Former Theranos CEO Elizabeth Holmes speaks on stage at the Clinton Global Initiative in New York City on September 29, 2015. File Photo by John Angelillo/UPI | License Photo
Sept. 5 (UPI) -- A California biological company that touted a revolutionary device it said could perform a full range of blood tests, with only a finger-prick sample, will dissolve after its founder was charged with fraud.
Theranos CEO David Taylor announced the decision in an email to employees, The Wall Street Journal reported Wednesday. In the message, Taylor said the firm will dissolve by Monday.
"We are now out of time," Taylor wrote. "Despite our careful cash management, we are in default under the Fortress credit facility."
"We owe at least $60 million to our unsecured creditors."
The Financial Times also reported Theranos' dissolution, citing two employees who'd seen the email.
The company has begun negotiating a settlement with Fortress that allows it to take ownership, but relinquishes $5 million, which could allow Theranos to distribute the remaining cash to creditors before filing for dissolution.
As part of the settlement, Fortress would receive Theranos' patents.
There is not enough cash to pay the creditors in full or distribute money to shareholders, the email said.
Earlier this year, founder Elizabeth Holmes resigned as CEO of the health technology company after the Securities and Exchange Commission charged her with "massive fraud" and fined her $500,000.
Holmes, 34, and Theranos President Ramesh "Sunny" Balwani settled the charges.
The SEC said they "made numerous false and misleading statements in investor presentations, product demonstrations and media articles by which they deceived investors into believing that [the company's] key product -- a portable blood analyzer -- could conduct comprehensive blood tests from finger drops of blood."
"In truth, Theranos' proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others," the agency added.
Several high-profile investors -- including Walgreens, Rupert Murdoch and Oracle co-founder Larry Ellison -- were pitched by Holmes. As CEO, she also assembled a board that included Defense Secretary Jim Mattis, former secretaries of state Henry Kissinger and George Schultz and high-profile attorney David Boies.
The SEC said Holmes and Balwani raised more than $700 million from investors through deception, misleading them about the company's technological capabilities and its finances.
In June, a federal grand jury indicted Holmes and Balwani on two counts of conspiracy to commit wire fraud and nine counts of wire fraud each.