LogicMark, Inc. (NASDAQ:LGMK), a medical device company specializing in orthopedic and surgical appliances, has announced a significant corporate restructuring through amendments to its Articles of Incorporation, as detailed in its recent SEC Form 8-K filing. The company, headquartered in Louisville, Kentucky, has settled agreements with holders of its Series B common stock purchase warrants, leading to the creation of two new series of preferred stock.
On Wednesday, November 13, 2024, LogicMark filed with the Nevada Secretary of State to designate 1,000 shares each of Series H Convertible Non-Voting Preferred Stock and Series I Non-Convertible Voting Preferred Stock. The following day, the company issued these shares to the warrant holders as part of the settlement agreements.
The Series H Preferred Stock has a stated value of $1,000 per share and is convertible into common stock at an initial conversion price of $0.4654, subject to adjustments. Notably, this series does not have voting rights until converted into common stock. However, it does participate in distributions and liquidation events. The Series H Preferred Stock is initially convertible into approximately 2,148,689 common shares, with a Beneficial Ownership Limitation set at 4.99%, which can be increased to 9.99% with company consent.
The Series I Preferred Stock carries two votes per share, ranking junior to other preferred stock series in terms of dividends and liquidation preferences. These shares are non-convertible and will be automatically redeemed upon the sale, conversion, or redemption of Series H Preferred Stock. In a liquidation event, Series I holders are entitled to a per-share amount equal to twice the distribution per common share or a minimum of $0.4654, subject to adjustments.
In other recent news, LogicMark, Inc. has made significant strides in its financial and strategic developments. The company reported a 14% year-over-year increase in third-quarter revenue, amounting to $2.7 million, partly due to the successful launch of its Freedom Alert Mini PERS device. Despite this growth, LogicMark reported an adjusted EBITDA loss of $785,000 and a net loss of $1.6 million to shareholders for the quarter.
In a noteworthy settlement deal, LogicMark entered into an agreement with the holders of its Series B common stock purchase warrants. As part of the agreement, the company will issue new Series H Convertible Non-Voting Preferred Stock and Series I Non-Convertible Voting Preferred Stock. This move aims to settle with the warrant holders and issue new preferred stock, as detailed in the company's latest 8-K filing with the Securities and Exchange Commission.
In addition to these financial outcomes, LogicMark is also expanding its intellectual property portfolio and shifting its focus towards higher-margin software solutions. The company has a new product launch on the horizon, indicating a commitment to evolving with market demands.
InvestingPro Insights
LogicMark's recent corporate restructuring comes at a critical time for the company, as reflected in the latest financial data and insights from InvestingPro. The company's market capitalization stands at a modest $0.96 million, indicating its current small-cap status. This aligns with the restructuring efforts, which may be aimed at improving the company's financial position and attracting investor interest.
InvestingPro data shows that LogicMark's revenue for the last twelve months as of Q2 2024 was $9.74 million, with a slight revenue growth of 0.4% in the most recent quarter. However, the company is facing profitability challenges, as evidenced by its negative operating income of -$7.23 million and a concerning operating income margin of -74.21% for the same period.
Two relevant InvestingPro Tips highlight LogicMark's financial situation:
1. The company is quickly burning through cash, which explains the urgency of the restructuring and the issuance of new preferred stock series.
2. LogicMark holds more cash than debt on its balance sheet, potentially providing some financial flexibility as it navigates its current challenges.
These insights provide context to the company's decision to restructure and settle agreements with warrant holders. The creation of new preferred stock series could be a strategic move to manage cash flow and strengthen the balance sheet without immediately diluting common shareholders.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide further insight into LogicMark's financial health and market position.
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