
    
    Stage
    
    
    TotalBalance as of August 12, 1999
(date of inception)
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Issuance of common stock
    
    
    4,324,458
    
    
    
    4,324
    
    
    
    395,676
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    98,000
    
    
    
    (98,000
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,000
    
    
    
    
    
    
    
    
    
    
    
    49,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (903,290
    )
    
    
    (903,290
    )Balance as of December 31, 1999
    
    
    4,324,458
    
    
    $
    4,324
    
    
    $
    493,676
    
    
    $
    (49,000
    )
    
    $
    
    
    
    $
    (903,290
    )
    
    $
    (454,290
    )Issuance of common stock (net
of issuance costs of $61,905)
    
    
    1,493,575
    
    
    
    1,494
    
    
    
    9,607,201
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,608,695Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    2,559,000
    
    
    
    (2,559,000
    )
    
    
    
    
    
    
    
    
    
    
    Fair value of warrants
granted in exchange for
licenses and intellectual
property
    
    
    
    
    
    
    
    
    
    
    5,220,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,220,000Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,080,692
    
    
    
    
    
    
    
    
    
    
    
    1,080,692Contributed capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,050,000
    
    
    
    
    
    
    
    1,050,000Common stock issued in
exchange for services
    
    
    7,964
    
    
    
    8
    
    
    
    51,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,001Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,113,933
    )
    
    
    (14,113,933
    )Balance as of December 31, 2000
    
    
    5,825,997
    
    
    $
    5,826
    
    
    $
    17,931,870
    
    
    $
    (1,527,308
    )
    
    $
    1,050,000
    
    
    $
    (15,017,223
    )
    
    $
    2,443,165Issuance of common stock (net
of issuance costs of $98,996)
    
    
    985,667
    
    
    
    986
    
    
    
    6,282,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,283,004Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    779,000
    
    
    
    (779,000
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,523,000
    
    
    
    
    
    
    
    
    
    
    
    1,523,000Conversion of contributed
capital to common stock
    
    
    81,084
    
    
    
    81
    
    
    
    1,049,919
    
    
    
    
    
    
    
    (1,050,000
    )
    
    
    
    
    
    
    Common stock issued in
exchange for services
    
    
    8,291
    
    
    
    8
    
    
    
    53,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,001Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,173,464
    )
    
    
    (8,173,464
    )Balance as of December 31, 2001
    
    
    6,901,039
    
    
    $
    6,901
    
    
    $
    26,096,800
    
    
    $
    (783,308
    )
    
    $
    
    
    
    $
    (23,190,687
    )
    
    $
    2,129,706Issuance of common stock
    
    
    1,092,883
    
    
    
    1,093
    
    
    
    7,075,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,076,198Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    143,521
    
    
    
    (143,521
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613,083
    
    
    
    
    
    
    
    
    
    
    
    613,083Common stock issued in
exchange for services
    
    
    35,137
    
    
    
    35
    
    
    
    227,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,503Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,257,954
    )
    
    
    (9,257,954
    )Balance as of December 31, 2002
    
    
    8,029,059
    
    
    $
    8,029
    
    
    $
    33,542,894
    
    
    $
    (313,746
    )
    
    $
    
    
    
    $
    (32,448,641
    )
    
    $
    788,536Issuance of common stock
    
    
    561,701
    
    
    
    562
    
    
    
    3,181,712
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,182,274Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (155,893
    )
    
    
    155,893
    
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,371
    
    
    
    
    
    
    
    
    
    
    
    79,371Common stock issued in
exchange for services
    
    
    144,300
    
    
    
    144
    
    
    
    823,743
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    823,887Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,037,528
    )
    
    
    (6,037,528
    )Balance as of December 31, 2003
    
    
    8,735,060
    
    
    $
    8,735
    
    
    $
    37,392,456
    
    
    $
    (78,482
    )
    
    $
    
    
    
    $
    (38,486,169
    )
    
    $
    (1,163,460
    )
  F-5




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Consolidated Statement of Shareholders (Deficit) Equity  (Continued)
 DeficitAccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    During theCommon Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Contributed
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Capital
    
