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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): January 19, 2022

 

STAR EQUITY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-35947   33-0145723
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer
Identification No.)

 

53 Forest Ave., Suite 101, 

Old Greenwich, CT, 06870

(Address of principal executive offices, including zip code)

 

203-489-9500

(Registrant’s telephone number, including area code)

 

Not Applicable

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

 

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:

 

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))

 

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, par value $0.0001 per share STRR NASDAQ Global Market
Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share STRRP NASDAQ Global market

 

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.

 

On January 24, 2022, Star Equity Holdings, Inc. (the “Company”) closed its previously announced firm commitment underwritten public offering (the “Offering”) in which, pursuant to the underwriting agreement (the “Underwriting Agreement”) entered into by and between the Company and Maxim Group LLC (“Maxim”), as representative of the underwriters, dated January 19, 2022, the Company issued and sold (A)(i) 9,175,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) an aggregate of 325,000 pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 325,000 shares of Common Stock, and (iii) an aggregate of 9,500,000 common stock purchase warrants (the “Firm Purchase Warrants”) to purchase up to 9,500,000 shares of Common Stock and (B) at the election of Maxim, (i) up to an additional 1,425,000 shares of Common Stock (the “Option Shares”) and/or (ii) up to an additional 1,425,000 shares of common stock purchase warrants (the “Option Purchase Warrants”, and together with the Firm Purchase Warrants, the “Warrants”). The Offering price was $1.49 per share of Common Stock and $0.01 per accompanying Warrant (for a combined Offering price of $1.50). Pursuant to the Underwriting Agreement, the Company granted to Maxim an option for a period of 45 days (the “Over-Allotment Option”) to purchase the Option Shares and/or the Option Purchase Warrants. Effective as of the closing of the Offering, Maxim also partially exercised the Over-Allotment Option for the purchase of 1,425,000 Warrants for a price of $0.01 per Warrant. The Underwriting Agreement contained customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and Maxim (including for liabilities under the Securities Act of 1933, as amended) and certain other obligations.

 

The net proceeds to the Company from the Offering (including the partial exercise of the Over-Allotment Option) were approximately $12.8 million, after deducting the fees and commissions and estimated Offering expenses payable by the Company, and excluding any proceeds the Company may receive upon exercise of the Warrants. The Company currently intends to use the net proceeds to pursue organic growth initiatives and fund potential acquisitions, and for working capital and other general corporate purposes. The Company will have broad discretion in determining how the proceeds of the Offering will be used, and its discretion is not limited by the aforementioned possible uses.

 

The shares of Common Stock and Warrants were issued in the Offering pursuant to the Company’s registration statement on Form S-1, as amended (File No. 333-261957) (the “Registration Statement”), which was declared effective by the U.S. Securities and Exchange Commission (the “Commission”) on January 19, 2022. The Registration Statement also registered the Maxim Warrant (defined below) and the shares of Common Stock issuable upon exercise of the Maxim Warrant and the Warrants sold in the Offering. The Common Stock is listed on The NASDAQ Global Market; however, the Warrants will not be listed on The NASDAQ Global Market, any other national securities exchange or any other nationally recognized trading system.

 

Maxim acted as the Company’s sole book-running manager in connection with the Offering. In connection with Maxim’s services, Maxim received an underwriting discount equal to 7% of the gross proceeds of the offering. The Company also agreed to pay Maxim an expense allowance of up to $90,000 for fees and expenses of legal counsel and other out-of-pocket expenses. In addition, the Company issued to Maxim a warrant to purchase up to 1,425,000 shares of Common Stock (the “Maxim Warrant”). The Maxim Warrant has an exercise price equal to $1.65 per share of Common Stock, which is equal to 110% of the price per share for the shares of Common Stock sold in the Offering, and is exercisable for five years from the date of issuance.

 

The Warrants are immediately exercisable upon issuance at a price of $1.50 per share of Common Stock, subject to adjustment in certain circumstances, and will expire on January 24, 2027 (five years from the date of issuance). No fractional shares of Common Stock will be issued in connection with the exercise of a Warrant. In lieu of fractional shares, the Company will round up to the next whole share. The Warrants also provide that in the event of a fundamental transaction the Company is required to cause any successor entity to assume its obligations under the Warrants. In addition, the holder of the Warrant is entitled to receive upon exercise of the Warrant the kind and amount of securities, cash or property that the holder would have received had the holder exercised the Warrant immediately prior to such fundamental transaction. In addition, the Warrants will be exercisable on a cashless basis if no registration statement registering the shares of Common Stock underlying the Warrants is effective according to the formula set forth in the Warrant. American Stock Transfer & Trust Company, LLC (“AST”) will serve as the agent for the Company with respect to the Warrants pursuant to a Warrant Agent Agreement entered into by AST and the Company on January 24, 2022.

 

A holder of Warrants will not have the right to exercise any portion of its Warrants if such holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants. However, any exercise of the Warrants which would result in a holder beneficially owning more than 4.99% of the Company’s outstanding shares of Common Stock will be subject to the Company’s consent, provided that any beneficial ownership in excess of the 4.99% threshold will not take effect until 61 days following notice to, and approval by, the Company. The Company may, in our sole discretion, waive the 4.99% ownership limitation in connection with the Offering with respect to one or more potential purchasers.

 

 

 

 

The foregoing descriptions of the Underwriting Agreement, the Maxim Warrant, the Warrants and the Warrant Agent Agreement are not complete and are qualified in their entirety by reference to the full text of the Underwriting Agreement, the form of Pre-Funded Warrant, the form of Warrant, and the form of Investor Agreement, copies of which are included as Exhibit 1.1, Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The provisions of the Underwriting Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement and are not intended as a document for investors and the public to obtain factual information about the current state of affairs of the parties to that document. Rather, investors and the public should look to other disclosures contained in the Company’s filings with the Commission.

 

Item 8.01. Other Events.

 

On January 19, 2022, the Company issued a press release announcing the pricing of the proposed Offering. On January 24, 2022, the Company issued a press release announcing the closing of the Offering. A copy of each of these press releases are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)       Exhibits

 

The following exhibits are filed with this Current Report on Form 8-K:

 

Exhibit   Description
1.1   Underwriting Agreement, dated January 19, 2022, between Star Equity Holdings, Inc. and Maxim Group LLC.
     
4.1  

Form of Maxim Warrant (included in Exhibit 1.1).

     
4.2   Form of Pre-Funded Warrant.
     
4.3   Form of Warrant.
     
4.4   Warrant Agent Agreement, dated January 24, 2022, between Star Equity Holdings, Inc. and American Stock Transfer Company, LLC.
     

99.1

 

Press Release of Star Equity Holdings, Inc. dated January 19, 2022.

     

99.2

 

Press Release of Star Equity Holdings, Inc. dated January 24, 202.

     
104   Cover Page Interactive Data (embedded within the Inline XBRL document).
     

 

 

 

 

Signature

 

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.

 

      Star Equity Holdings, Inc.
         
Date: January 25, 2022   By: /s/ Jeffrey E. Eberwein
      Name: Jeffrey E. Eberwein
      Title: Executive Chairman
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