Rumors Send Intellicell Biosciences Inc (OTCMKTS:SVFC) on the Run
How many are the red flags around Intellicell Biosciences Inc (OTCMKTS:SVFC) exactly?
That’s a tricky question, but nevertheless, we’ll try to list some of the most important things you need to look out for before putting your money on the line.
First, let’s start with our previous article on SVFC. It was published on March 11 and, as you can see from it, back then, the stock was trying (and failing) to break through the $0.01 per share barrier. Right now, even though it jumped up by a healthy 33% yesterday, it’s still sitting at just $0.0004 per share. To put things into perspective, if you were unlucky enough to buy SVFC shares in March, and if you’re still holding onto them, you’ve seen 96% of your investment go up in smoke.
Then we come to the company’s financial situation. Here are the figures as found in the latest 10-Q:
- current assets: $321 thousand in restricted cash
- current liabilities: $15.6 million
- quarterly revenues: $32,500
- operating loss: $1.2 million
On the bright side, SVFC managed to start the revenue generating process during the first half of the year, but, at least for the time being, the proceeds are dwarfed by the colossal operating expenses. Cash on hand was non-existent on June 30 and even by Pennyland standards, the debt is absolutely horrific. Speaking of debt, it played a major role in creating SVFC‘s biggest problem – dilution.
Running a small cap company is not easy. Access to readily available capital is sometimes tough which is why, many penny stock enterprises are forced to dilute their shareholders with the issuance of convertible notes. We’ve seen some pretty horrific cases of this sort of toxic funding, but we’re pretty sure that SVFC is one of the worst. How bad is it exactly?
If you take a peek at the 10-Q for the second quarter of 2013, you’ll see that a little over a year ago, the number of issued and outstanding shares was hovering around 140 million. According to the latest report, two weeks ago, it was sitting at exactly 3,655,052,841.
That, you would agree, is some horrific dilution and it’s pretty clear from the figures in the balance sheet that SVFC have no way of offsetting its effects. As if that wasn’t bad enough, once you take a closer look at the reasons for the endless printing of stock, you’ll see that while the shareholders investments were going down the drain, other people had the opportunity to cash in on some healthy profits. The Subsequent Events section of the latest 10-Q, for example, tells us that in July and August, the company issued a total of 327 million shares of common stock in order to satisfy just $224 thousand worth of convertible debt which brings the average conversion rate down to under $0.0007 per share. For the record, during that period, SVFC was still sitting comfortably above the $0.001 mark.
As you can see, there’s no shortage of things that could deter people away from the stock, and yet, yesterday, investors traded almost $460 thousand worth of shares which could suggest that they are getting back to the ticker. Unfortunately, the reasons for this are somewhat ambiguous.
There seems to be quite a lot of activity around the message boards and there’s no shortage of people who are trying to convince the rest of the community that the company has great potential. At the same time, there’s been no press releases for the last two months and the recent SEC filings are nothing to write home about.
It would appear that SVFC is currently moving simply because of the hype created by certain people around investor forums and social networks. That, in itself, is yet another red flag and considering it, as well as the rest of the risks, is absolutely essential.
