LOS ANGELES, CA -- (Marketwire) -- 04/23/12 -- Catasys, Inc. (PINKSHEETS: CATS) announced today that it has closed a private placement to raise approximately $3.4 million with institutional and other accredited investors. The investment round was led by Socius Capital Group, LLC ("Socius"), an affiliate of Terren S. Peizer, the Company's Chairman and Chief Executive Officer, which purchased $765,000 of common stock and warrants. Socius and the Company also agreed to exchange the $989,000 senior secured convertible promissory note issued earlier this year and accrued interest for common stock and warrants on the same terms as the placement. As a result of the exchange, the Company has no debt outstanding. After the offering and based on anticipated contracts and enrollment, the Company believes it may have sufficient capital to achieve positive cash flow.
In the aggregate, including the exchange of the note, Socius invested approximately $1.75 million in the offering. Mr. Peizer and his affiliates have invested $5.2 million in the Company over the last 18 months. After participating in the placement, Mr. Peizer and his affiliates own approximately 44% of the Company after taking into account the exercise of all options and warrants issued by the Company.
In the placement, the Company issued 21,440,050 shares of common stock and an equal number of warrants, exercisable at $0.16 per share. The warrants are exercisable immediately and expire on the fifth anniversary of the date of issuance. David Smith, an affiliate of the Company, also invested $1.3 million in the placement. Proceeds from the placement are expected to be used for working capital and general corporate purposes. The common stock and warrants have not been registered.
Catasys, Inc. provides specialized health management services to health plans, employers and unions through a network of licensed and company managed health care providers. The Catasys substance dependence program was designed to address substance dependence as a chronic disease. The program seeks to lower costs and improve member health through the delivery of integrated medical and psychosocial interventions in combination with long term care coaching, including a proprietary treatment program for alcoholism and stimulant dependence. For further information, please visit www.catasyshealth.com.
Except for statements of historical fact, the matters discussed in this press release are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes in regulations or issuance of new regulations or interpretations, limited operating history, lack of outcomes and statistically significant formal research studies, difficulty enrolling members in our programs, the risk that treatment programs might not be effective, difficulty in developing, exploiting and protecting proprietary technologies and intense competition and substantial regulation in the health care industry. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plan," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words other comparable words to be uncertain and forward-looking. For a further list and description of the risks and uncertainties we face, please refer to our most recent Securities and Exchange Commission filings which are available on its website at http://www.sec.gov. Such forward-looking statements are current only as of the date they are made, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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