What changed in this filing

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Item 9A. Controls and Procedures

2022-02-23 compared with 2021-02-23 · 77 added, 106 removed, 163 unchanged (53% of the section changed)

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controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

In making this assessment as of December 31, 2021, we excluded the AffloVest assets acquired from International Biophysics Corporation on September 8, 2021.

The assets of this business, all of which represented goodwill and intangible assets, comprised 21.7% of our total assets as of December 31, 2021.

This business contributed 2.5% to our total revenues for the year ended December 31, 2021.

We have excluded this business because we have not had sufficient time to make an assessment of its internal controls using the COSO criteria in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

In excluding this business from our assessment, we have considered the “Frequently Asked Questions” as set forth by the office of the Chief Accountant and the Division of Corporate Finance on June 24, 2004, as revised on September 24, 2007, which acknowledges that it may not be possible to conduct an assessment of an acquired business’s internal control over financial reporting in the period between the consummation date and the date of management’s assessment and contemplates that such business would be excluded from management’s assessment in the year of acquisition.

Our independent registered public accounting firm has audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in its report which appears below.

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of the AffloVest assets acquired on September 8, 2021 (“AffloVest business”), whose financial statements reflect total assets and revenues constituting 21.7% and 2.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

As indicated in Management’s Report, the AffloVest business was acquired during 2021.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of the AffloVest business.

Definition and limitations of internal control over financial reporting

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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Other Information.

Because we are filing this Annual Report on Form 10-K within four business days after the triggering event, we are making the following disclosure under this Item 9B instead of filing a Current Report on Form 8-K under Item 1.01, Entry into a Material Definitive Agreement and Item 2.03, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant:

On February 22, 2022 (the “Amendment Date”), we entered into a Second Amendment Agreement (the “Second Amendment”), which amends the Amended and Restated Credit Agreement, dated as of April 30, 2021, as amended by that First Amendment Agreement dated as of September 8, 2021 (as further amended by the Second Amendment, the “Credit Agreement”), by and among us, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent.

The Second Amendment, among other things, provides that, effective as of the Amendment Date and continuing through the end of the Covenant Relief Period (as defined below), the applicable margin for LIBOR rate loans under the Credit Agreement shall be 3.50%.

The Second Amendment modifies the financial covenants under the Credit Agreement to require that we not permit, as of the last day of each fiscal quarter:

● our consolidated total leverage ratio to be (i) for the fiscal quarter ending March 31, 2022, greater than 3.50 to 1.00, (ii) for each fiscal quarter ending from June 30, 2022 through December 31, 2022, greater than 4.75 to 1.00, (iii) for the fiscal quarter ending March 31, 2023, greater than 4.00 to 1.00, (iv) for the fiscal quarter ending June 30, 2023, greater than 3.25 to 1.00 and (v) for each fiscal quarter thereafter, greater than 3.00 to 1.00, in each case, for the period of four consecutive fiscal quarters ending on or immediately prior to such date;

● our consolidated EBITDA to be (i) for the fiscal quarter ending March 31, 2022, less than $14,500,000, (ii) for each fiscal quarter ending from June 30, 2022 through December 31, 2022, less than $10,000,000, (iii) for the fiscal quarter ending March 31, 2023, less than $11,500,000, (iv) for the fiscal quarter ending June 30, 2023, less than $14,500,000, and (v) for each fiscal quarter thereafter, less than $20,000,000, in each case, for the period of four consecutive fiscal quarters ending on or immediately prior to such date;

● our consolidated fixed charge coverage ratio to be (i) for the fiscal quarter ending March 31, 2022, less than 1.50 to 1.00, (ii) for the fiscal quarters ending June 30, 2022 and September 30, 2022, less than 1.25 to 1.00, and (iii) for each fiscal quarter thereafter, less than 1.50 to 1.00, in each case, for the period of four consecutive fiscal quarters ending on or immediately prior to such date.

The Second Amendment provides that during the period commencing with the fiscal quarter ending March 31, 2022 and ending on the last day of the fiscal quarter ending June 30, 2023 (the “Covenant Relief Period”), we will not permit our Liquidity (as defined in the Second Amendment) to be less than $7,500,000, determined as of the last day of any fiscal quarter within the Covenant Relief Period.

