Replies to post #25472 on Intellicell Biosciences Inc (fka SVFC)

[TheSkunk]

In a nutshell? No! LOL!

From the 10-Q for period ending 6/30/13:

http://www.sec.gov/Archives/edgar/data/1125280/000101376213001279/form10q.htm

The Frank Loan was for ~$200k. It was made from an advisor to the company.

It was assigned to Redwood in August 2013.

The Note is secured by 500,000 shares of the Company’s Common Stock.

We don't know how much Redwood paid for the note. All we know is that it was secured by 500,000 shares. There is no mention of any conversion factor and I wouldn't have expected one given it was an advisor to the company or for all intents and purposes an insider. They typically don't hold the company hostage unless it is a scheme.


The JMJ note was also assigned to Redwood and does come with conversion features.

The Investor may convert, beginning on the six month anniversary of the Effective Date, the outstanding principal and accrued interest on the Note into shares of the Company’s common stock, par value $0.001 per share at a conversion price per share equal to the lesser of (i) $0.16 or (ii) 60% of the lowest trade price in the 25 trading days prior to the date of conversion (the “Conversion Price”). The Conversion Price will be subject to adjustment for, among other things, the Company’s failure to be DTC eligible and only being Xclearing deposit eligible.

The Company shall include on the next registration statement the Company files with Securities and Exchange Commission (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of the Note. Failure to include such securities on the next registration statement will result in liquidated damages of 25% of the outstanding principal balance of the Note, but not less than $25,000, being immediately due and payable to the Investor at its election in the form of cash or added to the Principal Sum of the Note.

If conversion were to take place then Redwood would be filing a 13G and SVFC would have to issue an 8-K similar to what we see in the Hanover 8-Ks. So it appears this had not yet taken place but technically could at any time.

Redwood also has a limitation to percent of O/S they can hold at 4.99% should they begin conversion.

The Investor has contractually agreed to restrict its ability to convert the Note such that the number of shares of the Company common stock held by the Investor and its affiliates after such conversion does not exceed 4.99% of the Company’s then issued and outstanding shares of Common Stock.

The amount of the note plus interest is ~$116k so it is no where near the magnitude of what Hanover was at about 5.5x that amount.


And while we're in this section of the 10-Q:

JJK, LLC Notes Payable

On May 29, 2013 and June 26, 2013, the company issued promissory notes in the amount of $50,000 and $75,000, respectively, for advances from JJK, LLC. The terms of the note require repayment in 30 days and an annual interest rate of 10%. In July 2013, the company issued JJK, LLC 5,000,000 million shares of company common stock and an additional 2,000,000 shares of company common stock on September 26, 2013. The notes are currently due and payable.

As of June 30, 2013, the Company's JJK, LLC notes payable amounted to $125,000.

So 7M shares went to JJK since in July and September in aggregate. But I would expect those shares have already been sold.


I found the reference to the two May 11, 2013 holders under a section for Redwood but am unclear who those two are. I think they may be included in the section below but it is not the clear connection we had for the Frank Loan and JJK.

In May 2011, IntelliCell completed a convertible debt offering aggregating $1,385,000. The units offered consist of a $50,000 subordinated convertible debenture payable one year from the date of issue with interest at a rate of 6% and convertible, at the option of the holder, into the Company’s common stock at an initial conversion price of $1.72 per share. Each unit also included a detachable five (5) year warrant to purchase 57,143 shares of IntelliCell’s common stock at an exercise price of $1.72 per share. The proceeds from the issuance of convertible debt securities with detachable warrants were allocated between the warrants and the debt security. The discount is being amortized over the life of the debt. As of June 30, 2013, the Company recorded an original issue discount of $288,564 related to the value of the warrants that was amortized as interest expense over the initial one year term of the convertible debentures. During the three and six months ended June 30, 2012, the Company recognized $0 and $72,141 of interest expense as a result of the amortization.

The Company accounted for the conversion features underlying the convertible debentures issued in accordance with GAAP, as the conversion feature embedded in the convertible debentures could result in the debentures being converted to a variable number of the Company’s common shares. The Company determined the value of the derivate conversion features of these debentures issued at the relevant commitment dates to be $32,209 utilizing a Black-Scholes valuation model. The change in fair value of the liability for the conversion feature resulted in a reduction to charge to income of $132,373 and $569,387 during the three and six months ended June 30, 2013 and $1,222,927 and $4,472,141 during the three and six months ended June 30, 2012. The fair value of the derivative conversion features was determined to be $18,133 and $587,520 at June 30, 2013 and December 31, 2012, respectively.

The Company accounted for the detachable warrants included with the convertible debentures as liabilities in accordance with GAAP, as the warrants are subject to anti-dilution protection and could result in them being converted to a variable number of the Company’s common shares. The Company determined the value of the derivate feature of the warrants issued during at the relevant commitment dates to be $332,401 utilizing a Black-Scholes valuation model. The change in fair value of the liability for the warrants resulted in a reduction to the charge to income of $114,261 and $325,276 during the three and six months ended June 30, 2013 and $3,495,722 and $9,930,922 during the three and six months ended June 30, 2012, respectively. The fair value of the derivative conversion features was determined to be $ 63,274 and $388,550 at June 30, 2013 and December 31, 2012, respectively.

On May 17, 2012, the holder of an aggregate of $500,000 principal amount of IntelliCell Notes informed the Company that it is in default and demanded repayment under the IntelliCell Notes. Pursuant to the terms of the IntelliCell Notes, upon the occurrence, after the expiration of a cure period of fifteen (15) days with respect to monetary defaults, following the receipt by the Company of written notice from a holder of a default in the payment of any installment of principal or interest, or any part thereof, when due, a holder, at its election may accelerate the unpaid balance of the principal and all accrued interest due under this Note and declare the same payable at once without further notice or demand. Upon an event of default under the IntelliCell Notes, the holders of the IntelliCell Notes shall be entitled to, among other things (i) the principal amount of the IntelliCell Notes along with any interest accrued but unpaid thereon and (ii) costs and expenses in connection with the collection and enforcement under the IntelliCell Notes, including reasonable attorneys’ fees. As a result of the notice of default, the IntelliCell Notes in the aggregate principal amount of $1,360,000 are immediately due and payable. The Company is currently working with its investors on making arrangements to honor its obligations under the IntelliCell Notes, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the IntelliCell Notes. In conjunction with the agreement arrangements with the note holders, $77,744 of accrued interest was converted to 89,358 shares of the Company's common stock in May 2012. Furthermore, a $25,000 convertible debenture and related accrued interest of $904 was converted to 29,436 shares of common stock in the prior year ended December 31, 2012.

The key does lie in what you provided and that is " In conjunction with the assignment, the Company entered into a securities settlement agreement with Redwood Management LLC whereby Redwood agreed to acquire certain debt rights and along with the rights to common stock and conversion of certain debt securities assumed by Redwood in the aggregate of approximately $878,644."

We don't know what the details are regarding any conversion provision.

About the best it shows us is that the baggage from last year has been repackaged into new baggage. Kicking the proverbial can down the road.

Still, should there have been any conversions to take place Redwood would be filing a 13G and SVFC an 8-K. To me, this is why learning more about the services MD Global Partners is going to provide is really important at this point.