32. Finally in late October 2016, S. Goldberg informed me that he had agreed to
accept Besser’s deal. He said that there were some details to work out but that he had agreed to
give up a seat on the board, when Besser took over.
33. From late October 2016 and through mid-November 2016, it was everyone’s
mlderstanding at Echo’s R&D facility that Echo would receive financing led by Plaintiff and his
related entities. I met with Besser on two occasions to discuss Echo’s financing needs; Besser made it clear that he wanted to make sure Echo received enough capital to finish its work on the Core 3 CGM products. After the meetings, I, along with the rest of Echo’s remaining R&D team, were optimistic that Echo was finally heading in the right direction.
34. However, in or about November 18, 2016, Echo’s chief financial officer, Alan Schoenbart, told me that Echo would instead receive a $500,000 bridge loan from MTIA beginning the week of November 21st and that on December 10th, MTIA would lead another offer of, at least, $5,000,000.
35. On November 23, 2016, Defendant Schoenbart filed on Echo’s behalf an 8-K reporting that on November 18, 2016:
{echo] entered into an amendment (the "License Amendment") to its License, Development and Commercialization Agreement, dated as of December 10, 2013, with [MTIA]. Pursuant to the License Amendment, among other things, the definition of "Product" contained in Section 1.1.59 thereof was expanded to include the Company’s Core 2+, Generation 3 and all future generations of our CGM product(s), as further described in the License Amendment. The License Amendment will take effect, and is conditioned upon, the Company’s receipt of an aggregate of $500,000 in bridge loans on or before November 30, 2016.
36. I reviewed the 8-K, the License Amendment and the exhibits thereto. Contrary to
the representation in Echo’s 8k, the Licensing Amendment goes beyond expanding the definition
of "Product" to Echo’s "Core 2+ and Generation 3 and all future generations of CGM products .... " The Licensing Amendment gives MTIA full access to all of Echo’s intellectual property, including its algorithms and source code to the Core 2+ and Core 3 CGM technology. It is my beliefthat MTIA is essentially poised to take Echo’s intellectual property in the guise of an alleged technology transfer under the "Licensing Amendment."
37. It is my belief that the Licensing Amendment is a mechanism by which Platinum Partners, the Goldberg Defendants and MTIA are attempting to transfer, for little to no cost to MTIA, Echo’s intellectual property that was developed at a cost of over $100,000,000. The Licensing Agreement did not provide MTIA with the right to take full access to Echo’s intellectual property, particularly, its sensor and exfoliation technology. However, the Licensing Amendment provides MTIA with the right to take, inter alia, Echo’s sensor technology related to its Core 2+, Core 3 and all future generations of our NCGM product(s). This is simply the extraction of Echo’s intellectual property dressed up as a "Licensing Amendment."
