Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 7, 2022

Ontrak, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-31932

88-0464853

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

2200 Paseo Verde Parkway, Suite 280, Henderson, NV 89052

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (310) 444-4300

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	OTRK	The NASDAQ Global Market
9.50% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value	OTRKP	The NASDAQ Global Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

The information set forth below under Item 2.03 with respect to the Keep Well Note (a defined below) and the letter agreement described therein is hereby incorporated by reference into this Item 1.01.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As previously reported, on April 15, 2022, Ontrak, Inc. (the “Company”) entered into a Master Note Purchase Agreement (the “Keep Well Agreement”) with Acuitas Capital LLC (“Acuitas”), an entity indirectly wholly owned and controlled by Terren S. Peizer, the Company’s Executive Chairman and largest stockholder, pursuant to which, subject to specified conditions, the Company may borrow up to $25.0 million from time to time.

On September 7, 2022, the Company borrowed $6.0 million under the Keep Well Agreement and plans to use the proceeds therefrom to fund its working capital needs. In connection with this borrowing, the Company issued to Acuitas a senior secured note in the principal amount of $6.0 million (the “Keep Well Note”), a form of which was filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2022. The Keep Well Note will accrue interest based on the Term SOFR Reference Rate for a 30 day tenor plus a corresponding applicable margin for each interest period (the interest rate for the initial interest period is 18.36%). All outstanding borrowings under the Keep Well Agreement are due on September 1, 2023, subject to acceleration for certain customary events of default, including for failure to make payments when due, breaches by the Company of certain covenants and representations in the Keep Well Agreement, defaults by the Company under other agreements related to indebtedness, the Company’s bankruptcy or dissolution, and a change of control of the Company. The Company’s obligations under the Keep Well Agreement are secured by a first priority lien on substantially all of the present and future property and assets of the Company and certain of its subsidiaries, subject to customary exceptions and exclusions.

The Company's stockholders approved the proposal to approve the issuance of shares of common stock of the Company to Acuitas and the issuance of warrants and shares underlying such warrants to Acuitas pursuant to the Keep Well Agreement at the annual stockholders meeting held on August 29, 2022, as previously reported. In accordance with the terms of the Keep Well Agreement, as a result of the $6.0 million borrowing under the Keep Well Agreement, the Company will issue to Acuitas a warrant to purchase 710,059 shares of the Company’s common stock. The warrant issuable to Acuitas will have a term of five years and an exercise price equal to $1.69, which was the consolidated closing bid price of the Company’s common stock as reported by Nasdaq immediately preceding the time the parties entered into the Keep Well Agreement, and will be in the form attached as Appendix B to the Keep Well Agreement, which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2022.

In connection with the Company’s borrowing under the Keep Well Agreement, the Company and Acuitas entered into a letter agreement pursuant to which, among other things, Acuitas waived, subject to the terms and conditions therein (a) the condition in the Keep Well Agreement that the Company shall have unrestricted cash and cash equivalents of greater than $5.0 million as of the date of issuance of any senior secured note pursuant to the Keep Well Agreement on or before September 6, 2022 and after giving pro forma effect to the purchase of such note by Acuitas, and (b) any violation, through and including September 6, 2022, of the covenant in the Keep Well Agreement that the Company shall have unrestricted cash and cash equivalents of greater than $5.0 million at all times. The foregoing description of the letter agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the letter agreement, a copy of which is filed as an exhibit to this report, which is incorporated by reference herein.

1

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.


Exhibit No.						Description

10.1						Letter Agreement dated August 26, 2022, between Ontrak, Inc. and Acuitas Capital LLC
104						Cover Page Interactive Data File (formatted as Inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.