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July 10, 2014 /PRNewswire/ -- Platinum Management (NY) LLC and certain affiliates ("Platinum"), the largest stockholder of Echo Therapeutics, Inc. (NasdaqCM: ECTE) ("Echo" or the "Company") owning approximately 20% of the Company's outstanding Common Stock, sent a letter to the Company today exercising Platinum's contractual right under the
December 10, 2013 Stock Purchase Agreement between Platinum and the Company to cause Echo to call a meeting of stockholders to vote to lift the "blockers" limiting Platinum's voting power.
If the stockholders vote in favor of lifting the blockers, Platinum would wind up with the power to vote approximately
30.34 % of the Company's shares, based on current publicly available information. Although Platinum has refrained from exercising this right before, even in connection with its resounding proxy contest victory, the inexplicable and damaging recent conduct by directors
Vincent D. Enright,
William F. Grieco and
James F. Smith (the "Lingering Directors") leads Platinum to believe that future action to remove the Lingering Directors for cause is likely necessary. To that end, Platinum announces it is scheduling a stockholders' forum for
Friday July 18 at
10 a.m. at 152 West 57
th Street, 54
th Floor, for stockholders to come together and share their views on the future of the Company. Platinum invites the Lingering Directors to present their plan for reversing Echo's death spiral that has taken place under their stewardship of the Company. Platinum will ask for a similar presentation from the two recently elected non-conflicted stockholder supported directors (the "Independent Directors"), who were elected by overwhelming margins at the Company's 2014 Annual Meeting. Platinum will provide its opinion on the two plans and invites stockholders to comment on the plans as well. In addition to the all-important strategic plan for turning around the Company, anticipated subjects include the continuing conflicted conduct of the Lingering Directors and the deeply troubling fee-shifting bylaw they unilaterally adopted over the heated objections of the Independent Directors. The meeting will be webcast for those investors who cannot participate in person. Stockholders interested in attending the webcast should register at
As stockholders are aware, at Echo's recent
June 19, 2014 Annual Meeting, the stockholders of Echo overwhelmingly elected Platinum's director nominee, Shepard M. Goldberg, to the Board of Directors. The certified election results show that Shepard M. Goldberg received 5,391,044 votes to the 1,607, 692 votes received by former director and interim CEO
Robert F. Doman. That nearly four to one vote margin was much more than a rejection of the now departed CEO—it was the stockholders' powerful repudiation of the regime of the Lingering Directors. On the night before the Annual Meeting, when the full extent of stockholder support became apparent,
Mark Nordlicht, Managing Member, Chief Executive Officer and Chief Investment Officer of Platinum, sent a private email to the Lingering Directors suggesting that the time had come for them to do the right thing for stockholders and resign. Mr. Nordlicht cited the
$500,000 of precious Company funds squandered on a public proxy fight that mathematically, based on investor communication, the Lingering Directors were aware they had no chance of winning from the start, and excessive cash compensation and equity granted by the Lingering Directors to themselves at levels whereby stockholders—who paid for their shares—had suffered losses in excess of 80 percent. Sadly, the Lingering Directors, over the vehement objections of the Independent Directors, reacted by giving themselves a gold plated indemnity package and adopting a worst-in-class fee shifting bylaw without stockholder approval, all for their obvious personal benefit.
Mark Nordlicht stated, "Platinum believes that a qualified new CEO should be hired without delay and added to the Board as a Director. Platinum asked that this action to be taken in a public letter to stockholders nearly a year ago but were rebuffed by the Lingering Directors until recently. The excuse provided by the Lingering Directors was the Company did not have the resources at the time to attract a qualified candidate. The Lingering Directors had no issue with resources though to increase their annual cash compensation to over
$250,000 with an additional
$450,000 paid to the failed interim CEO,
$500,000 for the proxy fiasco and countless other expenses for high priced lawyers to generate investor unfriendly bylaw changes and massively increased D&O insurance expenses. The Lingering Directors should resign and the remaining three directors should select two new, entirely independent directors with no connection to either Platinum or the Lingering Directors. In the interim, the Company can take the steps needed to right a ship that has been damaged due to the performance of the Lingering Directors. Then the newly constituted Board can get down to the pressing task of turning around Echo for the benefit of all stockholders."
Mark Nordlicht continued, "This recent stockholder vote represented a tremendous mandate for immediate and concrete change, and was a true victory for the future of Echo. But the Board's disturbing decision to squander still more of the Company's remaining resources on ill-advised increases in director indemnification and abusive 'loser pays' bylaw changes shows a stunning disregard for the will and interests of the stockholders. We now have no choice but to demand publicly the immediate resignations of Messrs. Enright, Smith and Greico from the Board, and to prepare for a future in which stockholders may need to remove those entrenched directors for cause if they refuse to do the obviously right thing."
Stockholders who are interested in attending the webcast are encouraged to register at:
Stockholders who are interested in further information concerning the webcast can contact Platinum at
SOURCE Platinum Management (NY) LLC