DYNATRONICS CORPORATION (NASDAQ:DYNT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Acquisition of Hausmann Industries, Inc.
On March 21, 2017, Dynatronics Corporation (the “Company” or
“Dynatronics”) entered into a definitive agreement (the “Asset
Purchase Agreement”) to acquire substantially all of the assets
of Hausmann Industries, Inc., a New Jersey corporation (“HII”),
for $10.0 million in cash, subject to adjustment, as provided in
the Asset Purchase Agreement (the “Acquisition”). We will fund
the Acquisition with proceeds from the private placement of our
equity securities as described in Item 3.02 of this Current
Report (the “Private Placement”) and borrowings under an
asset-based lending facility (the “Credit Facility”) provided
by Bank of the West, described below. HII is a private
closely-held New Jersey corporation founded in 1955. The primary
shareholder and principal executive officer of HII is David
Hausmann. HII designs and manufactures medical, therapy, and
athletic training equipment to customers in the United States and
internationally. HII owns and conducts business in a 60,000
square-foot manufacturing and headquarters facility located at
130 Union Street, Northvale, New Jersey (the “Facility”). The
Acquisition does not include a purchase of the Facility, which
the Company will lease from HII following closing of the
Acquisition in April, 2017 (the “Closing”).
“Dynatronics”) entered into a definitive agreement (the “Asset
Purchase Agreement”) to acquire substantially all of the assets
of Hausmann Industries, Inc., a New Jersey corporation (“HII”),
for $10.0 million in cash, subject to adjustment, as provided in
the Asset Purchase Agreement (the “Acquisition”). We will fund
the Acquisition with proceeds from the private placement of our
equity securities as described in Item 3.02 of this Current
Report (the “Private Placement”) and borrowings under an
asset-based lending facility (the “Credit Facility”) provided
by Bank of the West, described below. HII is a private
closely-held New Jersey corporation founded in 1955. The primary
shareholder and principal executive officer of HII is David
Hausmann. HII designs and manufactures medical, therapy, and
athletic training equipment to customers in the United States and
internationally. HII owns and conducts business in a 60,000
square-foot manufacturing and headquarters facility located at
130 Union Street, Northvale, New Jersey (the “Facility”). The
Acquisition does not include a purchase of the Facility, which
the Company will lease from HII following closing of the
Acquisition in April, 2017 (the “Closing”).
Prior to the transactions described in this Current Report on
Form 8-K, there were no material relationships between the
Company or HII or any affiliate of HII and the Company, other
than pertaining to the Acquisition.
Form 8-K, there were no material relationships between the
Company or HII or any affiliate of HII and the Company, other
than pertaining to the Acquisition.
Asset Purchase Agreement
The Closing is conditioned upon, among other things, (i) receipt
of audited financial statements for HII for the fiscal years
ended December 31, 2015 and December 31, 2016, and for interim
periods as determined by the Company; (ii) closing of the Private
Placement; and (iii) the closing of the Credit Facility.
of audited financial statements for HII for the fiscal years
ended December 31, 2015 and December 31, 2016, and for interim
periods as determined by the Company; (ii) closing of the Private
Placement; and (iii) the closing of the Credit Facility.
Under the terms of the Asset Purchase Agreement, we will acquire
substantially all of the assets of HII and following the Closing
we will operate the business formerly conducted by HII at its New
Jersey Facility. We will lease the Facility on terms contained in
a lease agreement (the “Lease”) with an initial two-year term,
with annual lease payments of $360,000 for the first year, and 2%
increases in each subsequent year. The Lease grants us two
options to extend the term of the lease for two years per
extension term, subject to annual 2% per year increases in base
rent, and a third option at the end of the second option term for
an additional five-years at fair market value.
substantially all of the assets of HII and following the Closing
we will operate the business formerly conducted by HII at its New
Jersey Facility. We will lease the Facility on terms contained in
a lease agreement (the “Lease”) with an initial two-year term,
with annual lease payments of $360,000 for the first year, and 2%
increases in each subsequent year. The Lease grants us two
options to extend the term of the lease for two years per
extension term, subject to annual 2% per year increases in base
rent, and a third option at the end of the second option term for
an additional five-years at fair market value.
