8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  August 8, 2012

Echo Therapeutics, Inc.

 (Exact name of Company as specified in its charter)

Delaware	000-23017	41-1649949
(State or other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
8 Penn Center 1628 JFK Blvd., Suite 300 Philadelphia, PA		19103
(Address of principal executive offices)		(Zip Code)

Company’s telephone number, including area code: (215) 717-4100

 (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into a Material Definitive Agreement

On August 8, 2012, the Company and Platinum-Montaur Life Sciences, LLC, a Delaware limited liability company (“Montaur”), signed a letter agreement (the “Agreement”) pursuant to which Montaur agreed to make a non-revolving draw credit facility (the “Credit Facility”) available to the Company in an initial aggregate principal amount of $5,000,000 (the “Maximum Draw Amount”).  The term of the Credit Facility will be five years from the date of closing (the “Maturity Date”).

The Agreement provides that the Company may make an aggregate principal amount of draws which do not exceed the Maximum Draw Amount. The Company may not re-borrow the amount of any repaid draw.  The Maximum Draw Amount available under the Credit Facility may increase in $3,000,000 increments, for a Maximum Draw Amount of no more than $20,000,000, upon the Company’s achievement of certain clinical and regulatory milestones.

The principal balance of each draw will bear interest from the applicable draw date at a rate of 10% per annum, compounded monthly.  The Company is required to make interest payments on the principal amount due in connection with each draw on the first business day of each month until the Maturity Date.  The Company is also required to make a mandatory prepayment on each interest payment date, an amount equal to one-third its total revenue for the then prior fiscal quarter.  The Company is not, however, required to make such interest payment or mandatory prepayment if doing so would reduce the Company’s cash and cash equivalents to less than $5,000,000.  Any amounts not previously paid in full will be due and payable on the Maturity Date.  The Company will have the right to permanently prepay any draw, in whole or in part, prior to the Maturity Date.

On closing of the Credit Facility, the Company will issue Montaur a warrant to purchase 4,000,000 shares of its common stock, $0.01 par value (the “Common Stock”), with an exercise price of $2.00 per share and a term of five years.  In addition, for each $1,000,000 of funds borrowed pursuant to the Credit Facility, the Company will issue Montaur a warrant to purchase 1,000,000 shares of Common Stock, with a term of five years and an exercise price equal to 150% of the market price of the Common Stock at the time of the draw, but in no event less than $2.00 or more than $4.00 per share. The exercise price of the warrants shall be subject to a full ratchet adjustment in the event of a Dilutive Issuance (as defined below).

Montaur will have no obligation to fund any draw upon the issuance by the Company of Common Stock and/or securities convertible into, exchangeable for, or exercisable for Common Stock at a price of less than $4.00 per share (a “Dilutive Issuance”), other than issuances of Common Stock, options to acquire Common Stock or similar equity incentive grants and awards to the Company’s employees, directors and consultants pursuant to equity incentive plans approved by the shareholders of the Company.

The Credit Facility shall initially be secured by a pledge of the Pledged Revenue (as defined in the Agreement) of the Company and its subsidiaries.  Upon the earlier of the Maturity Date of the Credit Facility or an event of default, the Credit Facility shall be secured by substantially all assets of the Company and its subsidiaries, which security interest shall not be effective until such event of default or maturity.

The description of the material terms of the Agreement is qualified in its entirety by reference to the full text of the Agreement which is filed as Exhibit 10.1 and is incorporated herein by reference. On August 9, 2012, the Company issued a press release announcing the Agreement.  A copy of the press release is attached as Exhibit 99.1 to this report.  

Item 2.02  Results of Operations and Financial Condition

On August 10, 2012, the Company issued a press release announcing its financial results for the quarter ended June 30, 2012.  A copy of the press release is attached as Exhibit 99.2 to this report.  This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Exchange Act registration statements.

Item 9.01  Financial Statements and Exhibits

The Exhibits listed in the Exhibit Index immediately preceding such Exhibits are filed with or incorporated by reference in this report. 

