The company aims to seek board and shareholder consent for the Fortress settlement and corporate dissolution later this week and proceed with the actions starting Monday, Taylor said. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.
In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the NY private-equity firm ownership of the company's patents but leave its remaining cash-estimated at about $5 million-for distribution to other unsecured creditors.
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CEO David Taylor admits 'we are out of time'. But in 2015, the company's value plunged after news outlets began reporting that its technology wasn't as advertised.
The company, founded in 2003, became a darling of investors with its promise to perform tests on only a tiny amount of patients' blood, eventually scoring a partnership with Walgreens, the nation's largest drug store chain, even though it had to void or correct thousands of inaccurate test results. The Journal reports that most of the company's employees - reported to be down to fewer than two dozen as of April, a drastic fall from a peak of 800 - worked their last day on August 31.
Theranos was in default under its credit facility with Fortress Investment Group, Taylor said in the letter.
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But even by the following afternoon, Twitter users were still wondering about the identity of "Plaid Shirt Guy", who has yet to publicly come forward.
It's rare that we see a LinkedIn employee count graph that's sloping to a zero point, but in Theranos, we see a company that hasn't just been losing investors, but also employees who say they work for them.
She and Balwani pitched a tale in investor presentations, product demonstrations and media articles about the startup's key product - a portable blood analyzer - which they claimed could revolutionize the industry by inexpensively conducting comprehensive tests from drops of blood from fingers.
In June, Holmes appeared in federal court in San Jose to face charges of criminal fraud, and resigned as CEO of Theranos.
Holmes and the company have since settled these allegations.
Theranos did not immediately respond to Reuters' request for comment.
Balwani issued a statement through a representative: "As an investor who put millions of dollars of his own money and almost seven years of his life into Theranos, Mr. Balwani was saddened to see the letter from Theranos to investors [Tuesday]".