The purchase price for HII is $10.0 million. We will hold back
$1.0 million of the purchase price for purposes of satisfying
adjustments to the purchase price as may be required by the Asset
Purchase Agreement and indemnification claims, if any. Subject to
adjustments or claims as provided by the Asset Purchase
Agreement, 25% of the holdback amount will be released to HII on
January 1, 2018, and the balance of the remaining holdback amount
will be released to HII 18 months after Closing. As part of the
Acquisition transaction, we will pay and discharge certain
liabilities and obligations of HII related to its ongoing
business (primarily trade accounts and similar obligations in the
ordinary course).
$1.0 million of the purchase price for purposes of satisfying
adjustments to the purchase price as may be required by the Asset
Purchase Agreement and indemnification claims, if any. Subject to
adjustments or claims as provided by the Asset Purchase
Agreement, 25% of the holdback amount will be released to HII on
January 1, 2018, and the balance of the remaining holdback amount
will be released to HII 18 months after Closing. As part of the
Acquisition transaction, we will pay and discharge certain
liabilities and obligations of HII related to its ongoing
business (primarily trade accounts and similar obligations in the
ordinary course).
We will make offers of employment to employees of HII to become
Dynatronics employees at Closing. The Company and David Hausmann
will enter into an employment agreement (the “Employment
Agreement”) and he will assist in the transition of the acquired
business, reporting to our CEO, Kelvyn Cullimore. Under the
Employment Agreement, we will pay Mr. Hausmann an annual salary
of $150,000 and annual bonus in an amount between $25,000 and
$35,000 as determined by Mr. Cullimore, and provide him with
other employee benefits provided to our employees generally at
his level of management at the New Jersey location (including,
e.g., paid time off and paid holidays, medical/dental/vision
insurance, Section 125 Flexible Spending Account (FSA), and
401(k)). In addition to the restrictive covenants applicable to
him under the Asset Purchase Agreement described in the next
paragraph below, as a condition of his employment, Mr. Hausmann
will be required to sign a confidentiality and non-compete
agreement, which limits his ability to be employed by a
competitor of, or otherwise to compete with, Dynatronics for a
one-year period following the later of (i) termination of
employment, and (ii) the latest date upon which Dynatronics makes
any severance payment to Mr. Hausmann.
Dynatronics employees at Closing. The Company and David Hausmann
will enter into an employment agreement (the “Employment
Agreement”) and he will assist in the transition of the acquired
business, reporting to our CEO, Kelvyn Cullimore. Under the
Employment Agreement, we will pay Mr. Hausmann an annual salary
of $150,000 and annual bonus in an amount between $25,000 and
$35,000 as determined by Mr. Cullimore, and provide him with
other employee benefits provided to our employees generally at
his level of management at the New Jersey location (including,
e.g., paid time off and paid holidays, medical/dental/vision
insurance, Section 125 Flexible Spending Account (FSA), and
401(k)). In addition to the restrictive covenants applicable to
him under the Asset Purchase Agreement described in the next
paragraph below, as a condition of his employment, Mr. Hausmann
will be required to sign a confidentiality and non-compete
agreement, which limits his ability to be employed by a
competitor of, or otherwise to compete with, Dynatronics for a
one-year period following the later of (i) termination of
employment, and (ii) the latest date upon which Dynatronics makes
any severance payment to Mr. Hausmann.
The Asset Purchase Agreement contains customary representations,
warranties and covenants by HII and the Company, as well as
customary indemnification provisions among the parties.
Post-closing covenants include a covenant that for a period of
five years (the “Restrictive Period”), HII and its stockholders
(including Mr. Hausmann) will refrain from solicitation of
employees, customers and business of HII or the Company and from
other competitive activity as defined in the Asset Purchase
Agreement, and requires them and their representatives (as
defined in the Asset Purchase Agreement) to maintain (other than
in connection with performing obligations to the Lease or the
Employment Agreement, as applicable), the confidentiality of, and
not use, confidential information relating to the acquired
business or purchased assets, except as permitted by the Asset
Purchase Agreement.
warranties and covenants by HII and the Company, as well as
customary indemnification provisions among the parties.