SIGNATURES

              Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ECHO THERAPEUTICS, INC.
Dated: August 14, 2012	By:  /s/  Patrick T. Mooney
	Patrick T. Mooney
	President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.                   Description

10.1 Letter agreement between the Company and Platinum-Montaur Life Sciences, LLC dated August 8, 2012.

99.1                                Press release issued by the Company on August 9, 2012.

99.2                                Press release issued by the Company on August 10, 2012.

EX-10.1

Exhibit 10.1

Platinum-Montaur Life Sciences, LLC

152 West 57th Street, 4th Floor

New York, NY 10019

August 8, 2012

Echo Therapeutics, Inc.

8 Penn Center

1628 JFK Blvd, Suite 300

Philadelphia, PA 19013

Attention: Dr. Patrick Mooney

Ladies and Gentlemen:

Platinum-Montaur Life Sciences, LLC (hereinafter called the “Lender”) is pleased to provide this commitment for a term loan facility (the “Term Loan Facility”) to Echo Therapeutics, Inc. (the “Borrower”) on the terms and conditions set forth herein.  This letter is a summary and is not intended to be all inclusive.  Additional provisions that are standard to transactions of this size and type can be expected to be included in the loan and financing documents prepared by the Lender and its counsel for this transaction.

BORROWER:	Echo Therapeutics, Inc.
AMOUNT OF TERM LOAN FACILITY:	$5,000,000 initially, subject to increase in $3 million increments upon satisfaction of the Increase Conditions to an amount not to exceed to $20,000,000.
DRAWS:	Each Draw of the Term Loan Facility shall be in a minimum amount of $1,000,000, or in whole multiples of $100,000 in excess thereof.  Amounts repaid may not be reborrowed. The Lender shall have no obligation to fund any Draw upon the issuance by the Borrower of shares of its common stock and/or securities convertible into, exchangeable for, or exercisable for common stock of the Borrower at a price of less than $4 per share (a “Dilutive Issuance”), other than issuances of common stock, options to acquire common stock or similar equity incentive grants and awards to the Borrower’s employees, directors and consultants pursuant to equity incentive plans approved by the shareholders of the Borrower.
INTEREST RATE:	Ten percent (10%) per annum, compounding monthly.
COMMITMENT FEE WARRANT:	On closing, the Borrower shall deliver to the Lender a warrant to purchase 4,000,000 shares of the Borrower’s common stock, such warrant to have an exercise price of $2.00 per share and a term of five years (the “Commitment Fee Warrant”).
DRAW WARRANT:	The delivery by the Borrower to the Lender of a warrant to purchase 1,000,000 shares of the Borrower’s common stock per $1,000,000 of the amount of each Draw (a “Draw Warrant” and together with the Commitment Fee Warrant, the “Warrants”) shall be a condition precedent to the funding of each Draw. Each Draw Warrant shall have a term of five years from the date of the Draw and an exercise price equal to the lesser of: (a) 150% of the market price of the Borrower’s common stock at the time of the applicable Draw (but in no event less than $2.00 per share), or (b) $4.00 per share.
WARRANT TERMS:	The Warrants shall provide for cashless exercise unless an effective registration statement providing for the registration of all warrant shares is available for resales. The exercise price of the Warrants shall be subject to a full ratchet adjustment in the event of a Dilutive Issuance.  The Borrower shall provide typical indemnification in connection with any sales made via a prospectus.

