Advanced Cell Technology, Inc. (OTCMKTS:ACTC) Crashing Hard

Advanced Cell Technology, Inc. (OTCMKTS:ACTC) has been on a red streak ever since its latest 8-K hit the wire. The news that the company had to issue 388 million shares to get out of a lawsuit a couple of days ago didn’t appeal to investors, and as a result the company has been crashing ever since the report came out.

According to the 8-K, it seems that ACTC had breached an “anti-dilution provision contained in warrants” held by Gary D. Aronson and John S. Gorton, through transactions between the company and other third-party investors. As a result of this violation, both Gorton and Aronson, along with a couple of others, filed a lawsuit against ACTC. The issue was resolved by all parties entering into a settlement agreement, according to which: 

• Aronson is to be issued 269,766,667 shares of ACTC common stock 
• Gorton is to be issued 33,133,333 shares  
• Herron is to be issued 68,266,667 shares
• Miller/Steele is to be issued 8,533,333 shares
• Bourke is to be issued 8,533,333 shares

Needless to say, investors were not happy with the dilution this settlement agreement dumped on their heads, and their displeasure is obvious by the way the ticker has been crashing ever since the news came out.

However, such a turn of events was not exactly unexpected – ACTC‘s latest 10-Q stated that, as of March 31, the company had 3.75 BILLION shares authorized. An authorized share count this high can usually be taken as a clear sign that the company is preparing for dilution for one reason or another – and the worst part is, there is still plenty of room for ACTC to dilute even more.

Moreover, this is not the only red flag that reading ACTC‘s 10-Q for the period ended March 31, 2014 can reveal. The report stated that, at the end of the first Quarter, ACTC had:

• Cash and cash equivalents – $ 4 million
• Total current assets – $4.6
• Total current liabilities – $24.2 million
• Revenue (License fees and royalties) – $39.4 thousand
• Net loss – $8.6 million

With such unimpressive numbers in the company’s financials and the recent news of dilution fresh in the minds of investors, it’s easy to see why ACTC is currently blazing a red trail to the bottom of the charts.

Another OTC company that seems to be sliding slowly down the charts in the last three sessions is Blue Earth Inc. (OTCMKTS:BBLU), who lost 6.28% of its market value yesterday.