Post-closing covenants include a covenant that for a period of
five years (the “Restrictive Period”), HII and its stockholders
(including Mr. Hausmann) will refrain from solicitation of
employees, customers and business of HII or the Company and from
other competitive activity as defined in the Asset Purchase
Agreement, and requires them and their representatives (as
defined in the Asset Purchase Agreement) to maintain (other than
in connection with performing obligations to the Lease or the
Employment Agreement, as applicable), the confidentiality of, and
not use, confidential information relating to the acquired
business or purchased assets, except as permitted by the Asset
Purchase Agreement.
The foregoing description of the Asset Purchase Agreement does
not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Asset Purchase Agreement,
a copy of which is filed as Exhibit 10.1 to this Current Report
on Form 8-K and incorporated herein by reference.
not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Asset Purchase Agreement,
a copy of which is filed as Exhibit 10.1 to this Current Report
on Form 8-K and incorporated herein by reference.
The Credit Facility
On February 27, 2017, we obtained a written commitment letter
(the “Commitment”) from Bank of the West (“Bank”) to
provide asset-based financing to the Company to be used for
funding the Acquisition and for operating capital (the “Credit
Facility”). As provided in the Commitment, amounts available
to us under the Credit Facility will be subject to a borrowing
base calculation of up to a maximum availability of $8,000,000
and will bear interest at LIBOR plus 2.25%. We will pay a
commitment fee of .25% and an unused line fee of .25%. The
maturity date is two years from the date of the note. The
borrowing base will be an amount equal to 80% of eligible
accounts receivable and a percentage of inventory to be
determined by Bank following examination and appraisal of our
inventory.
(the “Commitment”) from Bank of the West (“Bank”) to
provide asset-based financing to the Company to be used for
funding the Acquisition and for operating capital (the “Credit
Facility”). As provided in the Commitment, amounts available
to us under the Credit Facility will be subject to a borrowing
base calculation of up to a maximum availability of $8,000,000
and will bear interest at LIBOR plus 2.25%. We will pay a
commitment fee of .25% and an unused line fee of .25%. The
maturity date is two years from the date of the note. The
borrowing base will be an amount equal to 80% of eligible
accounts receivable and a percentage of inventory to be
determined by Bank following examination and appraisal of our
inventory.
The Credit Facility is subject to documentation (including a
loan and security agreement, financing statements, notes and
other agreements) and the obligations of the Company will be
secured by first priority liens on substantially all of the
Company’s and its subsidiaries’ assets (as defined in the
Credit Facility). The Commitment provides that the Credit
Facility will include financial covenants, such as ratios for
consolidated leverage and fixed charge coverage. The Credit
Facility will also contain customary affirmative and negative
covenants for a transaction of this type, including, among
others, the provision of annual, quarterly and monthly
financial statements and compliance certificates, maintenance
of property, insurance, compliance with laws and environmental
matters, restrictions on incurrence of indebtedness, granting
of liens, making investments and acquisitions, paying
dividends, entering into affiliate transactions and asset
sales. The Credit Facility will also contain penalties in
connection with customary events of default, including, among
others, payment, bankruptcy, representation and warranty,
covenant, change in control, judgment and events or conditions
that have a Material Adverse Effect (as defined in the Credit
Facility).
loan and security agreement, financing statements, notes and
other agreements) and the obligations of the Company will be
secured by first priority liens on substantially all of the
Company’s and its subsidiaries’ assets (as defined in the
Credit Facility). The Commitment provides that the Credit
Facility will include financial covenants, such as ratios for
consolidated leverage and fixed charge coverage. The Credit
Facility will also contain customary affirmative and negative
covenants for a transaction of this type, including, among
others, the provision of annual, quarterly and monthly
financial statements and compliance certificates, maintenance
of property, insurance, compliance with laws and environmental
matters, restrictions on incurrence of indebtedness, granting
of liens, making investments and acquisitions, paying
dividends, entering into affiliate transactions and asset
sales. The Credit Facility will also contain penalties in
connection with customary events of default, including, among
others, payment, bankruptcy, representation and warranty,
covenant, change in control, judgment and events or conditions
that have a Material Adverse Effect (as defined in the Credit
Facility).
The foregoing description of the Credit Facility does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Commitment, a copy of which
is filed as Exhibit 10.2 to this Current Report on Form 8-K and
is incorporated herein by reference.
