Business Context and Reporting Period
This Form 8-K Current Report was filed by Mitcham Industries, Inc. (noted as MIND TECHNOLOGY, INC in metadata) on December 22, 2017, covering events occurring on December 20, 2017. The filing details a strategic private placement of equity securities.
Key Financial Metrics and Transaction Details
- Transaction Type: Unregistered sale of 9.00% Series A Cumulative Preferred Stock.
- Purchaser: Mitsubishi Heavy Industries, Ltd.
- Shares Issued: 152,290 shares initially, with an additional 21,756 shares contingent on specific conditions.
- Liquidation Preference: $25.00 per share.
- Gross Proceeds: Approximately $4.0 million.
- Use of Proceeds: Funding the acquisition of intellectual property from the Hydroscience Technology, Inc. bankruptcy estate and establishing a manufacturing/repair operation for the Purchaser.
Material Changes and Terms
The filing announces a material capital raise via preferred stock. The Series A Preferred Stock is not convertible into common stock except upon a change of control. In such an event, holders may convert at a rate equal to the lesser of the specified conversion rate or 25 shares of common stock per share of preferred stock. The transaction is expected to close within 90 days, subject to closing conditions.
Guidance, Outlook, and Risks
Management intends to utilize the proceeds to execute a previously announced acquisition and establish new operational capabilities. The filing notes that the issuance relies on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933. The closing of the transaction is contingent upon the satisfaction of conditions set forth in the Purchase Agreement.
Investor Verification Checklist
- Verify the final closing date of the private placement (expected within 90 days of Dec 20, 2017).
- Confirm the specific conditions required to issue the additional 21,756 shares of Series A Preferred Stock.
- Review the Certificate of Designations for the exact conversion rate applicable in a change of control scenario.
- Monitor the status of the acquisition of assets from the Hydroscience Technology, Inc. bankruptcy estate.