Intellicell Biosciences Inc (fka SVFC)

[BigBadWolf]

But here's the thing Skunky...SO WHAT,... IF....they get down listed...my question is, why the concern? It will not affect the fundamentals. The only potential thing is that a lower tier historically was for companies that did not meet the disclosure/filing requirements...But by April, SVFC will have a full time CFO and he/she will take care of the filing/transparency requirements...since that is one of the things that a CFO does...and the only reason for down listing will be because the OTC changed the rules and the bid test was not met...so, what is the exact reason for concern and why should this cause difficulty in breathing??? TIA:)

Under most circumstances, there wouldn't be a concern other than the company having less favorable capital raising terms should the company need to do so in the future if listed in OTC Pink as opposed to OTCQB. You are also right in that, through no fault of the company's, they would even have to face the possibility of de-listing. The problem or concern with two aspects (one each) of the above is detailed in the YA Global deal terms. The listing requirement and unfortunately, the cause being voluntary or involuntary being irrelevant.


We need to start here with the Securities Purchase Agreement:

http://www.sec.gov/Archives/edgar/data/1125280/000101376214000222/ex101.htm

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

(aa) Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to terminate, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Primary Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Primary Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

This section in and of itself is not a problem. It is quoted to begin laying the foundation for understanding other verbiage in the terms of the deal. Primary Market is bolded for this reason.


In the same linked document is this section:

4. COVENANTS.

(f) Listing or Quotation. The Company’s Common Stock shall be listed or quoted for trading on any of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Markets (which does not include the Pink Sheets LLC) (“OTC”) (each, a “Primary Market”). The Company shall promptly secure the listing or quotation of its Common Stock upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or quoted (subject to official notice of issuance) and shall maintain such listing or quotation of its Common Stock from time to time issuable under the terms of the Transaction Documents.

Notice the definition of what a Primary Market includes...AMEX, NASDAQ, NYSE or OTC Markets and what it excludes...OTC Pink.


Now moving onto the document from the agreement Exhibit 102:

http://www.sec.gov/Archives/edgar/data/1125280/000101376214000222/ex102.htm


This is the document that outlines, amongst other things, Events of Default.

Section 2. Events of Default.

(a) An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(v) The Common Stock shall cease to be listed or quoted for trading or listed on the OTC Markets, (the “OTC”) and shall not again be quoted or listed for trading thereon within ten (10) Trading Days of such delisting;

So remember earlier the two points that were made...so what if it is down-listed to OTC Pink and the reason for down-listing being through no fault of the company's? The above quoted section addresses both of those in this particular circumstance.

Do you see why now it was necessary to understand the other verbiage, specifically, the definition of what OTC Markets is for the purpose of this agreement, which is a Primary Market and why OTC Pink was specifically excluded from that definition?

It is from this point that all of the remedies available to YA Global under any default provision become important and this leads us to all of the documentation that stipulates the control they have over the company. They can be found in the remaining exhibits and are too numerous to post. Reference them in Section 7 Remedies here:

http://www.sec.gov/Archives/edgar/data/1125280/000101376214000222/ex103.htm


Aside from ultimately gaining control over all company assets including intellectual property, both current and future, YA Global also has to approve anything the company does which negates at least one short term remedy to avoid failing the bid test and that is a reverse split.

http://www.sec.gov/Archives/edgar/data/1125280/000101376214000222/ex101.htm

4. COVENANTS.

(h) Corporate Existence. So long as any of the Convertible Debentures remain outstanding, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split consolidation, sale of all or substantially all of the Company’s assets or any similar transaction or related transactions (each such transaction, an “Organizational Change”) unless, prior to the consummation an Organizational Change, the Company obtains the written consent of each Buyer. In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests to insure that the provisions of this Section 4(h) will thereafter be applicable to the Convertible Debentures.

So what does it all mean?

In the event of a default, Ya Global can gain control of the company. What happens after that can be summed up by multiple scenarios but none that are good for the SVFC stockholder.

This is where knowing how YA Global has conducted business in the past is important. They have acquired companies both bankrupt and those who have defaulted. It is with these companies that they got themselves into hot water with the SEC over how they valued those acquired assets and mislead their investors in order to collect higher fees.

They also have a track record of continuing to fund companies whereby they supply cash to companies in exchange for shares at steep discounts upon which they sell in the open market. Red Rock Resources has been a well they've tapped many many times. Just read the filings from the Red Rock Resources company website.

Should any of this occur, the likelihood of shareholders learning about any behind the scene dealings, changes, whatever are virtually nil. If it were to happen, I suspect they would wait to announce anything until they finished converting their note as well as waiting until Dominion converted their note as to avoid any potential dispute between those two parties. What happens after that could be SVFC continues but under the management of YA Global or they let SVFC the stock go to zero and de-list its shares in order to sell the company (with nothing being due shareholders) or they re-list Intellicell as a new company (again, with nothing due existing shareholders).

We can only hope if this plays out that is if what many believe comes to pass and that is YA Global being a true investor because at this stage they would be the owners save for what shareholders owned and if they truly were interested in seeing the potential realized of the company, they believed it was more lucrative to own the company than go through the hassle to sell it.

As with everything, there are no guarantees of anything playing out in one way or another but I think I've laid out a pretty good reason why there is risk and why every shareholder should be concerned.