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Commitment, a copy of which
is filed as Exhibit 10.2 to this Current Report on Form 8-K and
is incorporated herein by reference.
Securities Purchase Agreement
The information set forth in Item 3.02 of this report regarding
the Securities Purchase Agreement is incorporated into this
Item 1.01 by reference.
the Securities Purchase Agreement is incorporated into this
Item 1.01 by reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off- Balance Sheet Arrangement of a
Registrant
Obligation under an Off- Balance Sheet Arrangement of a
Registrant
The information under Item 1.01 of this Current Report on Form
8-K regarding the entry into the Credit Facility set forth
under “Credit Facility” is incorporated into this Item 2.03
by reference.
8-K regarding the entry into the Credit Facility set forth
under “Credit Facility” is incorporated into this Item 2.03
by reference.
Item 3.02 Unregistered Sales of Equity Securities.
To provide cash for the Acquisition, we conducted a private
offering or our equity securities to raise up to $9.0 million
(the “Private Placement”). As of the date of this report, we
have received subscriptions for an aggregate of 1,559,000
Units, as defined below. Closing of the Private Placement under
the Securities Purchase Agreement will occur simultaneously
with the Closing of the Acquisition, currently anticipated
during April 2017. In connection with the offer and sale of the
Units, we delivered to the Investors prior to execution of the
Securities Purchase Agreement, a “Supplemental Disclosure
Statement” summarizing the Acquisition, including information
provided by HII, which is an Appendix to the Securities
Purchase Agreement.
offering or our equity securities to raise up to $9.0 million
(the “Private Placement”). As of the date of this report, we
have received subscriptions for an aggregate of 1,559,000
Units, as defined below. Closing of the Private Placement under
the Securities Purchase Agreement will occur simultaneously
with the Closing of the Acquisition, currently anticipated
during April 2017. In connection with the offer and sale of the
Units, we delivered to the Investors prior to execution of the
Securities Purchase Agreement, a “Supplemental Disclosure
Statement” summarizing the Acquisition, including information
provided by HII, which is an Appendix to the Securities
Purchase Agreement.
The Units and their component and underlying securities are
offered and will be issued in reliance upon exemptions from
the registration requirements of the Securities Act of 1933,
as amended (the “Securities Act”), including Section
4(a)(2) of the Securities Act and Regulation D promulgated
thereunder, relating to sales by an issuer not involving any
public offering, and in reliance on similar exemptions under
applicable state laws. Each Investor represented that it is
an accredited investor and that it is acquiring the
securities for investment purposes only and not with a view
to any resale, distribution or other disposition of such
securities in violation of the United States federal
securities laws. Securities issued in the Private Placement
are “restricted securities” under the Securities Act and
may not be transferred, sold or otherwise disposed of unless
they are subsequently registered or an exemption is available
under the Securities Act. Neither this Current Report on Form
8-K, nor the exhibits attached hereto, is an offer to sell or
the solicitation of an offer to buy the securities described
herein.
offered and will be issued in reliance upon exemptions from
the registration requirements of the Securities Act of 1933,
as amended (the “Securities Act”), including Section
4(a)(2) of the Securities Act and Regulation D promulgated
thereunder, relating to sales by an issuer not involving any
public offering, and in reliance on similar exemptions under
applicable state laws. Each Investor represented that it is
an accredited investor and that it is acquiring the
securities for investment purposes only and not with a view
to any resale, distribution or other disposition of such
securities in violation of the United States federal
securities laws. Securities issued in the Private Placement
are “restricted securities” under the Securities Act and
may not be transferred, sold or otherwise disposed of unless
they are subsequently registered or an exemption is available
under the Securities Act. Neither this Current Report on Form
8-K, nor the exhibits attached hereto, is an offer to sell or
the solicitation of an offer to buy the securities described
herein.
In connection with the Private Placement, we offered up to
1,800,000 units (“Units”) at $5.00 per Unit. Each Unit is
comprised of:
1,800,000 units (“Units”) at $5.00 per Unit. Each Unit is
comprised of:
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one (1) share of the Company’s no par per share
Common Stock priced at $2.50 per share; and |
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one (1) share of Series B Preferred Stock priced at
$2.50 per share. |
Each purchaser in the offering also receives a Warrant to
purchase 1.5 shares of Common Stock for each Unit purchased,
exercisable at a price of $2.75 per share.
purchase 1.5 shares of Common Stock for each Unit purchased,
exercisable at a price of $2.75 per share.
