RenovaCare (RCAR) is now dancing dangerously close to fraud.
Today, the company released “news” that a patent dispute has been settled. A naïve market bought into this nonsense and pushed the stock to 5-year record levels exceeding $10. The stock market valuation is now teetering on $750 million … for a company with nothing but a pretty story surrounding its sole, experimental product which has not been submitted to the FDA for approval.
RenovaCare doesn’t tell investors the truth.
So we will.
*1 Nothing Like “Old” News
Today’s company headline screams “RenovaCare Secures Patent Victory…”
But … on Dec. 18, 2017 … a Final Written Decision was issued by the US Patent Office, resolving the patent dispute.
The decision date is right there in RenovaCare’s own SEC filing.
Now, desperate RenovaCare has issued a statement that claims “patent victory.”
Notice also that RenovaCare doesn’t dare enter this press release into its SEC filings. That would invite closer regulatory scrutiny.
RenovaCare, in our opinion, has probably committed fraud. At best it is deceiving people with 3-month-old information dressed up as news.
*2. The Motivation
What’s behind today’s shenanigans?
Well, the motivation is clear.
RenovaCare's SEC filing that contains the patent decision date is the S-1.
This Feb. 12, 2018 document sets up insiders to unload millions of shares of their cheap stock.
So obviously, RenovaCare wants to put on a good show so insiders can sell into the inflated stock price.
*3. More Out-Right Deception
Yesterday, Feb. 20, small investors breathed a sigh of relief.
But RenovaCare had just duped those non-insiders.
The company filed a deceptive filing with the golden words that its biggest stockholder, Harmel Rayat’s Kalen Capital, had “requested the withdrawal of the 10,500,000 registered for resale…”
"The Company has determined that all shares required to be registered on behalf of Jörg Gerlach, MD PhD. may now be sold without restriction under Rule 144 as promulgated under the Securities Act of 1933, as amended; and, Kalen Capital Corporation has requested the withdrawal of the 10,500,000 registered for resale on its behalf none of which have been sold as of the date hereof."
Everyone thought that the controlling owner had changed his mind and wouldn’t soon be unloading stock with the rest of them.
This is absolutely misleading. The 10.5 million shares mentioned in the filing were registered for resale on Mr. Rayat’s behalf back in 2014 (here) !!
Yes, this refers to a 4-year-old filing.
(Source: Company SEC filing of November 20, 2014)
Here’s the truth.
The biggest stockholder, Kalen Capital, is still set up to dump 2.2 million shares of company stock.
All Mr. Rayat and buddies are waiting for is the SEC’s notice of effectiveness which should arrive any day now. Then they can unload their stock.
We’re still digging into this poor excuse of a stock. We're still waiting for RenovaCare's respond to our many requests for comment... including our request to the CEO regarding how he can justify a quarter-of-a-billion-dollar market cap ... especially just as naive small stockholders are about to watch their stock value deteriorate.
This lowly Bulletin Board stock is up some 35% today on deception, old news, and low volume. So RenovaCare is really looking a lot like the controlled, boxed stocks rampant in the 1990s. We’re very interested in this mess … and we think the SEC will be, too.
Disclosure: I am/we are short RCAR.