Ontrak (OTRK) 8-KEntry into a Material Definitive Agreement

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):  November 5, 2021

Ontrak, Inc.

(Exact name of registrant as specified in its charter)

(Address of principal executive offices) (Zip Code)

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

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

On November 5, 2021, Ontrak, Inc. (the “Company”) entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell from time to time up to an aggregate of $70,000,000 of shares of the Company’s common stock, par value $0.0001 per share (the “Placement Shares”), through or to the Agent.

The Placement Shares have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Registration Statement on Form S-3 (File No. 333-259329) (the “Registration Statement”), which was originally filed with the Securities and Exchange Commission (“SEC”) on September 3, 2021 and declared effective by the SEC on September 16, 2021, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on November 5, 2021.

Sales of the Placement Shares, if any, pursuant to the Sales Agreement, may be made in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act. The Agent will act as sales agent and will use commercially reasonable efforts to sell on the Company’s behalf all of the Placement Shares requested to be sold by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the Agent and the Company.

The Company has no obligation to sell any of the Placement Shares under the Sales Agreement, and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement. The Company intends to use the net proceeds from this offering for general corporate purposes, which may include working capital, M&A, and investments in technology.

The Sales Agreement contains customary representations, warranties and agreements by the Company, as well as indemnification obligations of the Company for certain liabilities under the Securities Act.

Under the terms of the Sales Agreement, the Company will pay the Agent a commission equal to 3.0% of the gross proceeds from each sale of Placement Shares sold through it under the Sales Agreement. In addition, the Company has agreed to pay certain expenses incurred by the Agent in connection with the offering.

In connection with entering into the Sales Agreement, we entered into a conditional amendment (the "NPA Amendment") to the Note Purchase Agreement originally dated September 24, 2019 (as amended to date, the “Note Agreement”) with Goldman Sachs Specialty Lending Group, L.P. (“GS”) governing $45.0 million in aggregate principal amount of outstanding senior secured notes (the “2024 Notes“). The NPA Amendment includes changes to certain covenants in the Note Agreement intended to provide greater flexibility to the Company regarding our consolidated liquidity requirements, increases the threshold of permissible ownership shifts for net operating loss carryforwards purposes to 40% from 35%, permits the Company to issue up to $70,000,0000 of common stock in the offering and modifies the prepayment provisions of the Note Purchase Agreement and related documents such that the Company is required to use the net proceeds of the offering to prepay outstanding principal, interest, fees and obligations relating to the 2024 Notes until all of such obligations have been satisfied. The NPA Amendment requires the Company to pay certain fees and expenses of GS incurred in connection with its preparation and execution.

This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

The descriptions of the material terms of the Sales Agreement and the NPA Amendment are not intended to be complete and is qualified in their entirety by reference to the Sales Agreement and the NPA Amendment, which are filed as Exhibits 1.1 and 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Loeb & Loeb LLP, counsel to the Company, has issued an opinion to the Company, dated November 5, 2021, regarding the validity of the Placement Shares. A copy of the opinion is filed as Exhibit 5.1 to this Current Report on Form 8-K.

(d)    Exhibits.