The Second Amendment also permits additional addbacks to Consolidated EBITDA (as defined in the Credit Agreement) for certain litigation costs and expenses.

The Second Amendment also provides that we will make mandatory principal prepayments of the loans under the Credit Agreement upon the occurrence of collection of certain aged accounts receivable, in addition to the mandatory prepayments that were previously included in the Credit Agreement for certain asset dispositions, insurance and condemnation events and other matters.

Pursuant to the Second Amendment, on the Amendment Date, we made a mandatory principal prepayment of the term loan under the Credit Agreement of $3.0 million.

Following such payment, as of February 22, 2022, we had outstanding borrowings of $51.3 million under the Credit Agreement, comprised of $26.3 million under the term loan and $25.0 million under the revolving credit facility.

The foregoing description of the Second Amendment is a summary of the material terms, does not purport to be complete, and is qualified in its entirety by reference to the Second Amendment, a copy of which is attached to this Annual Report on Form 10-K as Exhibit 10.37 and is incorporated herein by reference.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance .

Soderberg , age 74, has served as a member of our board of directors since September 2012.

Soderberg currently is the Managing Partner of Worthy Venture Resources, LLC, a company that seeks to add intellectual and financial capital to post start-up companies transitioning to an established national market presence.

Beginning in 2006, Mr.

Soderberg served as the President and Chief Executive Officer of both Hillenbrand Industries and Hill-Rom.

In 2008, Hillenbrand Industries separated its two subsidiaries creating two, separately traded, public companies.

Soderberg continued his role as President and Chief Executive Officer of the medical technology company, Hill-Rom Holdings, Inc.

Soderberg served on the board of Hillenbrand Industries/Hill-Rom from 2002 until his semi-retirement in 2010.

Previously, he was President and Chief Executive Officer at Welch Allyn, a manufacturer of medical diagnostic equipment, for six years, and served as Group Vice President and Chief Operating Officer from 1993 to 1999.

Prior to his role at Welch Allyn Mr.

Soderberg served 23 years at Johnson & Johnson in a variety of operations, marketing and management positions, including President of Johnson & Johnson Health Management.

His career also includes roles as President and Chief Executive Officer of an industrial technology company and the founder and President of a venture capital business.

Soderberg currently serves on the board of directors of Medical Technology Enterprise Consortium and several overseas, privately held, medical technology companies.

Soderberg previously served on the boards of Integer Holdings Corp.

ITGR, formerly Greatbatch, Inc.), a medical technology company, Constellation Brands, Inc.

and the Advanced Medical Technology Association.

Burke , age 61, has served as a member of our board of directors since September 2015.

Since November 2015, Mr.

Burke has served as President of Austin Highlands Advisors, LLC, a provider of corporate advisory services.

He served as Executive Vice President and Chief Financial Officer of IDEV Technologies, a peripheral vascular devices company, from November 2009 until the company was acquired by Abbott Laboratories in August 2013.

From August 2004 to December 2007, he served as Executive Vice President and Chief Financial Officer of ReAble Therapeutics, a diversified orthopedic device company that was sold to The Blackstone Group in a going private transaction in 2006 and subsequently merged with DJO Incorporated in November 2007.

Burke remained with ReAble until June 2008.

From 2001 to 2004, he served as Chief Financial Officer of Cholestech Corporation, a medical diagnostic products company.

Burke has served on the board of directors of numerous public and private companies and currently serves on the board of directors of Adtalem Global Education Inc., Myocardial Solutions, Inc.

and EQ Health Acquisition Corp.

He previously served on the board of directors of Invuity, Inc.

(acquired by Stryker Corporation in October 2018), LDR Holding Corporation (acquired by Zimmer Biomet in July 2016) and Medical Action Industries (acquired by Owens & Minor in October 2014).

Sheri Dodd , age 55, currently serves as vice president and general manager at Medtronic plc.

At Medtronic, Ms.

Dodd oversees Care and Management Services.

She joined Medtronic in March 2010 and has served in vice president positions including healthcare economics and market access;

clinical research, health economics and policy;

non-intensive diabetes therapies, and telehealth.

From November 1997 until March 2010, Ms.

Dodd held various positions with Johnson & Johnson, most recently as vice president of health economics and reimbursement.