    
    Stage
    
    
    TotalBalance as of December 31, 2003
    
    
    8,735,060
    
    
    $
    8,735
    
    
    $
    37,392,456
    
    
    $
    (78,482
    )
    
    $
    
    
    
    $
    (38,486,169
    )
    
    $
    (1,163,460
    )Issuance of common stock
    
    
    808,570
    
    
    
    809
    
    
    
    4,580,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,580,913Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    637,858
    
    
    
    (637,858
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,812
    
    
    
    
    
    
    
    
    
    
    
    148,812Common stock issued in
exchange for services
    
    
    17,004
    
    
    
    17
    
    
    
    96,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,331Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,519,151
    )
    
    
    (5,519,151
    )Balance as of December 31, 2004
    
    
    9,560,634
    
    
    $
    9,561
    
    
    $
    42,706,732
    
    
    $
    (567,528
    )
    
    $
    
    
    
    $
    (44,005,320
    )
    
    $
    (1,856,555
    )Issuance of common stock (net
of issuance costs of $32,507)
    
    
    1,994,556
    
    
    
    1,994
    
    
    
    11,265,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,267,554Issuance of common stock in
lieu of cash compensation
    
    
    1,210
    
    
    
    1
    
    
    
    6,852
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,853Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,566,147
    
    
    
    (1,566,147
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,952,350
    
    
    
    
    
    
    
    
    
    
    
    1,952,350Issuance of common stock in
exchange for release of
accrued liabilities
    
    
    95,807
    
    
    
    96
    
    
    
    542,691
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    542,787Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,326,557
    )
    
    
    (7,326,557
    )Balance as of December 31, 2005
    
    
    11,652,207
    
    
    $
    11,652
    
    
    $
    56,087,982
    
    
    $
    (181,325
    )
    
    $
    
    
    
    $
    (51,331,877
    )
    
    $
    4,586,432Reclassification of deferred
compensation due to adoption
of SFAS No. 123(R)
    
    
    
    
    
    
    
    
    
    
    (181,325
    )
    
    
    181,325
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock (net
of issuance costs of
$100,038)
    
    
    1,069,699
    
    
    
    1,069
    
    
    
    8,123,623
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,124,692Equity instruments issued in
connection with settlement
agreement
    
    
    47,657
    
    
    
    48
    
    
    
    3,294,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,294,429Common stock issued in
exchange for services
    
    
    2,903
    
    
    
    3
    
    
    
    16,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,443Common stock issued in
exchange for distribution
rights and intellectual
property
    
    
    13,006
    
    
    
    13
    
    
    
    99,984
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,997Warrants issued in exchange
for licenses and intellectual
property
    
    
    
    
    
    
    
    
    
    
    144,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,867Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,224,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,224,430Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,180,646
    )
    
    
    (13,180,646
    )Balance as of December 31, 2006
    
    
    12,785,472
    
    
    $
    12,785
    
    
    $
    68,810,382
    
    
    $
    
    
    
    $
    
    
    
    $
    (64,512,523
    )
    
    $
    4,310,644Issuance of common stock (net
of issuance costs of
$150,000)
    
    
    529,432
    
    
    
    530
    
    
    
    3,920,186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,920,716Exercise of stock options
    
    
    31,955
    
    
    
    32
    
    
    
    181,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,040Warrants issued in connection
with notes payable
    
    
    
    
    
    
    
    
    
    
    3,139,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,139,639Warrants issued in exchange
for services
    
    
    
    
    
    
    
    
    
    
    30,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,559Warrants issued in exchange
for licenses and intellectual
property
    
    
    
    
    
    
    
    
    
    
    48,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,289Shares issued in connection
with reverse stock split
    
    
    279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    931,233
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    931,233Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,067,084
    )
    
    
    (18,067,084
    )Balance as of December 31, 2007
    
    
    13,347,138
    
    
    $
    13,347
    
    
    $
    77,061,296
    
    
    $
    
    
    
    $
    
    
    
    $
    (82,579,607
    )
    
    $
    (5,504,964
    )
  F-6




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Consolidated Statement of Shareholders (Deficit) Equity  (Continued)
 DeficitAccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    During theCommon Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Contributed
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Capital
    
