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): November 18, 2016

Echo Therapeutics, Inc.

 (Exact name of Company as specified in its charter)

Delaware	001-35218	41-1649949
(State or other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
99 Wood Avenue South., Suite 302 Iselin, NJ		08830
(Address of principal executive offices)		(Zip Code)

Company’s telephone number, including area code: (732) 201-4194

 (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 November 18, 2016, Echo Therapeutics, Inc. (the “Company”) entered into an amendment (the “License Amendment”) to its License, Development and Commercialization Agreement, dated as of December 10, 2013, with Medical Technologies Innovation Asia, LTD. 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.

On November 18, 2016, the Company issued a promissory note (the “Note”) to Network Victory Limited (the “Lender”) in the aggregate principal amount of up to $875,000 in respect of bridge loans to be funded to the Company. To date, the Company has received an aggregate of $575,000 in bridge loans from Lender (including $375,000 of bridge loans being rolled into the new Note) and anticipates receiving an additional $300,000 in funding under the Note on or prior to November 30, 2016. The Note bears interest on the unpaid principal balance outstanding at a rate of eighteen (18%) per annum, compounding monthly, and may, at Lender’s option, be exchanged for securities issued in a subsequent financing by the Company. The Note is due upon the earlier of (i) the consummation of the sale by the Company of equity securities in an offering, with gross proceeds to the Company (before deduction of underwriter’s commissions, offering expenses and the like) of not less than $1,000,000, and (ii) five business days after the date that demand for repayment is made by Lender to the Company in writing, but in no event earlier than December 10, 2016.

The summary set forth above is not intended to be complete and is qualified in its entirety by reference to the License Amendment and the Note, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

Item 2.03 

Creation of a Direct Financial Obligation or an Obligation Under an Off- Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 above with respect to the Note is incorporated by reference into this Item 2.03.

Item 5.02 

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 22, 2016, Alan W. Schoenbart, currently the Company’s Chief Financial Officer, was appointed by the board of directors of the Company (the “Board”) to serve as Interim Chief Executive Officer of the Company. Mr. Schoenbart will also continue as Chief Financial Officer. A biography for Mr. Schoenbart is contained in the Company’s definitive proxy statement filed on April 12, 2016 under the section entitled “Executive Compensation.” Also, as previously disclosed, Mr. Schoenbart is party to an employment agreement, dated December 29, 2014, with the Company filed with the Company’s Current Report on Form 8-K on December 30, 2014. All terms of Mr. Schoenbart’s current employment agreement remain the same.

The Board did not appoint Mr. Schoenbart pursuant to any arrangement or understanding between Mr. Schoenbart and the Company or any other person or entity, and Mr. Schoenbart does not have any familial relationship with any director or executive officer of the Company. In addition, there are no transactions between Mr. Schoenbart and the Company that are required to be disclosed pursuant to item 404(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Item 9.01

Financial Statements and Exhibits.

10.1 

Amendment to the License, Development and Commercialization Agreement between Echo Therapeutics, Inc. and Medical Technologies Innovation Asia, LTD.

10.2 

Promissory Note, dated November 18, 2016.

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: November 23, 2016	By:  /s/ Alan W. Schoenbart
	Alan W. Schoenbart
	Interim Chief Executive Officer

EX-10.1

Exhibit 10.1

Amendment # 2 to the

License, Development and Commercialization Agreement

Between

Echo Therapeutics, Inc.

And

Medical Technologies Innovations, Asia, Ltd.

1 

EXECUTIVE SUMMARY

1.1             Scope. This amendment covers the activities necessary to support the Chinese commercialization of the “Core 2+ and “Generation 3” versions of the Echo CGM system, as defined below. This Amendment # 2 will take effect, and is conditioned upon receipt of $500,000 in additional bridge loans on or before November 30th.

