Company sues investors for inadequate capitalization

Michelle Massey, East Texas Bureau Jun. 30, 2010, 9:31am

TYLER--A North Carolina company is accusing its investors of breach of fiduciary duties after the investors failed to adequately capitalize the company.

MEMSYS Inc. filed suit against ACT Technology Seed Fund, Phil Jenkins, Dan Bochsler, Steven Presley, Michael D. Rainone, Product Concept Development, Roy Stark and P-Sack Ltd. on June 21 in the Tyler Division of the Eastern District of Texas.

MEMSYS owns patents, technology and intellectual property relating to its microanemometer technology, which can be used with microanemometer chips as flow sensors.

Causes of action filed against the defendants include unfair or deceptive trade practices claim, piercing for inadequate capitalization, negligence and breach of fiduciary duty.

The defendants are accused of negligently failing to plan and arrange for the plaintiff to be capitalized adequately, failing to plan and arrange for financing to be available, failing to develop a business plan to enable it to satisfy its covenants with the plaintiff, and negligently focusing their efforts on assigning the technology to a third party rather than preparing and enabling the investors to satisfy its covenants with the plaintiff.

MEMYSYS is seeking damages exceeding $374,612 for development and fabrication costs, damages of $95,539 for testing, evaluation and marketing costs, damages for $250,000 for the initial payment due, damages for the $1,000,0000 for the four following minimum payments, plus interest, treble damages, attorneys' fees and costs.

The plaintiff is represented by John C. Rogers III and Arch T. Allen III of Allen, Moore & Rogers of Raleigh, N.C., and Deron Dacus of Ramey & Flock in Tyler. Jury trial requested.

U.S. District Judge Michael H. Schneider is assigned to the case.

Case No. 6:10cv00303

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