UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On June 10, 2024, Vivos Therapeutics, Inc., a Delaware corporation, (the “Company”), entered into a securities purchase agreement (the “SPA”) with V-CO Investors LLC, a Wyoming limited liability company (“V-CO”). V-CO is an affiliate of New Seneca Partners Inc., a Michigan corporation (“Seneca”), a leading independent private equity firm.
Pursuant to the SPA, the Company sold to V-CO in a private placement offering (the “Private Placement”): (i) 169,498 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) a pre-funded warrant to purchase 3,050,768 shares of Comon Stock (the “Pre-Funded Warrant”, with the shares of Common Stock underlying the Pre-Funded Warrant being referred to as the “PFW Shares”), and (iii) a Common Stock Purchase Warrant to purchase up to 3,220,266 shares of Common Stock (the “Common Stock Purchase Warrant, and together with the Pre-Funded Warrant, the “Warrants”, and with the shares of Common Stock underlying the Common Stock Purchase Warrant being referred to as the “Warrant Shares”).
V-CO paid a purchase price of $2.329 for each Share and Pre-Funded Warrant Share and associated Common Stock Purchase Warrant, with such price being established for purposes of compliance with the listing rules of the Nasdaq Stock Market LLC. The Private Placement closed on June 10, 2024. The Company received gross proceeds of $7,500,000 from the Private Placement. The Company intends to use the net proceeds from the Private Placement for general working capital and general corporate purposes. No placement agent was used in connection with the Private Placement.
The Common Stock Purchase Warrant has a five year term, an exercise price of $2.204 per share and became exercisable immediately as of the date of issuance. The Pre-Funded Warrant has a term ending on the complete exercise of the Pre-Funded Warrant, an exercise price of $0.0001 per share and became exercisable immediately as of the date of issuance. The Warrants also contain customary stock-based (but not price-based) anti-dilution protection as well as beneficial ownership limitations that may be waived at the option of each holder upon 61 days’ notice to the Company.
The SPA provides that for a period of three (3) years from the closing of the Offering, Seneca shall be entitled to (i) receive notice of any regular or special meeting of the Company’s board of directors (the “Board”) at the time such notice is provided to the members of the Board, (ii) receive copies of any materials delivered to the Company’s directors in connection with such meetings and (iii) allow one Seneca representative (who shall be an officer or employee of Seneca) to attend and participate (but not vote) in all such meetings of the Board. The SPA also includes standard representations, warranties, indemnifications, and covenants of the Company and V-CO.
The terms of the SPA require the Company to file a registration statement on Form S-3 or other appropriate form (the “Resale Registration Statement”) registering the Shares, the PFW Shares and the Warrant Shares (collectively, the “Registerable Securities”) for resale no later than July 25, 2024 and to use commercially reasonable best efforts to cause the Resale Registration Statement to be effective by September 8, 2024. The Company must also use its commercially reasonable efforts to keep the Resale Registration Statement continuously effective (including by filing a post-effective amendment to the Resale Registration Statement or a new registration statement if the Resale Registration Statement expires) for a period of three (3) years after the date of effectiveness of the Resale Registration Statement or for such shorter period as such securities no longer constitute Registrable Securities, subject to certain limitations specified in the SPA.
Strategic Alliance Agreement
On June 10, 2024, VSI Providers, PLLC, a wholly-owned subsidiary of the Company (“VSI”), and Rebis Health Holdings, LLC (“Rebis”), entered into a strategic alliance agreement (the “SAA”) providing for a joint marketing and distribution arrangement under which each party’s products and services will be offered together as a comprehensive solution to patients seeking sleep apnea treatment. Rebis and its affiliates operate multiple sleep testing and treatment centers in Colorado. VSI has a network of licensed dental professionals trained in providing various sleep apnea treatment-related services and, through its affiliates, access to additional products and services related to sleep apnea treatment. The Company and V-CO are third-party beneficiaries of the SAA.
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Under the SAA VSI shall provide Rebis access to licensed dental professionals trained in providing certain dental services (each a “VSI Dental Provider”) to provide such dental services in designated practice locations (as described in the SAA); provided, that nothing in the SAA restrict Rebis’ right to utilize the dental services of its own employees in a similar capacity as the VSI Dental Providers.
Pursuant to the SAA, Rebis will be entitled to receive from VSI an agreed upon percentage of patient payments collected by VSI Dental Providers, less certain administrative fees charged by VSI and agreed to direct cost deductions.
