In the last week there has been a surge of new readers here at BuyersStrike!, many of whom may not be familiar with the reanimated corpse of a company called Echo Therapeutics (ECTE).
Read about Echo‘s beginnings as a venture backed company in the mid 1990s and its subsequent fall from grace into the seedy underbelly of reverse mergers here, read about their rehashed device and recycled 510k submission here, and read about LifeTech Capital, the bucket shop staffed with D. Blech & Co alumni, which recently raised money for them right here.
In that last deal, the bulk of the financing for ECTE came from a group called Platinum-Montaur. On Jan 5th 2011, the date of the Platinum-Montaur investment, ECTE stock was trading at $1.49 a share. Platinum bought convertible preferred stock plus warrants. The convertible preferred has an conversion price of $1. A massive 33% discount to market.
So, for their $1mm investment, Platinum already had stock worth $1.49mm. But Platinum also got two series of warrants. Today, with the stock at $3.36 the value of their first $1mm tranche is approximately $4.72mm.
1mm shares @ 3.36 = 3.36mm
500k warrants worth a minimum of 1.86 each (3.36 – 1.50 * 500k) = 930k
500k warrants worth a minimum of 0.86 each (3.36 – 2.50 * 500k) = 430k
These lucky chaps have securities worth $4.72mm on a $1mm investment. A massive return.
The face of Platinum-Montaur is a gentleman named Uri Landesman, who never misses a chance to hawk his motley collection of rag tag Pink Sheet and OTCBB junk with every media outlet who will book him. Whether it is CNBC, or Pimm Fox’s show on Bloomberg, Uri will be there, pumping away. But Uri is just a pretty face who only joined Platinum in May 2010. Who is the real man behind Platinum?
That person is a New Yorker named Meir “Mark” Nordlicht. According to Institutional Investor magazine Nordlicht and Landesman have been friends for a while, but the article left out some important points about Nordlicht and his buddies.
Nordlicht, as some may remember, was the founder of one of the biggest stock collapses of early 2007. A little OTC-BB gem called Optionable (OPBL). Optionable trades for 2 cents a share today, but in March 2007 peaked at $9.10. OPBL imploded when it was discovered that the CEO and co-founder Kevin Cassidy was a two time felon, having served time for credit card fraud (30 months starting in 1997) and tax evasion (6 months in 1993), and that the company had been hiding massive commodities trading losses.
Optionable was founded not long after Kevin’s second release from prison, but clearly that did not bother his partner Mark. After all, Mark’s dad Jules Nordlicht had his own run in with the law in 1978, pleading guilty to a conspiracy count in regards to a plan to manipulate the oil futures market. You can read about that here.
Mark personally cleared over $18mm from OPBL share sales before the implosion, but he just may have been out-conned. Turns out that Platinum was a huge investor in South Florida’s own Madoff-like Ponzi scheme. Platinum sunk $50mm into Scott Rothstein’s $1.2bn structured settlement con. The Sun Sentinel has detailed coverage of that story, read it here.
But hope springs eternal, and recently Mark has had an amazing string of luck with some true dreck. Platinum has huge positions in ECTE, 14mm market cap OTCBB wonder DLYT, 17mm market cap Pink Sheet darling IMSC and the current hot stock among the retail crowd Neoprobe (NEOP).
Like ECTE, NEOP spoke at a LifeTech Capital event in mid November 2010. And, like ECTE, NEOP did a placement with two series of warrants attached. Although NEOP did manage to corral a banker a rung (but only one rung) higher on the ladder, Rodman, than ECTE could manage.
Given the amazing froth building in NEOP, and the same large player involved, is it reasonable to wonder if NEOP is about to pull an ECTE (or an OPBL) and collapse?