    
    Stage
    
    
    TotalBalance as of December 31, 2007
    
    
    13,347,138
    
    
    $
    13,347
    
    
    $
    77,061,296
    
    
    $
    
    
    
    $
    
    
    
    $
    (82,579,607
    )
    
    $
    (5,504,964
    )Initial public offering of
common stock (net of offering
costs of $4,327,171)
    
    
    1,100,000
    
    
    
    1,100
    
    
    
    1,446,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447,829Issuance of common stock
    
    
    1,230,280
    
    
    
    1,230
    
    
    
    2,117,275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,118,505Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,317,745
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,320,995Warrants issued in exchange
for services
    
    
    
    
    
    
    
    
    
    
    255,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251,850Warrants issued in connection
with notes payable
    
    
    
    
    
    
    
    
    
    
    168,387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168,387Warrant issued in connection
with settlement agreement
    
    
    
    
    
    
    
    
    
    
    87,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,200Exercise of stock options
    
    
    61,778
    
    
    
    62
    
    
    
    79,014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,076Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,204,925
    )
    
    
    (14,204,925
    )Balance as of December 31, 2008
    
    
    15,739,196
    
    
    $
    15,739
    
    
    $
    82,532,746
    
    
    $
    
    
    
    $
    
    
    
    $
    (96,784,532
    )
    
    $
    (14,236,047
    )
  F-7




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Consolidated Statements of Cash Flows
 CumulativePeriod fromAugust 12, 1999(date of inception)Years Ended December 31,
    
    
    to December 31,2008
    
    
    2007
    
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (14,204,925
    )
    
    $
    (18,067,084
    )
    
    $
    (96,784,532
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    182,329
    
    
    
    184,391
    
    
    
    617,006Bad debt expense
    
    
    
    
    
    
    
    
    
    
    165,000Amortization of warrants issued in exchange for
licenses and intellectual property
    
    
    
    
    
    
    48,289
    
    
    
    5,413,156Amortization of warrants issued in connection with
notes payable
    
    
    763,631
    
    
    
    2,407,677
    
    
    
    3,171,308Amortization of loan costs
    
    
    442,201
    
    
    
    486,539
    
    
    
    928,740Warrants issued in exchange for services
    
    
    255,100
    
    
    
    30,559
    
    
    
    285,659Equity instruments issued in connection with
settlement agreement
    
    
    87,200
    
    
    
    
    
    
    
    3,381,629Common stock issued in exchange for services
    
    
    
    
    
    
    
    
    
    
    1,277,017Common stock issued in exchange for distribution
rights and intellectual property
    
    
    
    
    
    
    
    
    
    
    99,997Stock-based compensation
    
    
    1,317,745
    
    
    
    931,233
    
    
    
    8,919,716Change in assets and liabilitiesReceivables
    
    
    (4,616
    )
    
    
    27,201
    
    
    
    (57,258
    )Inventory
    
    
    (22,980
    )
    
    
    (208,233
    )
    
    
    (395,034
    )Prepaid expenses and other current assets
    
    
    (462,852
    )
    
    
    (164,868
    )
    
    
    (723,882
    )Other assets
    
    
    2,294
    
    
    
    (2,294
    )
    
    
    (68,854
    )Accounts payable
    
    
    (182,613
    )
    
    
    1,291,297
    
    
    
    1,691,146Accrued expenses and deferred rent
    
    
    930,457
    
    
    
    3,415,425
    
    
    
    5,359,445Deferred revenue
    
    
    (82,000
    )
    
    
    (109,213
    )
    
    
    465,287Net cash used in operating activities
    
    
    (10,979,029
    )
    
    
    (9,729,081
    )
    
    
    (66,254,454
    )Cash flows from investing activitiesAcquisitions of property and equipment
    
    
    (18,930
    )
    
    
    (101,995
    )
    
    
    (898,112
    )Net cash used in investing activities
    
    
    (18,930
    )
    
    
    (101,995
    )
    
    
    (898,112
    )Cash flows from financing activitiesProceeds from issuance of common stock, net
    
    
    2,118,506
    
    
    
    3,920,716
    
    
    
    57,612,553Proceeds from (payments for) initial public offering
of common stock, net
    
    
    4,236,652
    
    
    
