Promissory note, convertible preferreds to go to Montaur, investors
By Jennifer Chiou
New York, Jan. 11 - Echo Therapeutics, Inc. announced a financing agreement with Platinum Montaur Life Sciences, LLC, under which it issued a $1 million 8% senior promissory note, as well as a stock purchase agreement through which Montaur and any new investors will acquire at least $3 million of the company's new series D convertible preferred stock and warrants.
Montaur is one of the company's largest institutional investors, according to an 8-K filed with the Securities and Exchange Commission.
The promissory note will mature on Feb. 1, and Echo will have the right to repay the note early without penalty.
The 8-K added that the investor intends to exchange the note in full for series D preferreds, and it intends to purchase an additional $500,000 of the shares. Montaur will then buy $1.5 million more of the preferreds in monthly installments from March through May for a total investment of at least $3 million in all.
For each $100,000 face value of the preferreds, investors will receive series 1 warrants to purchase 50,000 common shares with an exercise price of $1.50 per share and series 2 warrants to purchase 50,000 Echo shares with an exercise price of $2.50 each.
The strike prices represent a 9.64% discount and a 50.6% premium, respectively, to the closing share price on Tuesday.
The warrants have a term of two years.
Under the term sheet, each series D share will be convertible into common shares at a price per share equal to $1.00.
Proceeds are going toward working capital and general corporate purposes.
In other news, Walter W. Witoshkin, a member of the company's board, resigned from his position on Monday due to family obligations.
Franklin, Mass.-based Echo Therapeutics is a dual platform-enabled specialty therapeutics and diagnostics company.
| Issuer: | Echo Therapeutics, Inc.
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| Issue: | Promissory note, series D convertible preferred stock
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| Amount: | $3 million (minimum)
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| Pricing date: | Jan. 5
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| Stock symbol: | OTCBB: ECTE
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| Stock price: | $1.66 at close Jan. 11
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| Market capitalization: | $49.48 million
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|
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| Promissory note
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| Amount: | $1 million
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| Maturity: | Feb. 1, 2011
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| Coupon: | 8%
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|
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| Preferred stock
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| Amount: | $3 million (minimum following note conversion)
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| Warrants: | Series 1 for 50,000 shares; series 2 for 50,000 shares
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| Warrant strike prices: | $1.50 (for series 1 warrants), $2.50 (for series 2 warrants)
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| Warrant expiration: | Two years
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