Shares Issued to a Selling Stockholder in Connection with the Warrant Exercise Agreement
On March 8, 2018, the Company entered into the Warrant Exercise Agreement with the Warrant Holder to purchase up to an aggregate of
2.4 million shares of Common Stock, at an exercise price of $2.00 per share (the
Original Warrant
). Pursuant to the terms of the Warrant Exercise Agreement, the Warrant Holder agreed to exercise, from time to time and in
accordance with the terms of the Original Warrant, including certain beneficial ownership limitations set forth therein, the Original Warrant for cash (the
Warrant Exercise
). As a result of the Warrant Exercise, the Company
received gross proceeds of $3.4 million on March 8, 2018 from the exercise of 1.7 million shares under the Original Warrant, and expects to receive additional gross proceeds of up to $1.4 million thereafter from additional
exercises of the remaining shares under the Original Warrant following Stockholder Approval. The Company expects to use the net proceeds from the exercise of the Original Warrant for general corporate and working capital purposes and to fund
strategic initiatives.
Pursuant to the terms of the Warrant Exercise Agreement, and in order to induce the Warrant Holder to exercise the
Original Warrant, the Company issued the New Warrants to the Warrant Holder. The New Warrants entitle the Warrant Holder to purchase a number of shares of Common Stock equal to 75% of the number of shares of Common Stock received by the Warrant
Holder upon the full cash exercise of the Original Warrant (i.e., 75% of 2,400,000 shares of Common Stock, or 1,800,000 shares of Common Stock). The terms of the New Warrants are substantially similar to the terms of the Private Placement Warrants,
and have an exercise price of $3.50 per share.
The New Warrants will become exercisable following Stockholder Approval, are subject to
certain ownership limitations, and expire five years after the date of Stockholder Approval.
Registration Rights Agreement
In connection with the Private Placement, the Merger, and the Warrant Exercise Agreement, the Company entered into a registration rights
agreement (as amended, the
Registration Rights Agreement
) with the Purchasers, the former stockholders of SafeOp, and the Warrant Holder (collectively, the
Holders
), effective as of the Closing. Pursuant to the
Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the SEC (the
Resale Registration Statement
) by April 16, 2018 for purposes of registering the resale of the Private Placement
Shares, the Merger Shares, and the New Warrant Shares. This prospectus is part of the Resale Registration Statement filed in furtherance of our obligations under the Registration Rights Agreement.
Support Agreements
In connection with
the Private Placement, the Merger and the Warrant Exercise Agreement, certain stockholders of the Company then comprising a majority of the outstanding shares of Common Stock entered into support agreements (the
Support
Agreements
) pursuant to which such stockholders agreed to vote all shares of Common Stock owned by them in favor of the Companys issuances of the Merger Shares in connection with the Merger, Private Placement Shares in connection
with the Private Placement, and New Warrant Shares in connection with the New Warrants. Accordingly, a sufficient number of stockholders signed the Support Agreements to ensure approval of the Companys issuance of the Merger Shares in
connection with the Merger, the Private Placement Shares in connection with the Private Placement, and the New Warrant Shares in connection with the New Warrants.
Stockholder Approval Requirements
The
Companys issuances of Merger Shares, Private Placement Shares and New Warrant Shares are subject to the Stockholder Approval requirements summarized below. Until we have obtained Stockholder Approval, we will not issue Merger Shares, Private
Placement Shares or New Warrant Shares in excess of 19.9% of the issued
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