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 October 7, 2016. The filing discloses the entry into a material definitive agreement and amendments to the company's Articles of Incorporation regarding the issuance of preferred stock.
Key Financial Metrics and Capital Structure
This filing does not report operational financial metrics such as revenue, profit, cash flow, or margins. The financial details provided relate to a capital raise mechanism:
- Security Type: 9.00% Series A Cumulative Preferred Stock.
- Liquidation Preference: $25.00 per share.
- Par Value: $1.00 per share.
- Authorized Shares: Up to 500,000 shares available for sale under the new agreement.
- Total Authorized Series A: Upon effectiveness of the amendment, the company is authorized to issue an aggregate of 860,000 shares of Series A Preferred Stock.
- Agent Compensation: Up to 2.0% of gross proceeds from sales.
Material Changes
The following material changes were effected on October 7, 2016:
- Equity Distribution Agreement: The Company entered into an agreement with Ladenburg Thalmann & Co. Inc. to sell up to 500,000 shares of Series A Preferred Stock via "at-the-market" offerings or negotiated transactions.
- Corporate Charter Amendment: The Company filed a Certificate of Amendment with the State of Texas to classify and designate an additional 500,000 shares of authorized but unissued preferred stock as Series A Preferred Stock.
Outlook, Risks, and Contingencies
Management Commentary and Flexibility: The Company has no obligation to sell any shares under the Equity Distribution Agreement and may suspend solicitations at any time. Sales may occur directly on the NASDAQ Global Select Market or through a market maker.
Related Party Transactions: Peter H. Blum, the Non-Executive Chairman of the Company's Board, serves as Co-CEO and Co-President of the Agent (Ladenburg Thalmann & Co. Inc.). The Agent and its affiliates may provide other banking and advisory services for customary fees.
Risks and Conflicts: The Agent and its affiliates may hold long or short positions in the Company's securities and may effect transactions for their own account or for customers.
Investor Verification Checklist
- Verify the total number of Series A Preferred Stock shares actually sold and the gross proceeds generated since the October 7, 2016 agreement.
- Confirm the current market price of the Series A Preferred Stock relative to the $25.00 liquidation preference.
- Review the full text of the Equity Distribution Agreement (Exhibit 1.1) for specific termination clauses and pricing mechanisms.
- Monitor future filings for any additional sales of the 500,000 shares authorized under this specific agreement.
- Assess the impact of the 2.0% agent commission on net capital raised.