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INCREASE CONDITIONS:	The maximum principal amount of all Draws (the “Draw Credit Maximum Amount”) shall be increased by $3,000,000 upon the occurrence of each of the following conditions: (1)The initiation of treatment of at least one subject at each institution included in the CE study; (2)Upon the public announcement of a successful study (met the predefined success endpoints in the clinical protocol) suitable for filing for the CE Mark; (3)Upon the completion of at least one test subject at each of the targeted clinical testing venues for the FDA pivotal study; (4)Upon the public announcement of a successful study (meeting the predefined success endpoints in the clinical protocol) suitable for filing for FDA approval; and (5)Upon the receipt of U.S. regulatory clearance to sell the CGM device in US institutions.
PURPOSE:	To provide working capital to the Borrower for its general corporate purposes.
MATURITY DATE OF TERM LOAN FACILITY:	Five years from the date of closing.
REPAYMENT:	(1)Interest.  Interest shall be due and payable monthly on the first business day of each month; provided, however, that no portion of an interest payment shall be due on any interest payment date if, giving effect to such portion of such interest payment, the Borrower would have cash and cash equivalents of less than $5,000,000 (after giving effect to such interest payment) in the aggregate on such interest payment date; and provided, further, that if not previously paid in full, all accrued interest shall be due and payable in full on the maturity date of the Term Loan Facility or upon earlier acceleration. (2)Principal.  Principal shall be due and payable in full on the maturity date or upon earlier acceleration. (3)Mandatory Prepayment.  The Borrower shall, on each interest payment date, pay to Lender an aggregate amount equal to 1/3rd of the total revenue reported by the Borrower during the then immediately prior fiscal quarter (excluding, for the avoidance of doubt, funds received by the Borrower from capital raising activities), such payments to be applied no later than 45 days following the end of such immediately prior fiscal quarter and to be applied to accrued and unpaid interest before being applied to principal (such principal payment to be applied to the Draw or Draws as designated by the Borrower in its discretion); provided, however, that no such portion of such payment shall be due on any payment date if, giving effect to such portion of such payment, the Borrower would have cash and cash equivalents of less than $5,000,000 in the aggregate on such payment date; and provided, further, that if not previously paid in full, all principal of and all accrued interest on all Draws shall be due and payable in full on the Maturity Date of the Term Loan Facility or upon earlier acceleration.
PREPAYMENT:	The Borrower shall have the option at all times to permanently prepay any Draw, in whole or in part, by providing to Lender two (2) business days’ prior written notice of the effective date and amount of such cancellation or prepayment.

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COLLATERAL:	The Term Loan Facility shall be initially be secured by a pledge of the Pledged Revenue of the Borrower and its subsidiaries.  Upon the earlier of an event of default under or the maturity date of the Term Loan Facility, the Term Loan Facility shall be secured by substantially all assets of the Borrower and its subsidiaries, it being understood that such lien shall not attach and be effective until such event of default or maturity.  Such grants of collateral shall be evidenced by one or more security agreements (“Security Agreements”). As used herein, “Pledged Revenue” means (i) all rights of payment of monetary obligations, including rights to payment for goods and general intangibles sold, leased, licensed, assigned or otherwise disposed of; (ii) all rights to payment for services rendered or to be rendered; (iii) all rights under all documents and instruments and all sums of money or other proceeds due or becoming due thereon to the extent the same result from the sale, license or other disposition of the Borrower’s property, products or services, and all rights pertaining to and interest in such documents and instruments; (iv) all other rights and claims to the payment of money, under contracts or otherwise; all rights to payment evidenced by chattel paper or an instrument to the extent the same result from the sale, license or other disposition of the Borrower’s property, products or services; (v) all deposit accounts to the extent that such deposit accounts contain any of the foregoing items; and (vi) all other property constituting accounts (as defined in the UCC).  “Pledged Revenues” shall not include funds received by the Borrower from capital raising activities.
COVENANTS:	The Loan Documents shall contain customary and typical senior secured indebtedness covenants, including without limitation covenants regarding prohibitions on liens, indebtedness, organic changes, redemptions, affiliate transactions, dividends and investments, together with covenants regarding maintenance of assets, reporting requirements, and listing eligibility.  Further, the Borrower shall covenant to promptly provide, at the Borrower’s sole expense, any and all necessary legal opinions and other documentation as may be reasonably required by the Lender or the Borrower’s transfer agent to effect transactions under Rule 144, and otherwise by the Lender in the common stock to be received upon exercise of the Commitment Fee Warrant and the Draw Warrants.
GUARANTY:	All subsidiaries of the Borrower shall execute and deliver to the Lender a guaranty of the Borrower’s obligations under the Term Loan Facility (the “Guaranty”).
DOCUMENTATION:	The closing of the Term Loan Facility is subject to documentation acceptable to the Lender.
ASSIGNMENT:	Unless an Event of Default shall have occurred, the Lender may not assign all or any part of the Term Loan Facility without the Borrower’s consent; provided, that, the Lender shall have the right to assign all or part of the Term Loan Facility to any affiliate of the Lender without the prior consent of the Borrower; and provided, further, that the Lender shall be free to assign, sell, pledge, or otherwise dispose of the Warrants (and the stock underlying the Warrants) in its discretion.  The Borrower shall not have the right to assign the Term Loan Facility without the Lender’s prior written consent.
INDEMNITY:	The Borrower shall indemnify, defend and hold the Lender (and the Lender’s members, officers, managers, employees and agents) harmless against any and all losses, liabilities, claims, damages or expenses incurred in connection with  the Term Loan Facility except to the extent same are incurred solely by reason of the gross negligence or willful misconduct of the Lender (or the Lender’s members, officers, managers, employees or agents), including, without limitation, any brokerage commissions or finder’s fees claimed by any broker or other party in connection with the transactions contemplated hereby.

