SEC Form SC 13D/A filed by Ontrak Inc. (Amendment)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 20)*

Terren S. Peizer 

Acuitas Group Holdings, LLC 

200 Dorado Beach Drive #3831

Dorado, Puerto Rico 00646

(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)

If the filing person has previously filed a Statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D and is filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7(b) for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

SCHEDULE 13D

SCHEDULE 13D

SCHEDULE 13D

AMENDMENT NO. 20 TO SCHEDULE 13D

This Amendment No. 20 to Schedule 13D (this “Amendment”) is being filed by Acuitas Group Holdings, LLC, a California limited liability company (“Acuitas”), and Terren S. Peizer (“Mr. Peizer”) (collectively, the “Reporting Persons”) to amend the Schedule 13D originally filed with the Securities and Exchange Commission (the “SEC”) on October 20, 2010, as amended by Amendment No. 1 to Schedule 13D filed on December 6, 2011, Amendment No. 2 to Schedule 13D filed on April 27, 2012, Amendment No. 3 to Schedule 13D filed on September 20, 2012, Amendment No. 4 to Schedule 13D filed on February 14, 2013, Amendment No. 5 to Schedule 13D filed on May 11, 2021, Amendment No. 6 to Schedule 13D filed on July 27, 2021, Amendment No. 7 to Schedule 13D filed on August 16, 2021, Amendment No. 8 to Schedule 13D filed on November 2, 2021, Amendment No. 9 to Schedule 13D filed on April 18, 2022, Amendment No. 10 to Schedule 13D filed on September 2, 2022, Amendment No. 11 to Schedule 13D filed on September 8, 2022, Amendment No. 12 to Schedule 13D filed on November 22, 2022, Amendment No. 13 to Schedule 13D filed on January 4, 2023, Amendment No. 14 to Schedule 13D filed on January 6, 2023, Amendment No. 15 to Schedule 13D filed on February 23, 2023, Amendment No. 16 to Schedule 13D filed on March 7, 2023, Amendment No. 17 to Schedule 13D filed on March 8, 2023, Amendment No. 18 to Schedule 13D filed on June 27, 2023 and Amendment No. 19 to Schedule 13D filed on November 2, 2023 (as amended and supplemented, the “Original Statement” and, as amended and supplemented by this Amendment, the “Statement”), relating to common stock, par value $0.0001 per share (the “Shares”), of Ontrak, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein but not defined have the respective meanings ascribed to them in the Original Statement.

Item 3 of the Statement is hereby amended and supplemented to include the information disclosed in Item 4 below, which information is incorporated by reference herein.

Item 4 of the Statement is hereby amended and supplemented by adding the following information:

“As previously disclosed, on October 31, 2023, Acuitas Capital LLC, an entity wholly owned by Acuitas (“Acuitas Capital”), the Company, certain of the Company’s subsidiaries and U.S. Bank Trust Company, National Association, entered into the Fifth Amendment (the “Fifth Amendment”) to the Master Note Purchase Agreement, dated as of April 15, 2022, as amended by that certain First Amendment made as of August 12, 2022, that certain Second Amendment made as of November 19, 2022, that certain Third Amendment made as of December 30, 2022 and that certain Fourth Amendment made as of June 23, 2023 (as amended through and including the Fifth Amendment, the “Existing Keep Well Agreement”, and as modified by the November 9 Agreement (as defined below), the “Keep Well Agreement”).

On November 9, 2023, the Company and Acuitas Capital entered into a letter agreement (the “November 9 Agreement”) under which the minimum amount to be raised in an equity financing for such financing to constitute a “Qualified Financing” (as such term is defined in the Keep Well Agreement) was reduced from $8.0 million to $6.0 million. The foregoing summary of the November 9 Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the November 9 Agreement, which is attached hereto as Exhibit 99.24 and incorporated by reference herein.

On November 14, 2023, the Company closed its previously announced public offering (the “Offering”) of Shares and warrants to purchase Shares at a combined public offering price of $0.60 per Share and accompanying warrants (the “Public Offering Price”), as disclosed by the Company in its current report on Form 8-K filed with the SEC on November 15, 2023.

Notes Conversion. In accordance with the Fifth Amendment, on November 14, 2023 and before the closing of the Offering, the Company issued 18,054,791 Shares to Humanitario Capital LLC, an entity wholly owned by Acuitas (“Humanitario”), upon the conversion of the aggregate principal amount of all the outstanding senior secured convertible notes (the “Keep Well Notes”) previously issued by the Company to Acuitas Capital under the Keep Well Agreement, plus all accrued and unpaid interest thereon, minus $7.0 million (the “Notes Conversion”). The Notes Conversion was effected in accordance with the terms (including the conversion price) of the Keep Well Agreement and the Keep Well Notes. On November 14, 2023, in connection with the Notes Conversion, and in accordance with the Keep Well Agreement, the Company issued to Acuitas a warrant, in the form attached to the Keep Well Agreement, to purchase up to 18,054,791 Shares with an exercise price of $0.90 per share (the “Conversion Warrant”), which was the conversion price of the Keep Well Notes converted in the Notes Conversion.

Because the Public Offering Price was less than the conversion price at which the Keep Well Notes were converted in the Notes Conversion, upon the effectiveness of the Stockholder Approval (as defined below): (1) the Company will issue to Acuitas Capital (or its designee) additional Shares such that the total number of Shares issued in respect of the Notes Conversion plus such additional Shares will equal the number of shares the Company would have issued in respect of the Notes Conversion if the Keep Well Notes converted therein were converted at a conversion price equal to the Public Offering Price; and (2) the exercise price of the Conversion Warrant will be reduced to $0.60 per share (i.e., the Public Offering Price), and the number of Shares subject to the Conversion Warrant will be increased to the number of Shares that would have been subject to the Conversion Warrant if the Keep Well Notes converted in the Notes Conversion were converted at a conversion price equal to the Public Offering Price. Accordingly, upon the effectiveness of the Stockholder Approval, the Company will issue an additional 9,027,395 Shares to Acuitas Capital (or its designee) in respect of the Notes Conversion, the exercise price of the Conversion Warrant will be reduced to $0.60 per share, subject to further adjustment as set forth therein, and the number of Shares subject to the Conversion Warrant will be increased by 9,027,395 (collectively, the “Notes Conversion Modifications”).

Private Placement. In accordance with the terms of the Fifth Amendment, on November 14, 2023, concurrent with the closing of the Offering, the Company issued to Humanitario in a private placement (the “Private Placement”) an unregistered pre-funded warrant to purchase up to 18,333,333 Shares (the “Private Placement Pre-Funded Warrant”) and an unregistered warrant to purchase up to 36,666,666 Shares (the “Private Placement Warrant” and, together with the Private Placement Pre-Funded Warrant, the “Private Placement Securities”), for total consideration of $11.0 million. The consideration for the Private Placement Securities purchased by Humanitario consisted of (a) the $6.0 million Acuitas Capital previously delivered to the Company in June 2023 and September 2023 in accordance with the Keep Well Agreement and (b) a reduction of the aggregate amounts outstanding under the Keep Well Notes (after giving effect to the Notes Conversion) to $2.0 million (the Keep Well Note evidencing such $2.0 million, the “Surviving Note”). Each Private Placement Pre-Funded Warrant was sold with two Private Placement Warrants, with each Private Placement Warrant exercisable for one Share.

The following is a summary of the material terms of the Private Placement Securities. The following summary is not complete and is subject to, and qualified in its entirety by, the full terms of the Private Placement Securities, copies of which are attached hereto as Exhibits 99.25 and 99.26 and incorporated by reference herein.

Exercisability and Term. The exercisability of the Private Placement Securities is subject to the Stockholder Approval. Upon the effectiveness of the Stockholder Approval, (a) the Private Placement Pre-Funded Warrant may be exercised at any time until exercised in full, and (b) the Private Placement Warrant may be exercised through the fifth anniversary of the date of the effectiveness of the Stockholder Approval. The Private Placement Securities may be exercised on a cashless basis.

Exercise Price. The exercise price of the Private Placement Pre-Funded Warrant is $0.0001 per share, subject to customary adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock. The exercise price of the Private Placement Warrant is $0.85 per share, subject to adjustment as further described below.

In addition to customary adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock, the exercise price of the Private Placement Warrant and the number of Shares issuable upon exercise thereof are subject to adjustment upon the occurrence of the events described below (collectively, the “Warrant Adjustment Provisions”).

Fundamental Transaction. In the event of a fundamental transaction, as described in the Private Placement Securities and which generally includes any reorganization, recapitalization or reclassification of the Company’s common stock, the sale, transfer or other disposition of all or substantially all of the Company’s properties or assets, the Company’s consolidation or merger with or into another person, the acquisition of more than 50% of the Company’s outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by the Company’s outstanding common stock, the holder of the Private Placement Securities will be entitled to receive upon exercise thereof the kind and amount of securities, cash or other property that the holder would have received had it exercised the Private Placement Securities immediately prior to such fundamental transaction. Additionally, as more fully described in the Private Placement Securities, in the event of certain fundamental transactions, the holder will be entitled to receive consideration in an amount equal to the Black Scholes Value (as defined in the Private Placement Securities) of the Private Placement Securities on the date of consummation of such transaction.

