Business Context and Reporting Period
Company: DarioHealth Corp.
Filing Type: Form 8-K (Current Report)
Date of Report: September 7, 2018
Event: Entry into a Material Definitive Agreement for a private placement offering of equity securities.
Key Financial Metrics and Transaction Details
This filing details a capital raise rather than operational financial results. Key transaction metrics include:
- Aggregate Gross Proceeds: $10.345 million.
- Common Stock Issued: 4,266,800 shares at $0.90 per share.
- Series D Convertible Preferred Stock Issued: 1,806,923 shares at $3.60 per share.
- Warrants Issued to Investors: Warrants to purchase up to 9,195,604 shares of Common Stock at an exercise price of $1.25 per share.
- Placement Agent Fees: Cash fees ranging from 1.5% to 6% of purchase prices, plus warrants for 2.5% of shares purchased by introduced investors, and a $30,000 expense reimbursement.
- Consultant/Finder Fees: Aggregate cash fee of $606,060 plus issuance of 83,333 shares of Common Stock and 71,111 warrants.
Material Changes and Terms
The filing outlines the terms of the new securities issued in the Offering:
- Conversion Terms: Series D Preferred Stock is convertible into 7,227,692 shares of Common Stock at a conversion price of $0.90 per share. Conversion requires stockholder approval and is automatic upon approval.
- Warrant Terms: Investor Warrants are exercisable after six months and expire 36 months after issuance. They include anti-dilution protections and cashless exercise options if resale registration is not effective.
- Liquidation Preference: Series D holders have a liquidation preference equal to their investment amount, applicable in deemed liquidation events such as a change in control.
- Voting Rights: Series D Preferred Stock holders do not possess voting rights.
- Registration: The Company agreed to file a registration statement for the resale of these securities within 60 days of closing.
Outlook, Risks, and Contingencies
- Closing Date: Expected on or about September 13, 2018.
- Regulatory Status: Securities are exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D, and Regulation S for non-U.S. investors. They have not been registered and cannot be sold in the U.S. absent registration or exemption.
- Management Commentary: The filing states that the Securities Purchase Agreement is not intended as a document for the public to obtain factual information about the Company's current state of affairs; investors should refer to other SEC filings.
Investor Verification Checklist
- Verify the actual closing date of the Offering (expected September 13, 2018) and confirmation of fund receipt.
- Confirm the filing of the registration statement for resale of securities within the required 60-day window.
- Monitor for the required stockholder approval needed to convert Series D Preferred Stock into Common Stock.
- Review subsequent filings for the impact of the 9,195,604 warrant shares and 7,227,692 potential conversion shares on total share count and dilution.
- Check for any updates on the Company's cash position and runway following the $10.345 million raise.