Advanced Cell Technology to raise funds through private placements

Nov 16 2009

Advanced Cell Technology, Inc. (“Advanced Cell”, or the “Company”) (OTCBB: ACTC), announced today that it has entered into definitive agreements on three private placements with institutional and other accredited investors under which the Company has received definitive commitments in excess of $15 million. The three investments are expected to provide proceeds sufficient to fund the Company’s general operations and working capital for the next two years. Much of the proceeds will be used to support the Company’s Retinal Pigment Epithelial (RPE) program, which the Company expects to commence later this year through the filing of an IND with the FDA, in addition to funding development of certain other pre clinical programs.

“We are extremely pleased to have negotiated these financings, with the support of existing debt holders, which will leave us sufficiently capitalized well into 2011,” remarked William M. Caldwell IV, CEO of Advanced Cell. “In addition to satisfying our operational and working capital needs, these funds will be integral in advancing our RPE Program through the clinic once we receive FDA clearance to commence clinical activities. Although we will require additional funds for specific development programs, we believe the current funding go a long way to satisfying our general operations and specific research programs into 2011.”

The Company completed the placement of a series of debentures to existing investors in the principal amount of $2,103,000, convertible into common stock at $0.10 per share for which the Company was paid $1,752,000. The Company will be required to redeem the debentures monthly commencing in May 2010, in the amount of 14.28% of the initial principal amount of the Notes, in cash or common stock at the Company’s option. The investors also received warrants to purchase an aggregate of 14,020,000 shares of common stock at an exercise price of $0.108. Further, the investors are obligated to purchase an additional $2,103,000 principal amount of debentures and 14,020,000 warrants within 90 days, at a purchase price of $1,752,000, subject to customary conditions. The investors also received an Additional Investment Right, which terminates in August 2010, and allows the investors to purchase up to $2,200,000 of principal amount of the Company’s convertible notes on the same terms and conditions as the original notes purchased in the offering. If the investors exercise their Additional Investment Right, they will also receive one and one third Class B warrants for each two shares that would be issued if the investors converted the entire portion of the note purchased pursuant to their Additional Investment Right.

The Company also entered into amended agreements with an existing investor. Under the first amended agreement, the Company received gross proceeds of $1,000,000 and issued a secured and collateralized convertible promissory note for $1,200,000. The Company shall pay a one-time interest payment of 10% of the principal of the promissory note which is due on the maturity date of the promissory note, which is in October, 2012. The promissory note is convertible into shares of the Company’s Common Stock at a conversion price of the lesser of (i) $.25 per share or (ii) eighty percent of the average of the three lowest trade prices in the 20 trading days prior to the conversion. Under the second amended agreement, the Company received gross proceeds of $1,000,000 and issued a Secured & Collateralized Promissory Note for $1,000,000. The Company shall pay a one-time interest payment of 12% of the principal of the promissory note which is due on the maturity date of the promissory note, which is in October, 2012. The promissory note is secured by $1,000,000 of a money market fund or other assets of the Investor.

The remaining funding is expected to be provided by Optimus Life Sciences Partners, a private investment fund with offices in New York and California, under which Advanced Cell may sell up to $10 million of 10% non-convertible perpetual preferred stock and warrants to purchase up to approximately 119,000,000 shares of common stock, subject to meeting certain conditions. The warrants are exercisable only to the extent the Company elects to put preferred stock to Optimus. Warrants to purchase common stock equal to 135% of the monies funded by Optimus will be exercisable at the market price of the common stock at the time of each funding. The Company agreed to pay Optimus a commitment fee of 5%, payable in cash or registered shares of common stock (priced at 90% of the then current market price), at the option of the Company.

The Company expects to immediately file a registration statement with the SEC in connection with the Optimus transaction, as well as other recent financings and certain other previously issued securities.