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EXPENSES:	Whether or not the transactions contemplated hereby are consummated, the Borrower shall pay all expenses incurred by the Lender in the preparation of this commitment letter, and the negotiation, execution, and delivery of the documents and instruments evidencing the Term Loan Facility (including without limitation a Loan Agreement, a promissory note, the Guaranty, the Security Agreements, an opinion of the Borrower’s counsel, and the Commitment Fee Warrant, collectively the “Loan Documents”), including attorneys’ fees reasonably incurred, subject to the limitation set forth below.
CLOSING:	Definitive documentation to be executed and delivered by the Borrower and its subsidiaries no later than August 24, 2012, with closing to occur no later than September 24, 2012.
CONDITIONS PRECEDENT TO CLOSING:	The following are conditions precedent to the closing of the Term Loan Facility: (1)The Borrower shall have provided to the Lender all information reasonably requested by the Lender. (2)The negotiation, execution and delivery of the Loan Documents shall be satisfactory to the Lender, the Borrower and their respective counsel.  All documents required to be delivered in connection with the Term Loan Facility, including customary legal opinions, corporate records and documents from public officials and officers’ certificates, shall have been delivered and shall be in form and substance satisfactory to the Lender and the Lender’s counsel. (3)All representations and warranties of the Borrower and its subsidiaries shall be true, complete and correct. (4)There shall not have occurred any event or conditions that, in the opinion of the Lender , has had or could reasonably be expected to have a material adverse effect on the Borrower and/or any subsidiary of the Borrower (financial or otherwise) or any collateral, since the date of the most recent consolidated financial statements of the Borrower and its subsidiaries last submitted and reviewed by the Lender. (5)All necessary governmental, third party and other approvals required for the transaction contemplated hereby shall have been obtained and be in full force and effect on the closing date and any applicable waiting periods shall have expired without any action being taken or threatened by any applicable authority, which, without limitation, would restrain, prevent or otherwise impose materially adverse conditions on the Borrower or create any material risk to the Lender. (6)There shall not exist any action, suit, investigation or proceeding pending or threatened in any court of before any arbitrator or governmental authority that purports to affect any transaction contemplated hereby or the ability of the Borrower or any other obligor under the loan documentation to perform their respective obligations under such loan documentation. (7)$15,000 in fees, costs and expenses incurred by the Lender in connection with the negotiation, drafting and execution of Term Loan Facility and the Loan Documents (including this letter) shall have been paid by the Borrower. (8)The Borrower shall have provided opinions of counsel, in form and substance satisfactory to the Lender, addressing such matters as the Lender may reasonably request. (9)NASDAQ shall have approved the listing of the common stock underlying the Warrants.

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If the terms and conditions of this commitment letter are acceptable to you, please sign and deliver the enclosed copy to the undersigned.  This commitment letter is made to the Borrower and is not assignable or transferable.  Unless the Borrower executes and delivers a copy of this this letter to the Lender on or before August 9, 2012, this letter (other than provisions regarding reimbursement of expenses) shall expire and be of no further force or effect.

We look forward to continuing to work with you.  If you have any questions, please call me.

