Echo Therapeutics, Inc. (OTCMKTS:ECTE) Files An 8-K Other EventsItem 8.01.
On November 30, 2016
, Echo Therapeutics, Inc.
(the “Company”) received an Order to Show Cause (the “Order”) filed by Manchester Management Company, LLC
, Manchester Alpha, L.P.
, JEB Partners, L.P.
, in its individual and derivative capacity, James E. Besser
and Donald E. Besser
(collectively, the “Plaintiffs”) in the United States District Court for the Southern District of New York
(the “Southern District”) against the Company, Michael Goldberg
(“MG”), Shepard Goldberg
(“SG”), Alec Goldberg
, Platinum Management (NY) LLC
(“Platinum”), Mark Nordlicht
(“Nordlicht”), Bernard Fuchs
(“Fuchs, and together with Platinum and Nordlicht, the “Platinum Defendants”), Medical Technologies Innovation Asia, Ltd.
(“MTIA”), as defendants, and the Company as nominal defendant (collectively, the “Defendants”). The Order was obtained by the Plaintiffs, ex parte, based, in part, upon information provided by Thomas Bishop
, the Company
s former Vice President of Operations and Product Development, who tendered his resignation after admitting to lying to the Company
s officers and directors regarding attending a meeting in Florida
with one or more of the Plaintiffs that he was instructed not to attend, and Craig Pierson
, Managing Director of Investment Banking from LifeTech Capital
who the Company understands attended the meeting with Mr. Bishop
and who introduced certain of the Plaintiffs to the Company. The Order temporarily restrains and enjoins the Company from taking certain actions outside of the ordinary course of business, including entering into any agreement with MTIA, or selling, transferring and/or licensing any of the Company
s assets. The Order granted Plaintiffs expedited discovery and depositions are currently being scheduled. A hearing is scheduled for December 8, 2016
. The Company intends to vigorously defend against this action.
The Plaintiffs further filed a Summon and Complaint against the Defendants in the Southern District alleging various violations of the securities laws, theft of trade secrets, breach of contract and breach of fiduciary duty. The Complaint seeks, among other things, damages in excess of $800,000, derivative relief in favor of the Company against the Platinum Defendants, MG, SG and MTIA, temporary and permanent injunctive relief restraining and enjoining MTIA, the Platinum Defendants, MG and SG from transferring, possessing, using or disclosing trade secrets alleged to have been misappropriated from Echo, and the appointment of a trustee to operate Echo for the benefit of Plaintiffs and other secured parties. The Company denies the allegations and intends to vigorously defend against these claims.
The Company expects that defense of these actions will drain the Company
s remaining limited resources and prevent the consummation of any transaction that might allow the Company to continue funding its research and development activities. The Company is exploring its alternatives, but if the Company is unable to overturn the temporary restraining order or otherwise settle these actions, the Company will be unable to continue as a going concern.
About Echo Therapeutics, Inc. (OTCMKTS:ECTE) Echo Therapeutics, Inc.
is a medical device company. The Company is engaged in developing a non-invasive, wireless continuous glucose monitoring (CGM) system with use in the wearable-health consumer market, diabetes outpatient market and in the hospital setting. The Company operates through the development of transdermal skin permeation and diagnostic medical devices segment. The Company has also developed its needle-free skin preparation device as a platform technology that allows for enhanced skin permeation enabling extraction of analytes, such as glucose, enhanced delivery of topical pharmaceuticals and other applications. The CGM System includes a skin preparation device, transdermal glucose sensor, battery and wireless transmitter. The Company has conducted several human feasibility clinical studies with its CGM System in healthy subjects, diabetics and critically ill patients, as well as a clinical study at several hospitals in the United States
. Echo Therapeutics, Inc. (OTCMKTS:ECTE) Recent Trading Information Echo Therapeutics, Inc.
(OTCMKTS:ECTE) closed its last trading session down -0.046 at 0.234 with 313,339 shares trading hands.
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