Form 4: Ontrak Director Peizer and Acuitas Group Holdings Acquire Senior Secured Convertible Promissory Note and Warrants

Terren S. Peizer, a director and 10% owner of Ontrak, Inc., and Acuitas Group Holdings, LLC, acquired a $500,000 senior secured convertible promissory note and warrants to purchase 609,756 shares of common stock.

Summary

• Terren S. Peizer, both a director and a 10% owner of Ontrak, Inc., and Acuitas Group Holdings, LLC, jointly filed a Form 4.
• The filing reports a transaction on May 9, 2025, where Acuitas Capital LLC, wholly owned by Acuitas, purchased a $500,000 senior secured promissory note from Ontrak.
• The note, termed the 'Demand Note', is payable upon demand and convertible into Ontrak's common stock at Acuitas Capital's option.
• The conversion price is the lesser of $5.40 and the greater of (i) the consolidated closing bid price immediately prior to conversion and (ii) $1.80, subject to adjustments.
• In connection with the note purchase, Acuitas received a five-year warrant to purchase up to 609,756 shares of Ontrak's common stock, exercisable at $1.64 per share, also subject to adjustments.
• Mr. Peizer, as Chairman and sole member of Acuitas, exercises voting and investment power over securities held by Acuitas.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the financing provides Ontrak with capital, the terms of the note and warrant could be dilutive to existing shareholders. The lack of explicit forward-looking statements makes it difficult to assess the long-term impact.

Positives

• The investment by Acuitas Capital provides Ontrak with $500,000 in funding.

Negatives

• The promissory note is secured, potentially increasing financial risk for Ontrak if they are unable to repay it.
• The conversion of the note and exercise of the warrants could dilute existing shareholders' equity.

Risks

• The conversion price of the note is subject to adjustment, which could lead to a lower conversion price and greater dilution.
• The exercise of the warrants could put downward pressure on Ontrak's stock price.
• Ontrak's ability to repay the note is dependent on its future financial performance.

Future Outlook

The document does not contain explicit forward-looking statements from Ontrak regarding its future performance.

Management Comments

• Mr. Peizer, as Chairman and sole member of Acuitas, exercises voting and investment power over securities held by Acuitas.

Industry Context

This type of financing, involving convertible notes and warrants, is common for smaller companies seeking capital, particularly in the healthcare technology sector. It allows investors to participate in potential upside while providing immediate funding to the company.

Comparison to Industry Standards

• Similar deals in the micro-cap healthcare space often involve convertible notes with warrants, with conversion prices and warrant exercise prices set at a premium or discount to the current market price.
• The specific terms, such as the conversion price floor of $1.80 and the warrant exercise price of $1.64, would need to be compared to similar transactions to assess their favorability to either Ontrak or Acuitas.
• Comparable companies that have used similar financing structures include companies such as DarioHealth Corp. and Senseonics Holdings, Inc.

Related Party Transactions

• The transaction involves Acuitas Capital, an entity wholly owned by Acuitas Group Holdings, LLC, of which Terren S. Peizer is the Chairman and sole member, making it a related party transaction.

Stakeholder Impact

• Shareholders may experience dilution if the note is converted and the warrants are exercised.
• The financing provides Ontrak with capital, which could benefit employees and customers if it leads to improved operations or new initiatives.
• Creditors may be impacted by the senior secured nature of the promissory note.

Key Dates

Keywords

Ontrak, Peizer, Acuitas, promissory note, warrant, Form 4, convertible, financing