1.2                Amended Terms. The terms in the Original Agreement remain in force, except as described below.

1.3                Product Definition. The definition of “Product” contained in Section 1.1.59 is amended to include the following:

Release	Device	Description	Echo Deliverables	MTIA Responsibilities
Core 2+	System		Support as needed plus deliverables listed below. Evaluation and testing of MTIA produced materials, as needed.	Prototype construction, preliminary clinical testing in China. Manufacturing, CFDA clinical testing, regulatory approval, commercialization.
	Sensor Module & Target Base	Gen 1 CoPhthal Electrode, dried hydrogel, plastic case. Target Base with adhesive.	Design changes, test reports.	Final changes to design and testing as needed.
	Disposable Kit	Disposable package, containing the single use devices. Updates include new Tip, BZK wipe, Reference ring & labeling	None.	Update to Bill of Materials, contents, packaging & labeling. Shelf life & other testing as needed.
	Transmitter	Bluetooth transmitter and embedded firmware.	Firmware executable program and PC based test program.	Testing as needed.
	Glucose Algorithm	Signal processing software and configuration parameters.	Executable program and baseline configuration parameters. PC based test tool.	Final configuration parameters, testing as needed.
	Exfoliator	Skin exfoliator, with embedded control firmware and configuration parameters. Battery charger.	Design documentation, sample prototypes. Firmware executable program, configuration parameters and PC based test program.	Final configuration parameters, testing as needed. Exfoliator tip production. Battery charger design, development and testing.
	API	Application Programming Interface, running on Android	Executable software (Android), test reports and interface document.	None.
	App	CGM Application with Graphical User Interface.	Example English App with source code and executable (Android).	Software development of Chinese App, Testing as needed.

Release	Device	Description	Echo Deliverables	MTIA Responsibilities
Generation 3 and all future generations of our CGM product(s)	System		Requirements, design, implementation, testing and preliminary clinical testing. Software and algorithm design. Evaluation and testing of MTIA produced materials, as needed.	User documentation, Shipping packaging & labeling. Preliminary clinical testing in China. Manufacturing, CFDA clinical testing, regulatory approval, commercialization.
	Sensor Module & Target Base	Electrode, Wet Hydrogel and plastic carrier	Design documentation, Design test reports, pilot production, sample prototypes	Plastic part tooling & part manufacturing.
	Disposable Kit	Sterile, disposable package, containing the single use devices (Tip, Target Base, Sensor, Hydrogel, Tray, Packaging)	Design documentation, Design test reports, pilot production, sample prototypes	Plastic part tooling & part manufacturing.
	Transmitter	Reusable, battery operated transmitter and embedded firmware	Design documentation, Design test reports and sample prototypes. Firmware executable program and PC based test program.	Plastic part tooling & part manufacturing
	Glucose Algorithm	Signal processing software that produces glucose values	Executable software and configuration parameters. Design test reports
	Exfoliator	Self-use Exfoliator, with embedded firmware.	Design documentation, Design test reports and sample prototypes. Firmware executable program and PC based test program.	Plastic part tooling & part manufacturing
	API	Application Programming Interface, running on Android	Executable software (Android), test reports and interface document.	None.
	App	Chinese CGM Application	Example English App with source code and executable (Android).	Software development of Chinese App, Testing as needed.

2 

DEVELOPMENT PROJECT

2.1                Work Plan and Overview. Echo and MTIA will cooperate in the development of a project Overview and a more detailed Work Plan. This work plan will describe the responsibilities of each company for the development of the devices described above, in “Product Definition”. In the event that a change is needed in the definition of these deliverables, this will be made with mutual consent, in an update to the work plan.

2.2                Software Development. Echo will provide an Application Programming Interface (API) to facilitate the development by MTIA of application software for both Core 2+ and Generation 3. Echo will develop and provide source code for an example application using the API. The MTIA application software will be developed by MTIA based on requirements MTIA defines. Echo will provide executable versions of the software for the Exfoliator, Transmitter and API.

2.3                Technology Transfer. Echo will provide documentation and training to MTIA to ensure that MTIA has the knowledge necessary to manufacture the devices described in the “Product Definition” above.

2.4                Development Schedules. Both companies will publish to each other, Gantt charts showing the activities and end dates needed to produce the deliverables described in the work plan

2.5                  Status Reports. Both companies will publish bi-weekly status reports to each other, describing the progress, issues and any significant schedule updates.

2.6                  Conference Calls -TBD

3 

PAYMENTS

The terms of the Original Agreement apply with the following exceptions:

3.1                Reimbursement. There shall be up to $2,000,000 of reimbursement for direct out of pocket expenses, subject to submission of appropriate documentation for review and approval by the Company and outside independent auditors hired by the Company for work done by MTIA, or their affiliates, on our CGM product in development to date of this agreement. Reimbursement will be made in the form of a promissory note payable to MTIA upon consummation of a convertible debt financing led by MTIA or their affiliates in excess of $5,000,000 of gross proceeds. The form of the promissory note will be the same form as those issued in the financing. No further reimbursement will be made by Echo to MTIA for costs involved in the development of products to obtain CFDA approval or for commercial deployment. If a convertible debt financing cannot be led by MTIA or their affiliates, Echo will only reimburse up to a maximum of $1,500,000 upon CFDA approval of the products through the same promissory note as stated in accordance with the terms of the Original Agreement.

3.2                Prototypes. MTIA will reimburse Echo for the real and actual costs of producing and shipping prototype samples delivered to MTIA clinical testing, demonstration and other purposes, for the products described above in the “Product Definition”.

3.3                Plastic Parts and Tooling. MTIA will provide the tooling for the plastic parts needed for the products described above in the “Product Definition”. MTIA or their affiliates will also be responsible to provide these products to Echo for design testing, clinical testing, demonstration and other purposes. Echo will reimburse MTIA or their affiliates for the real and actual costs of producing and shipping manufactured parts for these products.

4. NOTICES

4.1           

All notices to Echo shall be sent to:

Echo Therapeutics, Inc.

295 Foster Street

Littleton, MA 01460

Attention: Chief Financial Officer

with a copy to:

Kevin W. Waite, Esq.

Moomjian, Waite & Coleman, LLP

100 Jericho Quadrangle, Suite 208

Jericho, NY 11753

IN WITNESS WHEREOF, the Parties, intending to be legally bound hereby, have caused their duly authorized representatives to execute this Agreement as of the Effective Date.

ECHO THERAPEUTICS, INC.

By:       /s/ Alan W. Schoenbart________

Name:  Alan W. Schoenbart

Title:    CFO

MEDICAL TECHNOLOGIES INNOVATION ASIA, LTD.

By:       /s/ Bai Ge__________________

Name:  Bai Ge

Title:    Managing Director

EX-10.2

Exhibit 10.2

PROMISSORY NOTE

(Bridge Note)

$875,000	Iselin, NJ
	November 18, 2016

FOR VALUE RECEIVED, ECHO THERAPEUTICS INC., a Delaware corporation (together with its successors and assigns, the “Borrower”), with its principal place of business at 99 Wood Avenue South, Suite 302, Iselin, New Jersey 08830, promises to pay to the order of NETWORK VICTORY LIMITED (together with any successors or assigns, the “Lender”) at the office of the Lender,PO BOX 957, OFFSHORE INCORPORATION CENTER. ROAD TOWN, TORTOLA, BRITTISH VIRGIN ISLANDS, the sum of up to EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS and ZERO cents ($875,000.00), together with interest on the unpaid balance and all other charges, as provided below. Lender has previously funded $425,000 and agrees to fund an additional $450,000 under this Note prior to November 30, 2016. Commencing on the date hereof, interest shall accrue on the unpaid principal balance outstanding from time to time at a rate per annum equal to 18%, compounding monthly. The Borrower shall pay all outstanding principal and interest on the Maturity Date. “Maturity Date” is defined as earlier of (i) the consummation of the sale by the Borrower of equity securities in an offering, with gross proceeds to the Borrower (before deduction of underwriter’s commissions, offering expenses and the like) of not less than $1,000,000 and (ii) five business days after the date that demand for repayment is made by Lender to Borrower in writing, but in no event earlier than December 10, 2016. To the extent permitted by applicable law, upon and after the occurrence of an Event of Default (whether or not the Lender has accelerated payment of this Note), interest on principal shall be payable on demand at a rate per annum equal to 24% per annum, compounding monthly. This Note is unsecured and is subordinated and junior, in payment and priority, to the Secured Convertible Notes of the Borrower issued on January 29, 2016 and May 3, 2016. This Note replaces the Promissory Notes issued to Lender in the principal amount of $250,000 dated September 23, 2016 and in the principal amount of $125,000 dated October 19, 2016 which shall be surrendered by the Lender to Borrower for cancellation.