Dodd also served as an outcomes researcher with Orthopedic Surgeons, plc from January 1995 until November 1997.

From May 1988 until September 1993 Ms.

Dodd served as a project manager with the World Health Organization.

Huggenberger , age 62, has served as a member of our board of directors since September 2017.

Huggenberger has served as a member of the board of directors of Inogen, Inc.

Huggenberger served as Inogen’s Chief Executive Officer from 2008 to February 2017 and also served as Inogen’s President from 2008 until January 2016.

Prior to joining Inogen, Mr.

Huggenberger held various management positions with Sunrise Medical Inc., a global manufacturer and distributor of durable medical equipment, culminating as its President and Chief Operating Officer.

Huggenberger also serves on the board of directors of private companies Wellfount Corporation, a pharmacy services company, Sommetrics, a medical device company, Zerigo Health, a medical device company, Aviation Medical, a medical device

company, and previously served on the board of directors of IYIA Technologies, Inc., a healthcare company, as well as device company Ebb Therapeutics.

Deepti Jain, age 52, served as the President of Anthem’s pharmacy benefit management division, IngenioRx through November 2020, and was responsible for all functions including sales and account management, clinical programs, operations, client analytics, financial performance, underwriting, internal audit coordination, compliance, and market strategy.

Jain served as the Vice President and Chief Operating Officer of Anthem Pharmacy Solutions from 2014 to 2015, as the Senior Vice President and Chief Operating Officer of Anthem Pharmacy Solutions from 2016 to 2018, and as President of IngenioRx from 2019 through November 2020.

From December 2013 until February 2014 Ms.

Jain served as the Chief Operating Officer for Cigna Pharmacy.

Prior to that, Ms.

Jain held various positions with Medco Health Solutions Inc., between 1998 and 2012, most recently as Chief Financial Officer and Senior Vice President of Finance for the health plan division.

Jain also served as a systems manager for Catholic Medical Center from 1996 until 1998 and as a senior analyst with the Montefiore Health System from 1994 until 1996.

Nigon , age 73, has served as a member of our board of directors since September 2012.

Nigon is currently Senior Vice President of Cedar Point Capital, Inc., a private company that raises capital for early stage companies, where he has served since 2007.

From February 2001 until December 2006, Mr.

Nigon was a Director of Equity Corporate Finance for Miller Johnson Steichen Kinnard, a privately held investment firm, which was acquired in December 2006 by Stifel Nicolaus, a brokerage and investment banking firm.

After that acquisition, Mr.

Nigon became a Managing Director of Private Placements until May 2007.

From February 2000 to February 2001, Mr.

Nigon served as the Chief Financial Officer of Dantis, Inc., a web hosting company.

Prior to joining Dantis, Mr.

Nigon was employed by Ernst & Young LLP from 1970 to 2000, where he was a partner from 1981 to 2000.

While at Ernst & Young, Mr.

Nigon served as the Director of Ernst & Young's Twin Cities Entrepreneurial Services Group and was the coordinating partner on several publicly traded companies in the consumer retailing and manufacturing sectors.

Nigon is a director of Northern Technologies International Corporation and Celcuity, Inc., and was previously a director of Vascular Solutions, Inc.

before its acquisition by Teleflex, Incorporated in February 2017.

Nigon also serves as a director of several private companies.

Daniel Reuvers , age 57, joined Tactile from Integra LifeSciences Holdings Corporation, where he has served as the Executive Vice President and President, Codman Specialty Surgical, since December 2016.

His responsibilities within Codman Specialty Surgical included leadership of sales, marketing, product development, regulatory affairs, quality assurance, global service and repair and manufacturing worldwide.

He joined Integra in 2008 as Vice President of Marketing and Product Development for Integra’s surgical instruments business and was promoted to President of the acute surgical instruments business in June 2010.

He was appointed President, Instruments in 2011 and Corporate Vice President and President, International in November 2013.

Reuvers was president of Omni-Tract Surgical from September 2005 until December 2008, when that company was acquired by Integra.

Reuvers has over 30 years of experience in the medical technology field, including holding various executive level positions in sales, marketing and general management.

Roche , age 70, has served as a member of our board of directors since October 2004.

Roche was General Counsel of UnitedHealth Group, a health insurance provider, from 1989 to 1996, at which time he founded and operated as the Chief Executive Officer of the Ingenix division of UnitedHealth Group, where he served until 2001.

