Ontrak, Inc. (OTRKQ) Earnings Call Transcript & Summary

Ladies and gentlemen, I'm Terren Peizer, Chairman of the Board of Directors of Ontrak Inc. and Chairman of this special meeting. As you know, we are hosting today's special meeting through a virtual online platform, hosted by Lumi. Before we proceed with the formal business of the special meeting, I would like to introduce the members of the Board who are with us virtually today: Michael Sherman, member of our Board and our Audit Committee and Chairman of our Compensation Committee and Nominations and Governance Committee; Richard Berman, member of our Board, Compensation Committee, Nominations and Governance Committee and Chair of our Audit Committee; Jim Messina, member of our Board, Compensation Committee, Audit Committee and Nominations and Governance Committee. Also virtually attending the special meeting are our company executives, Mr. Brandon LaVerne, President and Chief Operating Officer; Mr. James Park, Chief Financial Officer and Corporate Secretary. Representatives of the company's counsel, Sheppard Mullin, Richter & Hampton LLP, are also virtually attending the special meeting. After I describe and we fix each item to be voted on, we will open the polls for voting. After voting is completed on all matters on the agenda, we will close the polls and the inspector of elections will provide his preliminary report. We will not accept votes, ballots, proxies, revocations or changes after the closing of the polls. If you have already voted and submitted your proxy and do not wish to change your vote, you do not need to vote during the meeting and your shares will be voted on previously instructed. If you intend to vote during the meeting and have not already done so and are a stockholder of record, which means you hold your shares in your own hands and not through a brokerage account as of January 17, 2023, you must submit your vote online before the polls close in order for it to be counted. If you are a stockholder of record as of that date and have not yet voted, I encourage you to vote online now. I have asked Mr. Park to act as Secretary of the special meeting and to record the minutes of this special meeting. Before considering the business to be discussed at the special meeting, I would like Mr. Park to report and the formal steps taken in connection with the special meeting. James?

Mr. Chairman, the Board of Directors has adopted the resolution, which provide that this special meeting be held today and which fixed the close of business on January 17, 2023, as a record date for the determination of stockholders entitled to notice of and to vote at this special meeting. I have an affidavit of [ Dominic Becker ], an employee of American Stock Transfer & Trust Company, the company's transfer agent, certifying that the notice of the special meeting of our shareholders and proxy card were first sent or made available on January 20, 2023, to each holder of the company's common stock at the close of business on the record date. I also have at this special meeting a list of stockholders of company's common stock as of the record date that was compiled by American Stock Transfer & Trust Company. Stockholders of record at the close of business on January 17, 2023, can contact the company to coordinate a view of this list by e-mailing [email protected]. According to this list, there were 27,280,986 shares of common stock issued and outstanding on the record date. Each outstanding share of common stock is entitled to one vote on each of the matters presented to the stockholders at the special meeting.

Thank you, Mr. Park. I would like you to file the affidavit as to the mailing of the proxy material in the minute book of the company with the minutes of the special meeting. The Board of Directors has adopted resolutions, which appoint Mr. LaVerne to act as inspector of election of the special meeting. The inspector has executed an oath to carry out his duties impartially and to the best of his ability. His function is to decide upon the qualification of voters, accept their votes and when the voting on all matters is completed, to tally the final votes. James?

Mr. Chairman, we'll file the oath signed by the inspector of election with the record of the special meeting.

Thank you, Mr. Secretary. Will the inspector of election now provide us with the count of the outstanding shares of the company's common stock at the close of business on the record date that are present or represented by proxy at the special meeting?

Mr. Chairman, I can report that more than 50% of the outstanding shares of common stock of Ontrak at the close of business on the record date are present or represented by proxy at the special meeting.

Since at least a majority of the outstanding shares of common stock entitled to vote at this special meeting are present or represented by the proxy at the special meeting, I declare that a quorum is present. First order of business is to authorize the Board of Directors in its discretion to file a certificate of amendment to the company's amended and restated certificate of incorporation to effect the reverse stock split of our outstanding common stock at a ratio that is not less than 4:1 and not greater than 6:1, without reducing the authorized number of shares of common stock with the final ratio to be selected by the Board of Directors in its discussion following stockholder approval and to be affected, if at all, in the sole discretion of the Board of Directors at any time within 1 year of the date of the special meeting without further approval or authorization of the company's stockholders. This proposal, which is referred to as the reverse stock split proposal in the proxy statement for the special meeting, needs to be approved by the affirmative vote of the majority of the outstanding shares of common stock as of the record date of this special meeting. I will entertain a motion for the reverse stock split proposal.

I move that the reverse stock split proposal is presented to the stockholders.

I second the motion. The reverse stock split proposal is now closed and approved for voting. The second order of business is to authorize the issuance of shares of the company's common stock, convertible notes and the shares of common stock issued upon the conversion thereof and warrants to -- and warrants to purchase shares of common stock and the shares of common stock issued upon the exercise thereof in each case pursuant to the Master Note Purchase Agreement dated April 15, 2022, as amended for purposes of complying with NASDAQ Listing Rule 5635. This proposal, which is referred to as the Keep Well proposal in the proxy statement for the special meeting needs to be approved by the affirmative vote of the majority of the shares of common stock present or represented by proxy at the special meeting and entitled to vote on this proposal. I will entertain a motion for the Keep Well proposal.

I move that the Keep Well proposal be presented to the stockholders.

I second the motion. The Keep Well proposal is now closed and approved for voting. The third order of business is to authorize one or more adjournments of the special meeting to solicit additional proxies in the event there is insufficient votes to approve the reverse stock split proposal and to keep the well -- and the Keep Well proposal. This proposal, which is referred to as the adjournment proposal in the proxy statement for the special meeting, needs to be approved by the affirmative vote of the majority of the shares of common stock present or represented by proxy at a special meeting and entitled to vote on this proposal. I will entertain a motion for the adjournment proposal.

I move that the adjournment proposal be presented to the stockholders.

I second the motion. The adjournment proposal is now closed and approved for voting. As there are no other matters to be brought before this special meeting, I now call for votes: One, to reverse stock split proposal; two, the Keep Well proposal; and three, the adjournment proposal. If you previously did not vote or submit a proxy and would like to vote, you must submit your vote at this time in order for them to be counted by the inspector of election. The inspector of election will now accept proxies, ballots or votes or any changes or revocations submitted after the closing of the polls. The results of the votes will be certified by the inspector of election upon certification. The company will publicly announce, the voting results on our Form 8-K to be filed with the Securities and Exchange Commission. We will pause for 2 minutes before closing the polls in case any stockholder desires to vote at this time. [Voting]

The polls for each matter to be voted on at this special meeting are now closed. And I would like to have the inspector of election provide the preliminary count of the shares represented at the special meeting and of the votes cast in regard to each proposal.

As the inspector of election, I hereby preliminarily report the following: there are 16,398,864 shares of common stock represented at the special meeting, comprising approximately 60% of the outstanding shares of common stock of the company. With respect to the reverse stock split proposal, 15,174,280 shares of the company's common stock voted in favor of this proposal, representing a majority of the outstanding shares of common stock as of the record date for the special meeting. With respect to the Keep Well proposal, 12,039,105 shares of the company's common stock voted in favor of this proposal, representing a majority of shares present or represented by proxy at the special meeting and entitled to vote on this proposal. With respect to the adjournment proposal, 15,137,209 shares of common stock voted in favor of this proposal represented a majority of shares present or represented by proxy at the special meeting and entitled to vote on this proposal.

Thank you, Mr. LaVerne. Based on the preliminary voting results, I declare that all proposals submitted to stockholders for a vote at this meeting have been approved. There being no further business to conduct at this meeting, is there a motion to adjourn the meeting?

I move that the special meeting be adjourned.

I second the motion. There being no objections to the motion made to adjourn this special meeting, I hereby declare this special meeting adjourned.