    (2,564,405
    )
    
    
    1,447,829Proceeds from exercise of stock options
    
    
    79,076
    
    
    
    181,040
    
    
    
    260,116Proceeds from notes payable
    
    
    1,000,000
    
    
    
    10,000,000
    
    
    
    11,200,000Repayment of notes payable
    
    
    (1,671,112
    )
    
    
    (385,456
    )
    
    
    (2,256,568
    )Payment of loan costs
    
    
    (207,229
    )
    
    
    (854,045
    )
    
    
    (1,061,273
    )Net cash provided by financing activities
    
    
    5,555,893
    
    
    
    10,297,850
    
    
    
    67,202,657Net increase (decrease) in cash and cash equivalents
    
    
    (5,442,066
    )
    
    
    466,774
    
    
    
    50,091Cash and cash equivalents, beginning of period
    
    
    5,492,157
    
    
    
    5,025,383
    
    
    
    Cash and cash equivalents, end of period
    
    $
    50,091
    
    
    $
    5,492,157
    
    
    $
    50,091Disclosure of cash flow informationInterest paid
    
    $
    511,319
    
    
    $
    319,680
    
    
    $
    857,114Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    
  F-8




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 
 Notes to Consolidated Financial Statements
 1. Organization and Summary of Significant Accounting Policies
 Organization and Business
 ® ®
 Development Stage
 Accounting and Reporting by Development
Stage Enterprises ,
  Basis of Presentation
  Reverse Stock Split
  F-9




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 Initial Public Offering
     NASDAQ Delisting
   Use of Estimates
  F-10




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 Fair Value of Financial Instruments
 Disclosures
about Fair Value of Financial Instruments
 Cash and Cash Equivalents
  Accounts Receivable
  Inventory
   2008
    
    
    2007Finished product
    
    $
    338,280
    
    
    $
    315,300Raw materials
    
    
    56,754
    
    
    
    56,754Total inventory
    
    $
    395,034
    
    
    $
    372,054
 Prepaid Expenses and Other Current Assets
  F-11




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets,
 Deferred Loan Costs
  Revenue Recognition
 Revenue Recognition in Financial
Statements Revenue Recognition
   F-12




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 Research and Development Expenses
 Accounting for Research and
Development Costs.
 Marketing Expense
  Income Taxes
 Accounting for Income Taxes, Accounting for Uncertainty in Income Taxes,
 Accounting for Contingencies.
     Stock Options and Warrants
 Share-Based Payment
 F-13




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
  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 Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active
  F-14




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##### Table of Contents



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




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
  Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities  An Amendment of FASB Statement No. 133
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets Business Combinations,
 The Hierarchy of Generally Accepted Accounting
Principles , The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles
 F-16




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement)
 Determining Whether an Instrument (or an
Embedded Feature) Is Indexed to an Entitys Own Stock
  Reclassifications
  2. Going Concern
   F-17




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
   3. Collaborative License and Research/Development Agreements
    
    
    The parties agreed that the Company would issue, and the Company did issue, to CTI 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 Original
License Agreement, issuing to CTI or Dr. Law 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 per share. 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 CTI a $3.0 million milestone
payment would be triggered upon the Companys commencement of a bona fide U.S. Phase II
human clinical trial study that utilizes technology claimed under U.S. Patent No. 5,130,141
with FDA approval in the United States, instead of, as originally contemplated under the
Original License Agreement, upon initiation of an FDA approved human clinical trial study
of such technology in the United States.
   F-18




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
    4. Property and Equipment
  2008
    
    
    2007Laboratory and medical equipment
    
    $
    352,358
    
    
    $
    335,428Furniture, fixtures and equipment
    
    
    130,916
    
    
    
    130,916Computer equipment
    
    
    52,793
    
    
    
    50,793Leasehold improvements
    
    
    362,046
    
    
    
    362,046898,113
    
    
    
    879,183Less accumulated depreciation and amortization
    
    
    (617,006
    )
    
    
    (434,677
    )$
    281,107
    
    
    $
    444,506
  5.  Accrued Expenses
  F-19




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
 2008
    
    
    2007License and royalty fees
    
    $
    3,670,000
    
    
    $
    3,460,000Amounts payable to the Guarantors of the Companys loan
agreement with Bank of America, including fees and interest
    
    
    926,628
    
    
    
    408,759Interest payable on notes payable
    
    
    262,950
    
    
    
    87,435Expenses incurred in connection with the initial public offering
    
    
    
    
    
    
    482,000Other
    
    
    110,940
    
    
    
    73,581$
    4,970,518
    
    
    $
    4,511,775
 6. Notes Payable
  2008
    
    
    2007Bank of America note payable. Terms described below
    
    $
    5,000,000
    
    
    $
    5,000,000BlueCrest Capital Finance note payable. Monthly
payments of principal and interest as described
below
    
    
    2,943,432
    
    
    
    4,614,544Short-term note payable. Terms described below
    
    
    1,000,000
    
    
    
    8,943,432
    
    
    
    9,614,544Less current portion
    
    
    (7,898,960
    )
    
    
    (6,671,112
    )Notes
payable  long term
    
    $
    1,044,472
    
    
    $
    2,943,432
  2009
    
    $
    7,898,9602010
    
    
    1,044,472$
    8,943,432
 Bank of America Note Payable
   F-20




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
      F-21




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
     BlueCrest Capital Finance Note Payable
   F-22




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
       Short-term Note Payable
  F-23




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes
to Consolidated Financial Statements  (Continued)
   7. Commitments and Contingencies
 Leases
    Year ending December 31,2009
    
    $
    133,0002010
    
    
    11,000Total
    
    $
    144,000
  Accounting for Leases, Issues Related to Accounting for Leases,
 Royalty Payments
   William Beaumont Hospital
  F-24




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
   Year Ending December 31,2009
    
    $
    210,0002010
    
    
    210,0002011
    
    
    210,0002012
    
    
    210,0002013
    
    
    210,0002014  2015
    
    
    420,000Total
    
    $
    1,470,000
 Contingency
  8. Legal Proceedings
   F-25




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
          F-26




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Other
  9. Related Party Transactions
       
    
    The Company issued to the officer 47,658 shares of its common stock and agreed to pay
the officers income taxes related to the receipt of the shares of common stock, estimated
to be approximately $153,000. The fair value of the shares of common stock was determined
to be $7.69 per share, which was based on a current valuation of the Company. The aggregate
fair value of the shares of common stock issued and the $153,000 in cash was approximately
$500,000, which was recorded as compensation expense in August 2006.
    
    The Company issued to the officer a warrant to purchase 188,423 shares of the Companys
common stock at an exercise price of $5.67 per share. This warrant is exercisable
immediately and expires 10 years from the date of issuance. The approximate fair value of
this warrant of $1,200,000 was recorded as compensation expense in August 2006.
    
    The Company issued to the officer stock options to purchase up to 282,635 shares of the
Companys common stock at an exercise price of $5.67 per share. These stock options are
exercisable immediately and expire 10
 F-27




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 years from the date of grant. The fair value of these stock options of approximately
$1,800,000 was recorded as compensation expense in August 2006.
    
    As consideration for continued employment as an officer of the Company, the officer will
receive an annual salary of $130,000 per year.
    10. Shareholders Equity
     F-28




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
           Chairman of the Board Paid in and Contributed Capital
    F-29




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
    11. Stock Options and Warrants
 Stock Options
    F-30




---



##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (in years)
    
    
    Value (1)Options outstanding at January 1, 2008
    
    
    2,160,199
    
    
    $
    5.34Granted
    
    
    385,500
    
    
    $
    4.43Exercised
    
    
    (61,778
    )
    
    $
    1.28Forfeited
    
    
    (204,302
    )
    
    $
    7.45Options outstanding at December 31, 2008
    
    
    2,279,619
    
    
    $
    5.11
    
    
    
    5.7
    
    
    $
    Options exercisable at December 31, 2008
    
    
    1,985,588
    
    
    $
    5.09
    
    
    
    5.3
    
    
    $
    Available for grant at December 31, 2008
    
    
    5,714,333
 
 (1)
    
    The aggregate intrinsic value represents the amount by which the fair market value of the
Companys common stock exceeds the exercise price of options at December 31, 2008. At
December 31, 2008, the exercise price of all options was less than the fair market value of
the Companys common stock.  Transition Election Related to Accounting for the Tax Effects
of Share-Based Payment Awards.
  F-31




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageContractual
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Term
    
    Price
    
    Shares
    
    Price$1.17 - $1.28
    
    
    360,418
    
    
    
    2.9
    
    
    $
    1.26
    
    
    
    285,418
    
    
    $
    1.28$2.83 -  $4.11
    
    
    51,701
    
    
    
    2.8
    
    
    $
    3.08
    
    
    
    41,701
    
    
    $
    2.83$5.25 - $5.67
    
    
    1,650,167
    
    
    
    6.3
    
    
    $
    5.60
    
    
    
    1,529,435
    
    
    $
    5.60$7.69
    
    
    66,633
    
    
    
    7.7
    
    
    $
    7.69
    
    
    
    54,329
    
    
    $
    7.69$8.47
    
    
    150,700
    
    
    
    6.2
    
    
    $
    8.47
    
    
    
    74,705
    
    
    $
    8.472,279,619
    
    
    
    5.7
    
    
    $
    5.11
    
    
    
    1,985,588
    
    
    $
    5.09
   For the year ended December 31,2008
    
    2007Expected dividend yield
    
    
    00.0
    %
    
    
    00.0
    %Expected price volatility
    
    
    75.0
    %
    
    
    100.0
    %Risk free interest rate
    
    
    3.2
    %
    
    
    5.9
    %Expected life of options in years
    
    
    5.3
    
    
    
    5.0
  
    
    stock options to purchase an aggregate of 259,835 shares of common stock at an
exercise price of $0.71 per share issued to employees. The options vest in 24 equal
monthly installments, commencing one month after the date of grant, and will expire on
the tenth anniversary of the issuance date.
    
    stock options to purchase an aggregate of 40,539 shares of common stock at an
exercise price of $0.74 per share issued to employees. The options vest in four equal
annual installments, commencing on the first anniversary of the date of grant, and will
expire on the tenth anniversary of the issuance date.
    
    stock options to purchase an aggregate of 50,000 shares of common stock at an
exercise price of $0.80 per share issued to certain non-management members of the
Companys Board of Directors. The options vested immediately upon issuance and will
expire on the tenth anniversary of the issuance date.
 F-32




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Stock Warrants
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (in years)
    
    
    ValueOutstanding at January 1, 2008
    
    
    2,251,836
    
    
    $
    7.52Issued
    
    
    699,182
    
    
    $
    2.81Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2008
    
    
    2,951,018
    
    
    $
    6.65
    
    
    
    12.3
    
    
    $
    Exercisable at December 31, 2008
    
    
    926,159
    
    
    $
    6.90
    
    
    
    7.7
    
    
    $
    
     For the year ended December 31,2008
    
    2007Expected dividend yield
    
    
    00.0
    %
    
    
    00.0
    %Expected price volatility
    
    
    75.0
    %
    
    
    100.0
    %Risk free interest rate
    
    
    3.4
    %
    
    
    5.4
    %Expected life of options in years
    
    
    6.4
    
    
    
    7.0
  F-33




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Warrants Outstanding
    
    Warrants ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageContractual
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Term
    
    Price
    
    Shares
    
    Price$1.09
    
    
    5,000
    
    
    
    4.9
    
    
    $
    1.09
    
    
    
    
    
    
    $
    $1.90 - $2.60
    
    
    393,409
    
    
    
    2.8
    
    
    $
    2.08
    
    
    
    
    
    
    $
    $3.60 - $4.93
    
    
    105,000
    
    
    
    4.7
    
    
    $
    4.87
    
    
    
    100,000
    
    
    $
    4.93$5.67 - $7.69
    
    
    2,447,609
    
    
    
    14.2
    
    
    $
    7.47
    
    
    
    826,159
    
    
    $
    7.142,951,018
    
    
    
    12.3
    
    
    $
    6.65
    
    
    
    926,159
    
    
    $
    6.90
  
    
    a warrant to purchase 1,315,542 shares of common stock at an exercise price of $0.53.
This warrant was issued in connection with the BlueCrest Loan Amendment discussed in Note
6. The warrant vested immediately upon issuance and expires on the tenth anniversary of
the issuance date.
    
    a warrant to purchase 451,043 shares of common stock at an exercise price of $0.53. This
warrant was issued in connection with the BlueCrest Loan Amendment discussed in Note 6.
The warrant vested immediately upon issuance and expires on the tenth anniversary of the
issuance date.
    
    a warrant to purchase 173,638 shares of common stock at an exercise price of $0.53. This
warrant was issued in connection with the BlueCrest Loan Amendment discussed in Note 6.
The warrant vested immediately upon issuance and expires on the tenth anniversary of the
issuance date.
    
    a warrant to purchase 183,672 shares of common stock at an exercise price of $0.59. This
warrant was issued in connection with private placement discussed in Note 16. The warrant
vests six months following issuance and expires on the third year anniversary of the date
of issuance.
 12. Deferred Compensation
  13. Income Taxes
  F-34




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 December 31,2008
    
    
    2007Deferred tax assets:Stock-based compensation and others
    
    $
    5,436,000
    
    
    $
    4,557,000Net operating loss carryforward
    
    
    30,944,000
    
    
    
    26,475,000Total deferred tax assets
    
    
    36,380,000
    
    
    
    31,032,000Valuation allowance for deferred tax assets
    
    
    (36,380,000
    )
    
    
    (31,032,000
    )Net deferred tax assets
    
    $
    
    
    
    $
    
    14. Supplemental Disclosure of Cash Flow Information
   15. Unaudited Quarterly Financial Information
  Three Months EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312008Revenues
    
    $
    25,995
    
    
    $
    16,786
    
    
    $
    6,990
    
    
    $
    7,280Gross profit
    
    
    22,870
    
    
    
    12,265
    
    
    
    3,674
    
    
    
    7,280Development revenue
    
    
    61,500
    
    
    
    15,000
    
    
    
    20,500
    
    
    
    Net loss
    
    
    (3,291,048
    )
    
    
    (3,861,351
    )
    
    
    (4,405,756
    )
    
    
    (2,646,770
    )Loss per share  basic and diluted
    
    $
    (0.24
    )
    
    $
    (0.27
    )
    
    $
    (0.30
    )
    
    $
    (0.17
    )Weighted average shares
outstanding  basic and diluted
    
    
    13,854,830
    
    
    
    14,447,138
    
    
    
    14,459,897
    
    
    
    15,602,064
 F-35




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Three Months EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312007Revenues
    
    $
    13,805
    
    
    $
    194,609
    
    
    $
    46,550
    
    
    $
    37,345Gross profit
    
    
    6,446
    
    
    
    167,947
    
    
    
    28,753
    
    
    
    23,333Development revenue
    
    
    
    
    
    
    
    
    
    
    20,500
    
    
    
    Net loss
    
    
    (2,277,904
    )
    
    
    (2,762,437
    )
    
    
    (4,164,660
    )
    
    
    (8,862,083
    )Loss per share  basic and diluted
    
    $
    (0.18
    )
    
    $
    (0.21
    )
    
    $
    (0.31
    )
    
    $
    (0.66
    )Weighted average shares
outstanding  basic and diluted
    
    
    12,919,835
    
    
    
    13,235,738
    
    
    
    13,332,637
    
    
    
    13,347,138
  16. Subsequent Events
 Private Placement  Convertible Debt
       F-36




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##### Table of Contents



Bioheart, Inc. and Subsidiaries
(A development stage enterprise)
 Notes to Consolidated Financial Statements  (Continued)
 Bank of America Principal Payment by Guarantor
  Private Placement  Common Stock and Warrants
  F-37




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##### Table of Contents



INDEX OF EXHIBITS
  Exhibit No.
    
    Description4.10
    
    Warrant to purchase 451,043 shares of the registrants common
stock, dated April 2, 2009, issued to Rogers
Telecommunications Limited4.11
    
    Warrant to purchase 173,638 shares of the registrants common
stock, dated April 2, 2009, issued to Hunton & Williams, LLP23.1
    
    Consent of Jewett, Schwartz, Wolfe & Associates31.1
    
    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 2002