A biotech stock that recently raised $20 million in registered direct offerings came under pressure this month by a short sellers research report published at Seeking Alpha. Connecticut-based NanoVircidies has been the subject of multiple stories I reported for Growth Capitalist over the last six months detailing alleged miss-use of company assets and inaccurate statements made in SEC filings. New information shows the research facility $NNVC has touted in press releases is currently subject to foreclosure litigation in Milford, Conn state court by a former architecture firm named Svigls Partner LLP.
NanoViricides medial test facility at 1 Controls Drive in Shelton, Conn is owned by its CEO Anil R. Diwan through another company called Inno-Haven. The biotech firm has said in previous SEC filings that Inno-Haven, founded in 2011, will own their research lab but they plan to sign a lease on the building. Although no lease details or contracts have been published. CT State case ANN-CV13-6014531 was filed in August 2013 which list a mechanics lien against Inno-Haven and NanoViricides (as a relief defendant) for $17,659.85. A Milford court clerk confirmed for me today the litigation is asking for ‘possession of the lien premises’ at 1 Controls Dr. The 18,000 square-foot building has a $1.35 million mortgage on it according to a Shelton, Conn town clerk but no official lien’s have been filed against the property yet in Shelton.
The biotech firm said last week it now wants to buy the building, instead of lease, from Anil Diwan and his holding company Inno-Haven, but if the architecture firm that is suing for unpaid building supplies, labor, and material is able to secure a court ordered lien it might make it difficult to transfer the property to NanoViricides if a sale went through. Another option, according to real estate attorney Mark Schartz, is Inno-Haven could sell the building to NanoViricides and the public company would use their funds to pay off the $17k bill.
I was hung up on when I called Inno and Nano’s attorney Harry Schochat to ask about how the unpaid bill would be settled. Stewart Margolis, the attorney for the architecture firm Svigls Partners, chose not to comment on the current litigation. CT court records show their next pre-trial hearing is March is March 26th 2013.
If NanoViricides says it’s near completion of the building renovation and it just boosted it’s balance sheet with near $20 million in cash from discounted equity sales to institutional investors why doesn’t it just pay off the $17k bill. It would avoid costly legal fees and any lien’s against the research lab they keep touting in press releases will help advance the company’s goals and finish developing their drugs.
The company is also facing another problem today. Shaquoia Garo, from Columbia University-College of Physician and Surgeons, confirms in an email NanoViricides cofounder Eugene Seymour did not receive a medical degree from the University. Seymour stated in his bio’s he had medical training at Columbia. When the news first showed up as a possible allegation on Seeking Alpha today the company took down it’s website at the 3pm hour while trading in the stock was still going on. The company bio was edited today and the NanoVircides website was back online after the market closed. Where Seymour got his medical training is now a vague line on his bio.
The Seeking Alpha research report, which raised a lot of the questions I brought to light last year in my reporting at Growth Capitalist, led to a New York based law firm issuing a press release they want to start an investor class action suit against the biotech stock and its founders. When I reach the attorney on the suit, Benjamin Sachs-Michaels of Harwood Feffer, he said he could not talk about the case but enjoyed reading my reporting on the company. It’s unclear if any $NNVC investors have signed on to the suit yet.
NanoViricides is continuing to promote its company at investor conferences and is registered to present in April at a small-cap stock conference in Las Vegas run by Market Nexus Media.