Surviving Note. Under the terms of the Fifth Amendment, the Surviving Note will mature on May 14, 2026, unless it becomes due and payable in full earlier. Subject to the effectiveness of the Stockholder Approval, the conversion price of the Surviving Note will be the lesser of (i) $2.40 per share, subject to adjustment for stock splits and the like, and (ii) the greater of (a) the consolidated closing bid price of the Company’s common stock on the trading day immediately prior to conversion and (b) $0.60 per share, subject to adjustment for stock splits and the like.

The Shares issued and that will be issued in respect of the Notes Conversion, the Conversion Warrant, the Shares issuable upon exercise of the Conversion Warrant, the Private Placement Securities, and the Shares issuable upon exercise of the Private Placement Securities, were issued and will be issued, as applicable, pursuant to the exemptions provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder.

Stockholder Approval. As previously disclosed, under the terms of the Fifth Amendment, the Company was required to seek stockholder approval (the “Stockholder Approval”) in accordance with the rules of the Nasdaq Stock Market (the “Listing Rules”) of (A) the issuance of the Shares issuable upon exercise of the Private Placement Securities that, in the aggregate with the Shares issuable upon exercise of the warrants to purchase Shares sold in the Offering, are in excess of the maximum number of Shares permitted to be issued without such approval under the Listing Rules (which amount was 4,295,068, or 19.99% of the total number of Shares outstanding immediately following the Notes Conversion and immediately prior to the closing of the Offering and the Private Placement), (B) the amendment to the conversion price of the Surviving Note under the Fifth Amendment, (C) the elimination of the provision in the Keep Well Agreement that prohibited the issuance of Shares upon the conversion of any Keep Well Note or the exercise of any warrant issued under the Keep Well Agreement to the extent that, immediately after giving effect to the issuance of any such shares, Acuitas Capital and its affiliates would beneficially own Shares representing more than 90% of the total number of Shares outstanding as of the time of such issuance, and (D) any other terms of the Offering, the Private Placement and/or the Fifth Amendment that require approval of the Company’s stockholders under the Listing Rules, including the Notes Conversion Modifications and the Warrant Adjustment Provisions (collectively, the “Stockholder Approval Matters”).

On November 15, 2023, pursuant to the terms of the Support Agreement (as previously defined), Acuitas and Humanitario, which collectively owned a majority of the outstanding Shares as of that date, executed and delivered to the Company a written consent approving the Stockholder Approval Matters. According to the Company, the Company will file an information statement regarding the Stockholder Approval Matters with the SEC and mail an information statement to the holders of the Company’s common stock so the Stockholder Approval can become effective as soon as practicable. As of the date hereof, the Company has not filed such information statement with the SEC nor mailed it to the holders of the Company’s common stock.”

Item 5(a) and (b) of the Statement is amended and restated in its entirety as follows:

“(a) and (b)

All percentages of Shares outstanding contained herein are based on 57,100,174 Shares deemed outstanding pursuant to Rule 13d-3(d)(1) (without giving effect to the effectiveness of the Stockholder Approval), calculated as the sum of:

As of November 15, 2023, each of the Reporting Persons may be deemed to have beneficial ownership of 49,573,056 Shares, consisting of:

¹ Amendments 15 to 19 to the Statement incorrectly identified Acuitas Capital as the record holder of the outstanding Keep Well Warrants previously issued under the Keep Well Agreement. Acuitas is the record holder of such warrants.

The Shares beneficially owned by the Reporting Persons represent approximately 86.82% of the total number of Shares outstanding as of November 15, 2023 (without giving effect to the effectiveness of the Stockholder Approval). Acuitas may be deemed to share the power to vote or direct the vote and dispose or direct the disposition of all of the 49,573,056 Shares with Mr. Peizer. Mr. Peizer may be deemed to have the sole power to vote or direct the vote and dispose or direct the disposition of all of the 49,573,056 Shares.

Assuming the effectiveness of the Stockholder Approval within 60 days hereof, the exercise of all of the outstanding Keep Well Warrants issued to Acuitas (including the Conversion Warrant issued to Acuitas upon the Notes Conversion), the exercise of all of the outstanding Private Placement Securities issued to Humanitario following the Stockholder Approval, and the conversion of the Surviving Note into Shares following the Stockholder Approval, in each case as further described below, each of the Reporting Persons would be deemed to have beneficial ownership of 124,850,067 Shares, consisting of:

 Item 5(c) of the Statement is hereby supplemented with the following:

“Except as described in this Statement, the Reporting Persons had no transactions in the securities of the Company since the most recent filing on Schedule 13D.”

Item 6 of the Statement is hereby amended and supplemented to include the information disclosed in Item 4 above, which information is incorporated by reference herein. 

Item 7 of the Statement is hereby amended and supplemented by adding the following:

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated:  November 15, 2023