Purchasers of the Units include a select group of accredited
investors, including institutional investors (the
“Investors”). Certain of our officers and directors and
significant shareholders, as well as Mr. Hausmann and members
of his family, are Investors in the Private Placement.
investors, including institutional investors (the
“Investors”). Certain of our officers and directors and
significant shareholders, as well as Mr. Hausmann and members
of his family, are Investors in the Private Placement.
Subject to the terms and conditions of the Securities
Purchase Agreement as described below, assuming the full $9.0
million is raised in the Private Placement, we will issue a
total of 1,800,000 Units, or 1,800,000 shares of Common
Stock, 1,800,000 shares of Series B Preferred and Warrants to
purchase an aggregate of 2,700,000 shares of Common Stock.
Purchase Agreement as described below, assuming the full $9.0
million is raised in the Private Placement, we will issue a
total of 1,800,000 Units, or 1,800,000 shares of Common
Stock, 1,800,000 shares of Series B Preferred and Warrants to
purchase an aggregate of 2,700,000 shares of Common Stock.
Certain of the Investors, including any officer, director,
employee or consultant of the Company, are defined as
“insiders” in the Securities Purchase Agreement. The
issuance of our securities in the Private Placement generally
and to these Investors in particular is subject to
Shareholder Approval, as described below. Until we have
obtained Shareholder Approval, we will not issue any shares
of Common Stock as part of the Units or otherwise in an
amount that exceeds 19.9% of the issued and outstanding
shares of Common Stock of the Company. In addition, until we
have obtained Shareholder Approval, we will not issue any
shares of Common Stock to any insider or to any Investor who
has agreed to defer the issuance of such Investor’s Common
Stock.
employee or consultant of the Company, are defined as
“insiders” in the Securities Purchase Agreement. The
issuance of our securities in the Private Placement generally
and to these Investors in particular is subject to
Shareholder Approval, as described below. Until we have
obtained Shareholder Approval, we will not issue any shares
of Common Stock as part of the Units or otherwise in an
amount that exceeds 19.9% of the issued and outstanding
shares of Common Stock of the Company. In addition, until we
have obtained Shareholder Approval, we will not issue any
shares of Common Stock to any insider or to any Investor who
has agreed to defer the issuance of such Investor’s Common
Stock.
Our Common Stock is currently listed on The Nasdaq Capital
Market and therefore we are subject to the Nasdaq Listing
Rules (“Nasdaq Rules”) governing listing requirements
(Section 5500 of the Nasdaq Rules for securities listed on
the Capital Market) and corporate governance (Section 5600 of
the Nasdaq Rules) of companies with securities listed on
Nasdaq. to the terms of both the Asset Purchase Agreement and
the Securities Purchase Agreement, we have covenanted to
obtain approval of our shareholders (“Shareholder
Approval”) as may be required by the Nasdaq Rules for us to
issue the shares of Common Stock included in the Units and
underlying the conversion, payment of dividends and
redemption of the Series B Preferred, and execution of the
Warrants, including the following:
Market and therefore we are subject to the Nasdaq Listing
Rules (“Nasdaq Rules”) governing listing requirements
(Section 5500 of the Nasdaq Rules for securities listed on
the Capital Market) and corporate governance (Section 5600 of
the Nasdaq Rules) of companies with securities listed on
Nasdaq. to the terms of both the Asset Purchase Agreement and
the Securities Purchase Agreement, we have covenanted to
obtain approval of our shareholders (“Shareholder
Approval”) as may be required by the Nasdaq Rules for us to
issue the shares of Common Stock included in the Units and
underlying the conversion, payment of dividends and
redemption of the Series B Preferred, and execution of the
Warrants, including the following:
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Nasdaq Listing Rule 5635(a), which requires
shareholder approval prior to the issuance of securities in connection with an acquisition of the stock or assets of another company where the total number of shares of common stock to be issued is or will be equal to or in excess of 20% of the total number of shares of common stock outstanding before the issuance of the stock or securities; |
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Nasdaq Listing Rule 5635(b), which requires prior
shareholder approval for issuances of securities that could result in a “change of control” of the issuer Nasdaq may deem a change of control to occur when, as a result of an issuance, an investor or a group would own, or have the right to acquire, 20% or more of the outstanding shares of Common Stock or voting power, and such ownership or voting power of an issuer would be the largest ownership position of the issuer; |
