Business Context and Reporting Period
This Form 8-K Current Report was filed by Medalist Diversified REIT, Inc. on May 30, 2019, regarding events occurring on May 30 and May 31, 2019. The Company is a Maryland corporation listed on the Nasdaq Capital Market under the ticker symbol MDRR. The filing primarily reports the entry into a material definitive agreement for a private placement of equity securities.
Key Financial Metrics
- Transaction Type: Private Placement of Common Stock.
- Shares Issued: 270,833 shares of Common Stock ($0.01 par value).
- Price Per Share: $4.80.
- Gross Proceeds: Approximately $1.3 million.
- Transaction Costs:
- Placement Agent Fee (Aegis Capital Corp.): 3.0% of gross proceeds plus 1.0% for non-accountable expenses.
- Financial Advisor Fee (Maxim Group LLC): 3.0% of gross proceeds.
The filing does not provide specific data on the Company's overall revenue, profit, cash flow, margins, debt, or liquidity positions outside of this specific transaction.
Material Changes
The primary material change reported is the increase in outstanding common stock and the influx of capital from the private placement. The transaction closed on May 31, 2019, with the investor being the Virginia Birth-Related Neurological Injury Compensation Program. No comparative financial data for prior periods is included in this specific filing.
Guidance, Outlook, and Risks
Registration Rights: The Company granted the Investor the right to request a registration statement for the resale of shares on or after May 31, 2020. Piggyback registration rights were also granted for Company-initiated offerings on or after December 1, 2019.
Regulatory Status: The shares were not registered under the Securities Act of 1933 and were sold relying on the private placement exemption under Section 4(a)(2) and Rule 506 of Regulation D. The Company agreed to file a Form D with the SEC.
Management Commentary: The filing contains no forward-looking guidance, outlook, or management commentary regarding future operations beyond the terms of the purchase agreement.
Investor Verification Checklist
- Verify the exact closing date of the private placement (May 31, 2019) and the final number of shares issued.
- Confirm the total transaction costs deducted from the $1.3 million gross proceeds to determine net capital raised.
- Review the full text of the Purchase Agreement (Exhibit 10.1) for specific covenants or restrictions on the Investor.
- Monitor future filings for the registration statement requested by the Investor, expected on or after May 31, 2020.
- Check subsequent filings for the impact of this capital raise on the Company's overall liquidity and debt levels.