Ontrak, Inc. announced that it has entered into a Master Note Purchase Agreement to issue senior secured convertible note for gross proceeds of $25,000,000 on April 15, 2022. The transaction will include participation from Acuitas Capital LLC and certain other parties. The company may borrow the amount from time to time through the earlier of the date on which the company files a report with the SEC that states that there is substantial doubt regarding the company's ability to continue as a going concern during the twelve month period following such filing and September 1, 2023.
The company will also issue warrants to purchase common shares. The number of shares underlying each Keep Well Warrant will be equal to (y) the product of the principal amount of the applicable Keep Well Note and 20% divided by (z) the exercise price of the applicable Keep Well Warrant. Each Keep Well Warrant will have a term of five years and an exercise price equal to $1.69, which was the consolidated closing bid price of the shares as reported by Nasdaq immediately preceding the time the parties entered into the Keep Well Agreement.
Each Keep Well Warrant will contain customary adjustment provisions in the event of stock splits, combinations, and similar transactions, and will provide specified information, registration and indemnification rights to the holder. Assuming the full borrowing of the available amount under the Keep Well Agreement, the aggregate number of shares underlying the Keep Well Warrants will be equal to 2,958,580. The transaction is subject to shareholder approval.
The company agrees to timely file a Form D with respect to the Equity Securities as required under Regulation D under the Securities Act and to provide a copy thereof to Purchaser promptly upon request.