The term of the SAA commences as of its effective date and continues for a period of two (2) years unless sooner terminated. At the end of the initial term of the agreement, the SAA will automatically renew for additional one (1) year terms unless either party gives written notice of its intent not to renew at least sixty (60) days prior to the end of the then-current term. VSI and Rebis each may terminate the SAA (subject to applicable notice and cure periods) on breaches of the SAA, bankruptcy, and similar events
The SAA contains standard covenants regarding compliance with applicable laws, a two year non-solicitation of personnel provision, intellectual property, insurance and maintaining the confidentiality of communications and proprietary information. The SAA also contains customary representations and warranties of the parties, indemnification, and liability limitations.
Management Services Agreement
Also on June 10, 2024, the Company, Airway Integrated Management Company, LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“AIM”), and V-CO entered into a management services agreement (the “MSA”). Pursuant to the MSA, V-CO will provide certain management, consulting, and advisory services to the Company related to the SAA.
The term of the MSA commences on the effective date of the agreement and continues until the later of (i) June 10, 2027 or (ii) such time as V-CO has received two (2) times its original investment in the Private Placement (the “MSA Term”). The MSA will automatically renew for additional terms of one (1) year unless any party sooner terminates the agreement in accordance with the terms of the MSA.
During the MSA Term, V-CO will provide to the Company and AIM oversight, management consulting and advisory services, including, without limitation: (i) management of general and administrative expenses of the SAA, (ii) advice on strategy of the SAA with a view towards maximizing the revenue and profit generated by the SAA, (iii) searches for additional potential sleep center operators to form strategic alliances with, (iv) making introductions to industry contacts of V-CO and its affiliates (including Seneca) for purposes of expanding the business and opportunities of the Company, AIM, VSI and the SAA, and (v) performing other services as may be reasonably requested from time to time by the Company, VSI or the AIM, and agreed to by V-CO, taking into account the level of compensation for services and other engagements that V-CO and its affiliates may have (collectively, the “Management Services”).
As consideration for the Management Services, AIM has agreed to pay to V-CO for three (3) years a management fee equal to $37,500 per quarter, payable quarterly in arrears, with a minimum of $25,000 per quarter paid in cash and the remaining up to $12,500 per quarter paid in the form of cash or restricted Common Stock, as decided by V-CO (the “Management Fee”). The value of restricted Common Stock, if any, paid as part of the Management Fee will be calculated based upon the average 5-day closing price of the Common Stock ending as of the end of each applicable quarter (or, if the Common Stock is not then publicly listed, as determined in good faith by the Board using industry standard valuation metrics).
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In addition to the Management Fee, V-CO will also receive a quarterly cash participation payment from AIM (the “Participation Payment”) equal to an agreed upon percentage of the net positive cash flow (as determined in accordance with U.S. generally accepted accounting principles) generated by the operations of the SAA and received by VSI pursuant to the SAA (“Net Cash Flow”). The Participation Payment shall accrue (the “Accrued Amount”) and not be paid until the Company on a consolidated basis is cash flow positive from operations, as reported in its Securities and Exchange Commission (“SEC”) filings (the “Participation Trigger Event”) (meaning the Company shall receive all Net Cash Flow (if any) from VSI until the occurrence of the Participation Trigger Event). The Profit Participation shall continue to be earned quarterly until the later of such time as (i) V-CO receives an amount equal to two (2) times its investment in the Private Placement; or (ii) or June 10, 2027.
The MSA contains customary covenants regarding confidentiality and indemnification. Under the MSA, V-CO will also assign to AIM or its affiliates V-CO’s entire right, title, and interest in any intellectual property it creates while working for or on behalf of AIM.
On June 10, 2024, the Company issued a press release announcing the closing of the Private Placement and the execution of the SAA. A copy of such press release is filed as Exhibit 99.1 to this Current Report on Form 8-K.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosures set forth in Item 1.01 above related to the Offering are incorporated by reference into this Item 3.02. The Warrants and the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and are instead being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and/or Rule 506(b) promulgated thereunder.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Exhibit | |
| 99.1 | Press Release of the Company, dated June 12, 2024 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VIVOS THERAPEUTICS, INC. | ||
| Dated: June 14, 2024 | By: | /s/ Bradford Amman |
| Bradford Amman | ||
| Chief Financial Officer | ||
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Exhibit 99.1
Vivos
Therapeutics Closes $7.5 Million At-The-Market
Private Equity-Backed Investment and
Launches Strategic Marketing and Distribution Alliance
Alliance
with Sleep Treatment Provider in Colorado Marks Critical Pivot in Vivos’ Marketing and
Distribution Model Aimed at Enhancing Revenue
Streams and Potential Profit
Private Placement Investment Sponsored by Seneca Partners, Who Will Also Provide General
Management Advisory Services to Fuel Growth Prospects
LITTLETON, CO, June 12, 2024 — Vivos Therapeutics, Inc. (“Vivos” or the “Company”) (NASDAQ: VVOS), a leading medical device and technology company specializing in the development and commercialization of highly effective proprietary treatments for sleep-related breathing disorders (including all severities of obstructive sleep apnea (OSA) in adults), today announced the execution of a strategic marketing and distribution alliance with an operator of multiple sleep testing and treatment centers in Colorado.