Following his retirement from UnitedHealth Group, Mr.

Roche has spent several years assisting emerging growth companies as an investor, advisor and board member.

He also serves as a Senior Advisor for Triple Tree, LLC.

He currently serves as a director for several private healthcare companies.

During the past five years, Mr.

Roche served on the board of directors of Cogentix Medical, Inc.

Information About our Executive Officers

Information regarding our Chief Executive Officer, Daniel L.

Reuvers, is included above under the heading “Directors.”

Daniel Reuvers , age 58, has served as our President and Chief Executive Officer, and as a member of our Board of Directors, since June 2020.

Previously, he was at Integra LifeSciences Holdings Corporation, where he has served as the Executive Vice President and President, Codman Specialty Surgical, since December 2016.

His responsibilities there included global sales, marketing, product development, quality and regulatory, and service and repair.

He joined Integra in 2008 as Vice President of Marketing & Product Development for the company’s surgical instrument business, and held a series of roles with progressively increased responsibility.

Among his accomplishments there, he led the $1B acquisition and integration of the Codman business from Johnson & Johnson.

Previously, he served as President of Advanced Respiratory and Omni-Tract Surgical, both resulting in acquisitions by Hill-Rom and Integra, respectively.

Reuvers served on the board of Respirtech, Inc.

for 10 years, until their acquisition by Philips.

Burns , age 50, has served as our Senior Vice President, Marketing & Clinical Affairs since joining the company in March 2021.

Prior to joining our company, Ms.

Burns was the Chief Marketing Officer of Cala Health, Inc., a privately-held bioelectronic medicine company developing wearable neuromodulation therapies for chronic disease, from January 2017 until March 2021.

At Cala Health, she organized the company’s commercial functions and managed the U.S.

commercial introduction of its lead product.

Prior to joining Cala Health, Inc., Ms.

Burns served as Vice President of Solutions Marketing, ResMed Americas of ResMed Inc.

RMD), a global leader in digital health and cloud-connected medical devices focused on sleep apnea and other chronic diseases, from December 2003 to February 2016.

Burns held various marketing and leadership roles of increasing responsibility with ResMed Inc.

beginning in 2003.

At ResMed Inc., her responsibilities included managing marketing and legal due diligence teams and leading the collaboration between multiple teams following a significant market reorganization.

Burns previously served in consulting and business development roles of increasing responsibility at a privately-held cardiology consulting practice that was subsequently acquired by GE Medical Systems, from 1994 to 1999.

Moen , age 54, has served as our Chief Financial Officer since joining the company in September 2018.

Prior to joining our company, Mr.

Moen served as Chief Financial Officer of Entellus

Medical, Inc., a publicly held medical device company, from May 2016 until the company’s acquisition by Stryker Corporation in February 2018.

Moen served as Chief Financial Officer of Entellus Medical, Inc., a publicly held medical device company, from May 2016 until the company’s acquisition by Stryker Corporation in February 2018.

Prior to joining Entellus Medical, Mr.

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in Accounting from the University of North Dakota and is a Certified Public Accountant (inactive) and started his professional career with Coopers and Lybrand.

Rishe , age 65, has served as our Senior Vice President, Sales since December 2017 and previously served as our Vice President, Sales since 2008.

From 2004 to 2008, he served as the Vice President, Sales for BSN Medical, a medical soft goods manufacturer.

Rishe also served as the Vice President, Sales and Marketing for TFX Medical, a surgical equipment manufacturer.

Prior to that, Mr.

Rishe was the Western Area Manager with Surgical Laser Technologies, a specialty laser company.

Rishe has held other sales leadership and business development roles with Becton Dickinson, Baxter Travenol and American Hospital Supply.

Eric Pauls , age 47, has served as our Senior Vice President, Sales since joining the company in May 2021.

Prior to joining our company, Mr.

Pauls served in positions of increasing responsibility at Royal Philips (NYSE:

PHIA), a leading health technology company.

He most recently held the position of Business Sales Leader for Sleep and Respiratory Care, North America.

In this position, Mr.

Pauls was responsible for a sleep and respiratory business, where he led a team of 500 sales and support personnel across multiple sales channels.