Default. If (a) the interest hereon or any commitment or other fee shall not be paid in full punctually when due and payable, and/or (b) the principal hereof shall not be paid in full punctually when due and payable, it shall constitute an Event of Default (“Event of Default”) under this Note. Upon an Event of Default, or at any time thereafter, at the option of the Lender, all obligations hereunder shall become immediately due and payable without notice or demand and the Lender shall then have in any jurisdiction where enforcement hereof is sought. All rights and remedies of the Lender are cumulative and are not exclusive of any rights or remedies provided by laws or any other agreement, and may be exercised separately or concurrently.

Waiver; Amendment. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. No waiver of any right contained in, consent to any departure from, or amendment to any provision contained in this Note shall be effective unless in writing and signed by the Lender, nor shall a waiver on one occasion be construed as a waiver of any such right on any future occasion. Without limiting the generality of the foregoing, the acceptance by the Lender of any late payment shall not be deemed to be a waiver of the Event of Default arising as a consequence thereof.

Governing Law; Consent to Jurisdiction. This Note shall be governed by, and construed in accordance with, the laws of the State of New Jersey without regard to any conflict of laws provisions that might result in the application of the laws of another state. The Borrower agrees that any suit for the enforcement of this Note may be brought in the courts of the State of New Jersey or any federal court sitting in such state and consents to the non-exclusive jurisdiction of each such court and to service of process in any such suit being made upon the Borrower by mail at the address set forth above. The Borrower hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit was brought in an inconvenient court.

{00145512.1}

WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER, BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF: (A) THIS NOTE OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THE OBLIGATIONS HEREUNDER; (B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE BORROWER AND THE LENDER.

Severability; Authorization to Complete; Paragraph Headings. If any provision of this Note shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Note and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Paragraph headings are for the convenience of reference only and are not a part of this Note and shall not affect its interpretation. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person, persons, entity or entities may require. The terms “herein,” “hereof” or “hereunder” or similar terms used in this Note refer to this entire Note and not only to the particular provision in which the term is used.

Exchange Right. For so long as this Note is outstanding, if the Company enters into any subsequent equity or equity-linked financing on terms more favorable than the terms governing this Note (a “Subsequent Financing”), as determined by the Lender in its sole discretion, then the Lender in its sole discretion may exchange the outstanding principal and interest under this Note for the securities issued or to be issued in the Subsequent Financing.   In no event shall any such exchange be permitted to the extent such exchange results in the Lender beneficially owning (for purposes of Section 13(d) under the Securities Exchange Act of 1934) 9.99% or more of the outstanding Common Stock of the Company.

Assignments. Neither this Note nor the proceeds hereof shall be assignable by the Borrower without the Lender’s prior written consent, and any attempted assignment without the Lender’s prior written consent shall create a default under this Note. This Note may be assigned, in whole or in part, by the Lender and its successors or assigns. The Borrower’s consent shall not be required for any such assignment.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.

ECHO THERAPEUTICS INC.

By:         /s/ Alan W. Schoenbart

Name: Alan W. Schoenbart

Title: Chief Financial Officer