[signature page follows]

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Very truly yours,

PLATINUM-MONTAUR LIFE SCIENCES, LLC

By: /s/ Michael Goldberg, M.D.

Its Duly Authorized Agent

The Borrower hereby accepts and agrees to the terms and conditions set forth above:

ECHO THERAPEUTICS, INC.

By: /s/ Patrick Mooney

Its Duly Authorized Agent

By: /s/ Christopher Schnittker

Its Duly Authorized Agent

Date:  August 8, 2012

EX-99.1

Exhibit 99.1

Echo Therapeutics Announces $20 Million Financing with Platinum-Montaur Life Sciences

Commitment provides resources to move Symphony® tCGM System toward regulatory clearance

Philadelphia, PA – August 9, 2012 – Echo Therapeutics, Inc. (Nasdaq: ECTE), a company developing its needle-free Symphony® tCGM System as a non-invasive, wireless, transdermal continuous glucose monitoring system and its Prelude® SkinPrep System for transdermal drug delivery, today announced that Platinum-Montaur Life Sciences, LLC (Montaur) will provide Echo a credit facility of up to $20 million. The company believes that this transaction will provide Echo with the capital resources needed to implement Echo’s plans to commercialize Symphony.

The commitment letter provides that Echo will be able to borrow up to $5 million initially, at 10% interest per annum.  Upon attaining certain key regulatory and clinical study objectives, the credit facility will increase in $3 million increments, with a maximum increase of $15 million. On closing, Echo will issue Montaur 4 million warrants with a term of five years and an exercise price of $2 per share.  Additionally, Echo will issue 1 million five year warrants per $1 million borrowed, with an exercise price ranging from $2 to $4 per share, depending on the market price of Echo’s common stock at the time of the applicable draw.   The loan matures five years from the date of closing.

“We are pleased that this new facility allows us to balance our capital structure while attempting to minimize dilution to our shareholders.  We believe the increased liquidity and financial flexibility provided by this financial commitment will enhance our ability to aggressively move Symphony toward regulatory clearance in both Europe and the United States,” said Patrick T. Mooney, M.D., Chairman and CEO of Echo Therapeutics.  “Montaur has proven to be a trusted source for our financing needs, and has demonstrated continued confidence in Echo with their on-going participation in funding our growth.”

About Echo Therapeutics

Echo Therapeutics is developing the Symphony tCGM System as a non-invasive, wireless, transdermal continuous glucose monitoring system for patients with diabetes and for use in hospital critical care units.  Echo is also developing its needle-free Prelude SkinPrep System as a platform technology for enhanced skin permeation for delivery of topical pharmaceuticals.

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Cautionary Statement Regarding Forward Looking Statements

The statements in this press release that are not historical facts may constitute forward-looking statements that are based on current expectations and are subject to risks and uncertainties that could cause actual future results to differ materially from those expressed or implied by such statements. Those risks and uncertainties include, but are not limited to, risks related to regulatory approvals and the success of Echo's ongoing studies, including the safety and efficacy of Echo's Symphony tCGM and Prelude SkinPrep Systems, the failure of future development and preliminary marketing efforts related to Echo's Symphony tCGM and Prelude SkinPrep Systems, Echo’s ability to secure additional commercial partnering arrangements, risks and uncertainties relating to Echo's and its partners’ ability to develop, market and sell diagnostic and transdermal drug delivery products based on its skin permeation platform technologies, including the Symphony tCGM and Prelude SkinPrep Systems, the availability of substantial additional equity or debt capital to support its research, development and product commercialization activities, and the success of its research, development, regulatory approval, marketing and distribution plans and strategies, including those plans and strategies related to its Symphony tCGM and Prelude SkinPrep Systems. These and other risks and uncertainties are identified and described in more detail in Echo's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2011, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. Echo undertakes no obligation to publicly update or revise any forward-looking statements.

For More Information:

Christine H. Olimpio

Director, Investor Relations and Corporate Communications

(215) 717-4104

colimpio@echotx.com

Connect With Us:

- Visit our website at www.echotx.com

- Follow us on Twitter at www.twitter.com/echotx

- Join us on Facebook at www.facebook.com/echotx

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EX-99.2

Exhibit 99.2

Echo Therapeutics Announces Second Quarter 2012 Financial Results

Philadelphia, PA – August 10, 2012 – Echo Therapeutics, Inc. (Nasdaq: ECTE), a company developing its needle-free Symphony® tCGM System as a non-invasive, wireless, transdermal continuous glucose monitoring system and its Prelude® SkinPrep System for transdermal drug delivery, today announced financial results for the quarter ended June 30, 2012. Echo’s Quarterly Report on Form 10-Q, as filed with the SEC, is available through Echo’s website at www.echotx.com.

Recent Corporate Highlights

·   Echo announced that Platinum-Montaur Life Sciences, LLC will provide the Company a credit facility of up to $20 million.  This transaction will provide the Company with significant, yet flexible, financial resources to fund its development and growth plans.

·   Echo announced positive results from its clinical study conducted at Thomas Jefferson University Hospital in Philadelphia, Pennsylvania.  This study is the second of two studies in critically ill patients that demonstrated that Symphony successfully and continuously monitored glucose levels in the intensive care unit.

·   Echo signed an amended license agreement with Ferndale Pharma Group, Inc. that expanded the territory in which Ferndale can develop, market and sell Prelude for needle-free skin preparation prior to the application of topical 4% lidocaine cream.

·   Echo was included in the Russell Microcap® Index when Russell Investments rebalanced its family of U.S. indexes.  A company’s membership in the Russell Microcap Index, which remains in place for one year, means that it is automatically included in the appropriate growth and value style indexes.

·   At the 72nd Scientific Sessions of the American Diabetes Association, Echo presented an expanded analysis of data from its clinical trial of Symphony in subjects with either type 1 or type 2 diabetes.  Following the oral presentation, Echo hosted a panel discussion on hospital-based glucose control with Key Opinion Leaders in glycemic control. Video highlights are available: http://echotx.com/events.shtml.

·   David Walton, who has nearly two decades of strategic healthcare marketing experience, joined Echo as Vice President of Marketing and Commercial Development.  Dave leads global strategic marketing planning for Symphony and other new products in the Company’s growth strategy.

“Montaur’s financial commitment, together with the recent positive clinical results of Symphony and the appointment of Dave Walton to lead our global marketing effort, represent important achievements for Echo as we progress toward regulatory clearance and commercialization,” commented Patrick T. Mooney, M.D., Chairman and Chief Executive Officer of Echo Therapeutics.  “In the second half of the year, our focus is to establish plans for CE Mark and FDA pivotal trials for Symphony, advancing toward European and U.S. regulatory clearances and, ultimately, Symphony’s commercial launch.”

Second Quarter 2012 Financial Results

Echo’s net loss for the second quarter of 2012 was $3.2 million, or ($0.08) per share, compared to $2.0 million, or ($0.06) per share, for the second quarter of 2011.  Operating loss for the second quarter of 2012 was $3.5 million compared to $1.8 million for the second quarter of 2011.  Research and development expenses were $2.2 million for the second quarter of 2012 compared to $1.0 million in the prior year.  The increase in research and development expenses are primarily related to increased manufacturing, development and clinical expenses, as well as personnel costs.  General and administration expenses were $1.3 million for the second quarter of 2012 versus $1.0 million in the prior year.  The increase in general and administrative expenses was primarily due to increased personnel and facility costs, as well as legal and other Nasdaq and public company expenses. Echo reported a cash balance of approximately $3.1 million as of June 30, 2012.

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Cautionary Statement Regarding Forward Looking Statements

The statements in this press release that are not historical facts may constitute forward-looking statements that are based on current expectations and are subject to risks and uncertainties that could cause actual future results to differ materially from those expressed or implied by such statements. Those risks and uncertainties include, but are not limited to, risks related to regulatory approvals and the success of Echo's ongoing studies, including the safety and efficacy of Echo's Symphony tCGM and Prelude SkinPrep Systems, the failure of future development and preliminary marketing efforts related to Echo's Symphony tCGM and Prelude SkinPrep Systems, Echo’s ability to secure additional commercial partnering arrangements, risks and uncertainties relating to Echo's and its partners’ ability to develop, market and sell diagnostic and transdermal drug delivery products based on its skin permeation platform technologies, including the Symphony tCGM and Prelude SkinPrep Systems, the availability of substantial additional equity or debt capital to support its research, development and product commercialization activities, and the success of its research, development, regulatory approval, marketing and distribution plans and strategies, including those plans and strategies related to its Symphony tCGM and Prelude SkinPrep Systems. These and other risks and uncertainties are identified and described in more detail in Echo's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2011, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. Echo undertakes no obligation to publicly update or revise any forward-looking statements.

For More Information:

Christine H. Olimpio

Director, Investor Relations and Corporate Communications

(215) 717-4104

colimpio@echotx.com

Connect With Us:

- Visit our website at www.echotx.com

- Follow us on Twitter at www.twitter.com/echotx

- Join us on Facebook at www.facebook.com/echotx

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Echo Therapeutics, Inc.

Condensed Consolidated Balance Sheets

	June 30, 2012			December 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	3,111,342		$	8,995,571
Cash restricted pursuant to letters of credit		407,463			250,000
Other current assets		221,961			317,940
Total current assets		3,740,766			9,563,511
Net property and equipment (including assets under capitalized leases)		563,597			317,731
Intangible assets, net of accumulated amortization		9,625,000			9,625,000
Restricted cash, deposits and other assets		10,816			20,565
Total assets	$	13,940,179		$	19,526,807
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	683,672		$	365,298
Deferred revenue		123,721			123,708
Derivative warrant liability		392,536			1,035,337
Accrued expenses and other liabilities		745,384			968,120
Total current liabilities		1,945,313			2,492,463
Deferred revenue, notes payable and capital lease obligation, net of current portion and discounts		2,656			65,755
Total liabilities		1,947,969			2,558,218
Commitments
Stockholders' Equity:
Convertible preferred stock, Series C & D		30,160			30,160
Common stock		396,156			385,442
Additional paid-in capital		99,276,015			98,116,327
Common stock subscribed for but not paid for or issued		-			6,667
Accumulated deficit		(87,710,121	)		(81,570,007	)
Total stockholders' equity		11,992,210			16,968,589
Total liabilities and stockholders' equity	$	13,940,179		$	19,526,807

Condensed Consolidated Statements of Operations

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Licensing revenue	$	30,927		$	121,455		$	61,854		$	242,910
Other revenue		-			37,065			-			145,152
Total revenues		30,927			158,520			61,854			388,062
Operating Expenses:
Research and development		2,200,307			996,149			3,591,952			1,862,099
Selling, general and administrative		1,334,852			978,150			3,194,256			1,900,265
Total operating expenses		3,535,159			1,974,299			6,786,208			3,762,364
Loss from operations		(3,504,232	)		(1,815,779	)		(6,724,354	)		(3,374,302	)
Other Income (expense):
Interest income (expense), net		1,422			606			4,231			(10,065	)
Loss on extinguishment of debt/payables		-			-			-			(1,514	)
Gain (loss) on disposals of assets		(21,272	)		(2,531	)		(21,272	)		834
Derivative warrant liability gain (loss)		369,738			(122,011	)		601,281			(3,151,908	)
Other income (expense), net		349,888			(123,936	)		584,240			(3,162,653	)
Net loss		(3,154,344	)		(1,939,715	)		(6,140,114	)		(6,536,955	)
Deemed dividend on beneficial conversion feature of Series D Convertible Preferred Stock		-			-			-			(1,975,211	)
Accretion of dividends on Convertible Perpetual Redeemable Preferred Stock		-			(47,558	)		-			(93,242	)
Net loss applicable to common shareholders	$	(3,154,344	)	$	(1,987,273	)	$	(6,140,114	)	$	(8,605,408	)
Net loss per common share, basic and diluted	$	(0.08	)	$	(0.06	)	$	(0.16	)	$	(0.26	)
Basic and diluted weighted average common shares outstanding		39,160,643			33,911,459			38,951,809			33,277,823

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