From July 2017 to September 2019, he served as Business Segment Leader for RespirTech, a U.S.-based provider of an in-home wearable treatment for patients with chronic respiratory conditions, which was acquired by Philips in 2017.

Pauls was Vice President of Sales for Key Accounts from January 2015 to June 2017 and Director of Sales for National Accounts from July 2012 to January 2014, leading targeted sales teams within Philips’ Sleep and Respiratory Care business.

He joined Philips Respironics as a Technical Sales Specialist in 2002, and was subsequently promoted to multiple positions within its sales organization over the following decade.

Pauls holds a M.B.A.

from Baker University and a B.S.

in Respiratory Care from the University of Kansas.

Corporate Governance

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We intend to disclose on our website any amendments or waivers to the Code that are required to be disclosed by SEC rules.

Other Information

Additional information required by this Item 10 will be contained in our definitive proxy statement for our 2022 Annual Meeting of Stockholders (the “Definitive Proxy Statement”) and is incorporated herein by reference.

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Date of Filing

Asset Sale and Purchase Agreement, dated as of September 14, 2012, by and between Tactile Systems Technology, Inc., Swelling Solutions, Inc., ConvaTec Inc.

and ConvaTec Technologies, Inc.

Asset Purchase Agreement, dated as of September 8, 2021, among Tactile Systems Technology, Inc., International Biophysics Corporation and H.

David Shockley, Jr.

Amended and Restated Certificate of Incorporation, as amended through May 9, 2019

Amended and Restated By-laws, effective May 9, 2019

Amended and Restated By-laws, effective M arch 10 , 2021

Description of the Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934

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Mattys and Tactile Systems Technology, Inc.

Letter Agreement between Tactile Systems Technology, Inc.

and Mary Thompson, dated July 16, 2019

Offer letter between Eric Pauls and Tactile Systems Technology, Inc.

dated April 19, 2021

Offer letter between Kristie Burns and Tactile Systems Technology, Inc.

dated February 1, 2021

Credit Agreement, dated as of August 3, 2018, by and among Tactile Systems Technology, Inc., the lenders from time to time party thereto and Wells Fargo Bank, National Association

First Amendment to Credit Agreement, dated as of February 12, 2019, by and among Tactile Systems Technology, Inc., the lenders party thereto and Wells Fargo Bank, National Association

Waiver and Second Amendment to Credit Agreement, dated as of March 25, 2019, by and among Tactile Systems Technology, Inc., the lenders party thereto and Wells Fargo Bank, National Association

Waiver and Second Amendment to Credit Agreement, dated as of March 25, 2019, by and among Tactile Systems Technology, Inc.,

the lenders party thereto and Wells Fargo Bank, National Association

Third Amendment to Credit Agreement, dated as of August 2, 2019, by and among Tactile Systems Technology, Inc., the lenders party thereto and Wells Fargo Bank, National Association

License Agreement, dated as of October 15, 2018, by and between Tactile Systems Technology, Inc.

and Sun Scientific, Inc.

Amended and Restated Credit Agreement, dated as of April 30, 2021, by and among Tactile Systems Technology, Inc., the lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent

First Amendment Agreement, dated as of September 8, 2021, among Tactile Systems Technology, Inc., the lenders signatory thereto and Wells Fargo Bank, National Association, as administrative agent

Second Amendment Agreement, dated as of February 22, 2022, among Tactile Systems Technology, Inc., the lenders signatory thereto and Wells Fargo Bank, National Association, as administrative agent

Consent of Grant Thornton LLP

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The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL:

(i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Comprehensive (Loss) Income, (iv) Statements of Stockholders’ Equity, (v) Statements of Cash Flows, and (vi) Notes to the Financial Statements

(i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of

Comprehensive (Loss) Income, (iv) Statements of Stockholders’ Equity, (v) Statements of Cash Flows, and (vi) Notes to the Financial Statements

Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)

Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request.

Indicates management contract or compensatory plan or arrangement.

The Securities and Exchange Commission has granted the registrant’s request that certain provisions of this exhibit be treated as confidential.

Such material has been redacted from the exhibit as filed.

Form 10-K Summary

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accounting officer)

Chairman of the Board of Directors

/s/ William W.

Chairman of the Board of Directors

/s/ Valerie L.

/s/ Raymond O.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures