Business Context and Reporting Period
This Form 8-K Current Report was filed by Inpixon (noted as XTI Aerospace in metadata, but identified as Inpixon in the filing text) on February 15, 2018. The report details the entry into a Material Definitive Agreement to conduct a public offering of securities to raise capital for working capital, general corporate purposes, research and development, sales and marketing, and to support the divestiture of the Company's infrastructure business segment.
Key Financial Metrics and Transaction Details
- Gross Proceeds: Approximately $18 million expected from the Offering.
- Net Proceeds: Approximately $15.4 million expected after deducting placement agent fees and amounts payable to service providers ($1 million).
- Securities Issued:
- Class A Units: 3,325,968 units at $2.35 per unit (1 Common Stock share + 1 Warrant).
- Class B Units: 10,184.9752 units at $1,000 per unit (1 Series 3 Convertible Preferred Stock share + Warrants).
- Warrant Terms: Immediately exercisable at $3.50 per share (subject to adjustment).
- Preferred Stock Terms: Series 3 Preferred has a stated value of $1,000, is non-voting, and initially convertible into approximately 426 shares of Common Stock at a conversion price of $2.35 per share.
- Transaction Costs: Placement agent fee up to 8.0% of gross proceeds; Financial advisor fee of $150,000.
Material Changes and Agreements
The Company entered into a Placement Agency Agreement with Roth Capital Partners, LLC to assist in selling the securities. The Offering is subject to a Registration Statement on Form S-1 declared effective on February 14, 2018. The Company expects the Offering to close on or about February 20, 2018.
Key contractual restrictions include:
- Leak-out Agreement: Purchasers of $5,000 or more of Units are restricted from selling more than 35% of the daily trading volume of Common Stock during the Restricted Period (until March 15, 2018).
- Lock-up Agreement: Officers, directors, and beneficial owners of more than 5% are subject to an 180-day lock-up prohibiting sales, transfers, or hedging transactions.
- Issuance Restrictions: The Company is restricted from issuing new Common Stock or equivalents for 90 days or until aggregate trading volume reaches 38,300,000 shares, whichever comes first.
Outlook, Risks, and Management Commentary
Management intends to utilize the net proceeds to fund operations and specifically to support the divestiture of the infrastructure business segment. The filing notes that the Warrants contain a "full ratchet" anti-dilution provision, reducing the exercise price to the "Base Share Price" if the Company issues stock at a lower price, with a floor of $0.634 per share.
Risks and Contingencies: The closing of the Offering is subject to customary conditions, including the filing of the Certificate of Designation for the Series 3 Preferred with the State of Nevada. The filing text does not provide specific financial performance metrics (revenue, profit, cash flow) for the period, as this is a transactional report rather than a periodic financial statement.
Investor Verification Checklist
- Verify the final closing date of the Offering (expected February 20, 2018) and the actual net proceeds received.
- Confirm the execution of the divestiture of the infrastructure business segment as planned.
- Monitor the trading volume of Common Stock to determine if the 90-day issuance restriction is lifted early.
- Review the full text of the Certificate of Designation (Exhibit 3.1) for specific rights and limitations of the Series 3 Preferred.
- Check for any subsequent "Dilutive Issuances" that would trigger the warrant exercise price reduction mechanism.