This alliance, which Vivos hopes will be the first of a series of similar alliances across the country, marks an important pivot in Vivos’ marketing and distribution model for its cutting edge OSA appliances.
Vivos also announced the related closing of a $7.5 million equity growth investment from New Seneca Partners, Inc. (Seneca), a leading North American private equity sponsor based in Southfield, Michigan. This investment materially bolsters Vivos’ cash on hand and stockholders’ equity and will facilitate the launch of the new strategic alliance and potentially other similar alliances, which is expected to positively impact Vivos’ revenue growth.
Under the new alliance, Vivos and the sleep center operator have agreed to collaborate to offer OSA patients a full spectrum of evidence-based treatments such as continuous positive airway pressure (CPAP) machines, and Vivos’ advanced, proprietary and FDA-cleared CARE oral medical devices, oral appliances and additional adjunctive therapies and methods offered by Vivos. The program will commence in two existing sleep treatment centers in Colorado, with operations expected to begin in July 2024. Vivos’ sleep center collaborator is presently rebranding its name in light of the new alliance, and Vivos expects to be able to share further details in the near future.
Kirk Huntsman, Chairman and CEO of Vivos, commented, “We cannot overstate the importance of this alliance to Vivos and its future, coupled with a validating private equity-led investment from Seneca. Over the last several years, peer-reviewed studies have confirmed our longstanding belief that Vivos has the most effective, safe, and potentially lasting non-surgical solution for all severities of OSA in adults that does not require lifelong nightly intervention. This was further validated by recent unprecedented FDA clearances Vivos has received, including the only FDA clearance for an oral medical device to treat severe OSA in adults.”
“We firmly believe this new strategic marketing and distribution alliance will serve as the initial launch of a scalable model and the first of many such alliances throughout the United States that will be the means of highlighting and delivering Vivos treatment options to millions of new and existing OSA patients seeking non-surgical alternatives to CPAP. In our field operations experience, OSA patients who are presented with all available OSA treatment options strongly prefer Vivos.”
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“Our intense operational focus in the near term is to execute at a high level with this new model to eliminate our cash burn and make Vivos cash flow positive and, ultimately, profitable. Simultaneously, we are already in talks with other local and national sleep testing and therapy companies to expand and establish this model on a national scale. Further, we believe this new model’s significantly higher gross profit per case and lower patient acquisition costs will be highly beneficial for our future results of operations. We believe this can scale relatively quickly and broaden our revenue channels, giving us the potential to drive our revenue growth,” Mr. Huntsman concluded.
Michael Skaff, Managing Director of Seneca, stated “We’ve been working with Vivos for more than nine months on this project, and our diligence has led us to strongly believe in both the significant health challenges and costs associated with OSA and the ability of Vivos’ suite of appliances and methods to address OSA. We also strongly believe in Vivos’ new marketing and distribution model through alliances with sleep health practitioners, which creates the opportunity for Vivos to significantly increase the revenue and gross profit it can generate from its proprietary and effective products, while dramatically lowering its customer acquisition costs and related overhead burden. Our investment in Vivos shows our commitment to this new endeavor for the long term, and we look forward to leveraging our experience in the healthcare space and working closely with the Vivos management team on this exciting endeavor.”
Certain Key Terms of the Seneca Investment and Strategic Alliance
The $7.5 million private placement investment by Seneca into Vivos consists of 3,220,266 shares of common stock (or a pre-funded warrant to purchase common stock in lieu of shares of common stock) and a five-year common stock warrant to purchase an aggregate of up to 3,220,266 shares of common stock. Seneca paid a purchase price of $2.329 for each share and associated warrant, with such price being “at the market” for purposes of Nasdaq Stock Market rules. The warrants are exercisable for $2.204 per share. No placement agent was utilized in connection with the financing. Seneca has also been provided with Vivos Board of Directors observation rights.
The new marketing and distribution strategic alliance is based on a revenue-sharing model between Vivos and the sleep center operator. Subject to certain conditions, Seneca will participate in Vivos’ net cash flow allocation from the alliance up to an agreed-upon amount as partial consideration for its management advisory services to Vivos.
Additional details regarding these transactions will be provided by Vivos in a Current Report on Form 8-K, expected to be filed shortly with the U.S. Securities and Exchange Commission.
About Vivos Therapeutics, Inc.
Vivos Therapeutics, Inc. (NASDAQ: VVOS) is a medical technology company focused on developing and commercializing innovative diagnostic and treatment methods for patients suffering from breathing and sleep issues arising from certain dentofacial abnormalities such as obstructive sleep apnea (OSA) and snoring in adults. The Vivos Method represents the first clinically effective nonsurgical, noninvasive, nonpharmaceutical, and cost-effective solution for treating mild to severe OSA. It has proven effective in over 42,600 patients treated worldwide by more than 1,950 trained dentists.
The Vivos Method includes treatment regimens that employ proprietary CARE appliance therapy and other modalities that alter the size, shape, and position of the soft tissues that comprise a patient’s upper airway and/or palate. The Vivos Method opens airway space and may significantly reduce symptoms and conditions associated with mild-to-severe OSA in adults, such as lowering Apnea Hypopnea Index scores. Vivos also markets and distributes SleepImage diagnostic technology under its VivoScore program for home sleep testing in adults and children. The Vivos Integrated Practice (VIP) program offers dentists training and other value-added services in connection with using The Vivos Method.
For more information, visit www.vivos.com.
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About Seneca Partners
Seneca Partners is an active independent private equity sponsor located in Metropolitan Detroit, Michigan. Seneca works closely with institutional capital partners, family offices, ultra-high net worth and high net worth individuals to invest in businesses based in the U.S. and Canada.
Seneca’s focus is on businesses where Seneca can play an active role to add value, as well as industries where the firm or its partners have a deep understanding of the dynamics, trends, and potential growth strategies. Seneca has completed dozens of transactions across multiple industries and geographic locations during its nearly 25-year history. Its professionals leverage over 85 years of collective transaction experience in private equity and providing guidance on mergers and acquisitions, capital raising, and profitable growth strategies. Seneca invests and partners in businesses where its experience and acumen can play an active role in their growth and development.
Cautionary Note Regarding Forward-Looking Statements
This press release and statements of the Company’s management made in connection therewith contain “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events. Words such as “may”, “should”, “expects”, “projects,” “intends”, “plans”, “believes”, “anticipates”, “hopes”, “estimates”, “goal” and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon several assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond Vivos’ control. Actual results (including, without limitation, the anticipated benefits of the Company’s new marketing and distribution alliance and its relationship with Seneca Partners as described herein) may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: (i) the risk that the alliance described herein or Vivos’ other revenue, sales, marketing, collaboration, and other strategies may not increase revenues, (ii) the risk that some patients may not achieve the desired results from using Vivos’ products, (iii) risks associated with regulatory scrutiny of and adverse publicity in the sleep apnea treatment sector; (iv) the risk that Vivos the investment by Seneca described herein may not be sufficient for Vivos’ long term capital needs or to maintain its Nasdaq listing and (v) other risk factors described in Vivos’ filings with the SEC. Vivos’ filings can be obtained free of charge on the SEC’s website at www.sec.gov. Except to the extent required by law, Vivos expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Vivos’ expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.
Vivos Investor Relations and Media Contact:
Julie Gannon
Investor Relations Officer
720-442-8113
jgannon@vivoslife.com
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Cover |
Jun. 14, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Jun. 14, 2024 |
| Entity File Number | 001-39796 |
| Entity Registrant Name | Vivos Therapeutics, Inc. |
| Entity Central Index Key | 0001716166 |
| Entity Tax Identification Number | 81-3224056 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 7921 Southpark Plaza |
| Entity Address, Address Line Two | Suite 210 |
| Entity Address, City or Town | Littleton |
| Entity Address, State or Province | CO |
| Entity Address, Postal Zip Code | 80120 |
| City Area Code | (844) |
| Local Phone Number | 672-4357 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, par value $0.0001 per share |
| Trading Symbol | VVOS |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |