Some information from the recent SA article to help give new investors some background about ACTC.
A Little History
For most who follow the company, ACTC's history is well documented and known so I won't spend much time rehashing it here. However, since it's still impacting the company, it's worth mentioning. Like most startups, ACTC had difficulty attracting capital and resorted to very punitive PIPE financing arrangements with resets and anti-dilution provisions that captured additional shares for future transactions that were executed at a lower stock price. However, in ACTC's case, they did not disclose these future transactions to the existing debt holders. ACTC eventually settled with close to 50 claimants. One large settlement in particular, resulted in the issuance of a convertible debenture (as ACTC's stock price goes lower, more shares are issued for payment of the debt). A separate large claimant does remain however, and litigation is ongoing.
During this time, ACTC also resorted to a scheme to raise capital that involved settling outstanding claims through the court system using fairness hearings. However, the claims were settled in shares of the company substantially above the amount actually owed and ACTC was provided a cash kickback that was not disclosed to the courts. The SEC charged ACTC with fraud and the case was recently settled for over $4 million, which will be paid in installments over a period of time.
I would argue these historical events are relevant today for a couple of reasons. First, it sets the backdrop for what I consider is an inflection point in the management of the company. Second, it is a reminder that ACTC, a company with limited resources, is still haunted by its past and paying the cost now and into the future.
Can someone please help me gain a better understanding of the Gorton Arronson situation as there is now the discussion of a mass dilution. I am new to the board but have been following ACTC for almost two years. I love the technology these guys have but do you think it will go anywhere? Please provide some advice along with some real-life facts.
If you haven't checked the Advanced Cell Technology boards at the Investor Stem Cell site yet, I recommend it in the most emphatic possible terms. There is a community of active watchers investigating everything having to do with ACT, and I would be shocked indeed if you didn't find a full discussion on the ramifications of the lawsuit on the "Legal" sub-board.
First the contra aspects: It takes many years to get FDA approval to market a new drug or treatment. In the meanwhile, the research and trials must be paid for without any revenue stream replenishing the coffers, and it's especially difficult when dealing with stem cells due to the federal ban on funding research. ACT's former CEOs got creative with the financing to keep the doors open, and now it's come back to bite them.
Generally speaking, the past board did pretty much everything imaginable to inspire fear in investors. They had their reasons, such as diluting shares instead of selling off assets to raise funds so they maintained ACT's core value, for example. According to ACT, they know the true value of their tech and patents and they're not going to do a joint venture deal now for 10 million when hanging in there will net billions later. Both of those examples make sense for the company, but it leads to ACT looking scary from an investment standpoint.
On top of its actions, the board has been uncommunicative, which leaves the average investor fearing the worst. When one adds in the fact it takes many years to get FDA approval, you've got investors who hear nothing for long stretches of time.
Due to Yahoo's character limit, I'll add the rest in a response to this comment.
The company has racked up an accumulated deficit of more than $300 million, according to SEC filings, and years of fundraising have flooded the market with 2.6 billion shares of Advanced Cell stock. Shares closed yesterday at 7 cents in over-the-counter trading. At the end of September, the company had $5.5 million in cash on hand and was facing shareholder lawsuits. "I look at it and I say, 'Explain to me how much money they have, and show me how they're going to go out there and do, not expensive trials, but the most expensive trials, because it's regenerative medicine,' " said Stephen G. Brozak, president of WBB Securities, who follows a number of stem cell companies but not Advanced Cell." Less U....DADDY.....SPERMA............ Less U....FORGOT ....2....MENTION THIS........................
Phil, you're just too much a Good Samaritan, always worrying about those that could care less what you have to say about ACTC. And to be fair and balanced, like those wonderful folks at Fox, you should also tell newbies that you are totally against ACTC, for whatever reasons that only you know, maybe it's your religious beliefs? Or maybe you've been burnt by them over the years? But whatever it is, be more transparent about your motives.
You took this out of context from an article titled "Advanced Cell Technology: A Balanced Perspective Of Risk And Reward" on Seeking Alpha and only presented one side while failing to post the positive points mentioned in that article, which directly follow the segment you copied and pasted.
In fact, the very next line that follows the block of text you pasted reads: A New Team, A New Day
You also failed to mention you hold a short position in the stock and will profit if the price falls.
No need to thank me for the clarifications. I'm just helpful like that.
For anyone who hasn't read the article in its entirety yet, it is fairly well written. You can find it on the Seeking Alpha website.
I agree, it depends on which information you choose to take "stock" in, no pun intended.
In the end this companies' potential is at least as promising as many other "drug" companies who have sold millions and billions of snake oil products which really helped no one. So, what we have here is a speculative "drug" company. They need to get SOMETHING to market though, even if it the techniques to install the cells, the clinics, blood products, etc.
ALL drug companies have to go through the FDA hurdle, ACTC is no different.
It has always come down to whether or not the science works. LasiK surgery, transplants, synthetic human parts, etc., have all gone through controversy and scrutiny during their rise to normalcy....yet all are accepted now.