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Nasdaq Rule 5635(c), requiring shareholder approval
when common stock may be issued to “insiders” (directors, officers, employees or consultants) of the issuer in transactions at prices less than market value, which includes sales deemed to be “equity compensation” paid to insiders, as well as the issuance of common stock at less than market prices in payment of dividends or for redemption of other securities or payment of debt; and |
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Nasdaq Rule 5635(d), which requires shareholder
approval prior to the issuance of common stock in connection with certain non-public offerings involving the sale, issuance or potential issuance of common stock (and/or securities convertible into or exercisable for common stock) equal to 20% or more of common stock outstanding before the issuance. |
We will hold a meeting of shareholders following the
Closing for the purpose of obtaining Shareholder Approval
as described above. Certain key shareholders of the Company
(officers, directors and certain shareholders) will enter
into an agreement with the Investors to vote all Common
Stock over which such persons have voting control as of the
record date for the meeting of shareholders, amounting to,
in the aggregate, at least 35% of all current voting power
of the Company in favor of the Shareholder Approvals
described above.
Closing for the purpose of obtaining Shareholder Approval
as described above. Certain key shareholders of the Company
(officers, directors and certain shareholders) will enter
into an agreement with the Investors to vote all Common
Stock over which such persons have voting control as of the
record date for the meeting of shareholders, amounting to,
in the aggregate, at least 35% of all current voting power
of the Company in favor of the Shareholder Approvals
described above.
In connection with the Private Placement, we agreed to file
a registration statement under the Securities Act
registering the issuance and resale of all shares of Common
Stock included in the Units and underlying the conversion
of and payment of dividends on the Series B Preferred, and
exercise of the Warrants. The obligations of the Company
and the rights of the Investors are contained in a
Registration Rights Agreement to be executed at the
Closing.
a registration statement under the Securities Act
registering the issuance and resale of all shares of Common
Stock included in the Units and underlying the conversion
of and payment of dividends on the Series B Preferred, and
exercise of the Warrants. The obligations of the Company
and the rights of the Investors are contained in a
Registration Rights Agreement to be executed at the
Closing.
The rights and preferences of the Series B Preferred will
be designated by the Company’s Board of Directors in an
amendment to the Company’s Amended and Restated Articles
of Incorporation (the “Designation”) which will be filed
prior to the Closing with the Utah Division of Corporations
and Commercial Code.
be designated by the Company’s Board of Directors in an
amendment to the Company’s Amended and Restated Articles
of Incorporation (the “Designation”) which will be filed
prior to the Closing with the Utah Division of Corporations
and Commercial Code.
Unless a holder of Series B Preferred otherwise elects at
the time it purchases the Units, the holder shall not have
the right to convert any portion of the Series B Preferred,
to the extent that, after giving effect to the conversion,
such holder (and the holders affiliates and other related
persons as provided in the Designation) would beneficially
own in excess of an amount defined as the “Beneficial
Ownership Limitation.” The “Beneficial Ownership
Limitation” is 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion
of shares of Series B Preferred held by the applicable
holder. A holder, upon prior notice to the Company, may
increase or decrease the Beneficial Ownership Limitation
provisions applicable to the holder’s shares of Series B
Preferred (up to 9.99% of the outstanding Common Stock
after giving effect to conversion of such shares).
the time it purchases the Units, the holder shall not have
the right to convert any portion of the Series B Preferred,
to the extent that, after giving effect to the conversion,
such holder (and the holders affiliates and other related
persons as provided in the Designation) would beneficially
own in excess of an amount defined as the “Beneficial
Ownership Limitation.” The “Beneficial Ownership
Limitation” is 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion
of shares of Series B Preferred held by the applicable
holder. A holder, upon prior notice to the Company, may
increase or decrease the Beneficial Ownership Limitation
provisions applicable to the holder’s shares of Series B
Preferred (up to 9.99% of the outstanding Common Stock
after giving effect to conversion of such shares).
The Series B Preferred entitles the holder to vote on an
as-converted basis, one vote for each share of Common Stock
issuable upon conversion of the Series B Preferred, subject
to the Beneficial Ownership Limitation as provided above
and subject to the restrictions on conversion as may be
required by the Nasdaq Rules. The Series B Preferred will
accrue an annual dividend at a rate of 8.0% that may be
paid at the discretion of the Company in cash or in shares
of Common Stock, subject to Shareholder Approval.
as-converted basis, one vote for each share of Common Stock
issuable upon conversion of the Series B Preferred, subject
to the Beneficial Ownership Limitation as provided above
and subject to the restrictions on conversion as may be
required by the Nasdaq Rules. The Series B Preferred will
accrue an annual dividend at a rate of 8.0% that may be
paid at the discretion of the Company in cash or in shares
of Common Stock, subject to Shareholder Approval.
The Warrants have an exercise price of $2.75 per share of
Common Stock and a term of six years. The Warrants may not
be exercised unless and until Shareholder Approval has been
obtained. At the election of the holder of the Warrant, the
holder may be restricted from the exercise of the Warrant
or any portion of the Warrant held by such holder, to the
extent that, after giving effect to the conversion, such
holder (together with such holder’s affiliates, and any
persons acting as a group together with such holder or any
of such holder’s affiliates) would beneficially own in
excess of 4.99% (or 9.99%, as such holder may elect) of the
number of shares of the Common Stock outstanding
immediately after giving effect to the exercise.
Common Stock and a term of six years. The Warrants may not
be exercised unless and until Shareholder Approval has been
obtained. At the election of the holder of the Warrant, the
holder may be restricted from the exercise of the Warrant
or any portion of the Warrant held by such holder, to the
extent that, after giving effect to the conversion, such
holder (together with such holder’s affiliates, and any
persons acting as a group together with such holder or any
of such holder’s affiliates) would beneficially own in
excess of 4.99% (or 9.99%, as such holder may elect) of the
number of shares of the Common Stock outstanding
immediately after giving effect to the exercise.
Ladenburg Thalmann Co. Inc. (“Ladenburg”) acted as
placement agent and we will pay Ladenburg fees for its
services in connection with proceeds received in the
Private Placement from Investors introduced to the Company
by Ladenburg to its agreement with the Company, in
accordance with applicable FINRA rules and regulations. No
compensation, fees, or discounts will be paid or given to
any other person in connection with the offer and sale of
the securities.
placement agent and we will pay Ladenburg fees for its
services in connection with proceeds received in the
Private Placement from Investors introduced to the Company
by Ladenburg to its agreement with the Company, in
accordance with applicable FINRA rules and regulations. No
compensation, fees, or discounts will be paid or given to
any other person in connection with the offer and sale of
the securities.
The foregoing descriptions of the Designation, Securities
Purchase Agreement, Registration Rights Agreement, Voting
Agreement, and Warrant do not purport to be complete and
are subject to, and qualified in their entirety by, the
full text of the Designation, Securities Purchase
Agreement, Registration Rights Agreement, Voting Agreement,
and Warrant, as the case may be, substantially in the forms
filed as Exhibits 3.1, 10.3, 10.4, 9.1, and 4.2,
respectively, to this Current Report on Form 8-K and
incorporated herein by reference.
Purchase Agreement, Registration Rights Agreement, Voting
Agreement, and Warrant do not purport to be complete and
are subject to, and qualified in their entirety by, the
full text of the Designation, Securities Purchase
Agreement, Registration Rights Agreement, Voting Agreement,
and Warrant, as the case may be, substantially in the forms
filed as Exhibits 3.1, 10.3, 10.4, 9.1, and 4.2,
respectively, to this Current Report on Form 8-K and
incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
Press Release
On March 22, 2017, we issued a press release announcing
the Acquisition and the Private Placement. A copy of this
press release is furnished (not filed) as Exhibit 99.1
hereto and incorporated herein by reference in its
entirety. A copy of the Supplemental Disclosure Statement
delivered to the Investors with the Securities Purchase
Agreement dated March 21, 2017, is furnished with this
Current Report as Exhibit 99.2.
the Acquisition and the Private Placement. A copy of this
press release is furnished (not filed) as Exhibit 99.1
hereto and incorporated herein by reference in its
entirety. A copy of the Supplemental Disclosure Statement
delivered to the Investors with the Securities Purchase
Agreement dated March 21, 2017, is furnished with this
Current Report as Exhibit 99.2.
Cautionary Statement Regarding Forward-Looking Statements
This Report contains forwardlooking statements that
involve risks and uncertainties. These statements relate
to future periods, future events or our future operating
or financial performance. All statements other than
statements of historical fact, including statements
identified by words such as “may,” “will,” “could,”
“expect,” “anticipate,” “continue,” “plan,”
“intend,” “estimate,” “project,” “believe” and
similar expressions or variations, are forwardlooking
statements. Forwardlooking statements include but are not
limited to statements regarding our strategy, future
operations, financial condition, results of operations,
projected costs, and plans and objectives of management.
Actual results may differ materially from those
contemplated by the forwardlooking statements due to,
among others, the risks and uncertainties described in
our reports and filings with the Securities and Exchange
Commission. We undertake no obligation to update any
forwardlooking statement or statements to reflect events
or circumstances that occur after the date on which the
statement is made or to reflect the occurrence of
unanticipated events.
involve risks and uncertainties. These statements relate
to future periods, future events or our future operating
or financial performance. All statements other than
statements of historical fact, including statements
identified by words such as “may,” “will,” “could,”
“expect,” “anticipate,” “continue,” “plan,”
“intend,” “estimate,” “project,” “believe” and
similar expressions or variations, are forwardlooking
statements. Forwardlooking statements include but are not
limited to statements regarding our strategy, future
operations, financial condition, results of operations,
projected costs, and plans and objectives of management.
Actual results may differ materially from those
contemplated by the forwardlooking statements due to,
among others, the risks and uncertainties described in
our reports and filings with the Securities and Exchange
Commission. We undertake no obligation to update any
forwardlooking statement or statements to reflect events
or circumstances that occur after the date on which the
statement is made or to reflect the occurrence of
unanticipated events.
Item 9.01 Financial Statements and Exhibits.
|
(a)
|
Financial Statements of Business Acquired
|
The financial statements required by this item are not
being filed herewith. The Company will file the required
financial statements as an amendment to this Current
Report on Form 8-K within the time permitted by Item
9.01(a).
being filed herewith. The Company will file the required
financial statements as an amendment to this Current
Report on Form 8-K within the time permitted by Item
9.01(a).
|
(b)
|
Pro Forma Financial Information
|
The pro forma financial information required
by this item is not being filed herewith. The Company
will file the required pro forma financial information as
an amendment to this Current Report on Form 8-K within
the time permitted by Item 9.01(b).
by this item is not being filed herewith. The Company
will file the required pro forma financial information as
an amendment to this Current Report on Form 8-K within
the time permitted by Item 9.01(b).
|
(d)
|
Exhibits
|
About DYNATRONICS CORPORATION (NASDAQ:DYNT)
Dynatronics Corporation is a manufacturer and distributor of physical medicine products. The Company’s products include a line of medical equipment for physical medicine applications, including therapy devices, medical supplies and soft goods, treatment tables and rehabilitation equipment. Its products are used by physical therapists, chiropractors, sports medicine practitioners, podiatrists, physicians and other physical medicine professionals. Its physical medicine products include therapeutic modalities, such as Dynatron Solaris, including electrotherapy and thermal therapy, and 25 Series, including electrotherapy and ultrasound; manufactured capital products, including traction systems and wood furniture; manufactured supplies, including cold packs, straps, wedges, bolsters and mats; distributed capital products, including hydrotherapy, weight training equipment and pilates, and distributed supplies, including clinical accessories, sports med and taping products, lotions and gels. DYNATRONICS CORPORATION (NASDAQ:DYNT) Recent Trading Information
DYNATRONICS CORPORATION (NASDAQ:DYNT) closed its last trading session 00.00 at 2.90 with 0 shares trading hands.
