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Originally published Tuesday, August 19, 2008 at 12:00 AM

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CellCyte stops paying its remaining employees

CellCyte Genetics has fired some employees and stopped paying salaries to those who remain, the Bothell-based stem cell research company said Tuesday.

Seattle Times business reporter

CellCyte Genetics has fired some employees and stopped paying salaries to those who remain, the Bothell-based stem cell research company said Tuesday.

The company also said in a filing with the Securities and Exchange Commission that it currently does not have sufficient cash to fund its operations beyond the next month.

The terminations occurred after the end of the second quarter. An undisclosed number of remaining employees are still accruing salary but not receiving compensation; some, including management, continue providing service to the company. At the beginning of the year the company had 17 employees.

CellCyte, whose shares trade in loosely regulated German and U.S. markets, was briefly one of the region's most valuable biotechnology firms by market capitalization. Its market value soared above $400 million amid a spamming campaign paid for by one of the firm's major shareholders, Vancouver, B.C.-based stock promoter G. Brent Pierce.

Pierce, banned for 15 years by the British Columbia Securities Commission, was recently accused by the SEC of illegally reaping millions in profits by selling unregistered stock in another company, Lexington Resources.

Cellcyte's shares plummeted after The Seattle Times ran stories describing the stock promotion efforts and inconsistencies in the resume of CellCyte Chief Executive Gary Reys. The fall triggered shareholder lawsuits which the company has spent hundreds of thousands of dollars to fight. As of Tuesday, the company's market capitalization was $26 million.

An informal SEC probe of the company's activities began in January, and subsequently became a formal investigation, CellCyte disclosed in May. In the most recent filing, the company said it is "committed to resolving the issues raised in connection with the investigation."

Ángel González: 206-515-5644 or agonzalez@seattletimes.com

Copyright © 2008 The Seattle Times Company

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