Intellicell Biosci (OTCMKTS:SVFC) Moving Up

Not that long ago, when a company made a big surge in the green direction, it was often caused by them entering the medical marijuana business. The hype around the cannabis industry is still here but it would appear that there’s a new contender for investors’ attention – biomedical ventures. Intellicell Biosci (OTCMKTS:SVFC) is one of the many small cap enterprises in this business and they made a huge leap yesterday closing the session nearly 30% above their previous value. We decided to see why.

Unlike other biomedical companies like Arch Therapeutics Inc (OTCBB:ARTH), SVFC‘s run was not fueled by a paid promotion which, as we all know, is always a good thing. The reason for the ascend was a report written by a person called Jason Colbert and according to him the treatment that SVFC are developing right now won’t need an FDA approval. That’s also a good thing since everyone that has ever followed biotech companies knows very well how long the process can take and how devastating an effect a rejection could have on the price. All in all, the news from yesterday spell good future for SVFC but what about the present?

Well, truth be told, we don’t know for sure. While SVFC have filed some 8-K forms in the recent weeks (we’ll get to them in a minute), they said on April 1 that they won’t be able to publish their 2012 annual report on time, and that really isn’t such a good thing since most of the companies already have their Q1 statements out while all we have to work with in SVFC‘s case is information that’s a whopping nine months old. In case you’re interested, we have summarized the figures found in the latest 10-Q for the third quarter of 2012:

• cash: $0
• current assets: $334 thousand
• current liabilities: $6.7 million
• quarterly revenue: $186 thousand
• quarterly net loss: $1.7 million

You can see that they’re capable of generating revenues and the good news is that the same period of 2011 yielded much less in that respect. Even so, the losses are still significant and the overall financial situation is not that good. Having no current information means that we can’t really be sure if they have managed to get themselves out of the mess.

The 8-K forms that we talked about earlier, however, suggest that they haven’t. In one of them we read that, known toxic financing entity, Hanover Holding commenced a legal action against SVFC for the recovery of around $706 thousand worth of past-due debt. The dispute was eventually settled but SVFC weren’t able to repay the loan with cash so they issued Hanover more than 18 million common shares valued at less than $0.04 and when you have in mind that the current price is around $0.07, you can see that there’s a lot of room for a profit.

Still, you’re thinking, at least SVFC managed to get the whole thing off their backs. They have a CEO with lots of experience, the patents are in place and they should soon have all the permissions to perform the extraction of human stem cells in their laboratory located in Downtown New York.

The only problem is, we don’t know if they will remain in the aforementioned laboratory in Downtown New York. Another 8-K dated April 24 says that they received a notice from the owner of the facility according to which SVFC are in default under the terms of the lease agreement which means that the contract can be terminated at any time thus shattering the dreams of SVFC‘s shareholders along with the company credibility.

As for the CEO, we did some research on him as well and what we found is somewhat controversial. His name is Dr. Steven Victor, he is also known as Dr. Lookgood and he is apparently a very good dermatologist. His work is appreciated by celebrities like French jewelry designer and former model Jade Jagger and the wife of rock star Ozzy Osborne, Sharon. He’s not quite so famous with investors, though. According to this New York Post article from September, 2008 he was sued by some investors because, according to them, he used a $2.5 million cash injection that they made to fuel his own glamorous lifestyle. Of course, we can’t be sure if the claims have any merit, but we still reckon that before you make your final decision, you should definitely consider the risks of a potential SVFC investment.