Business Context and Reporting Period
This Form 8-K filing by Spherix Incorporated (not Dominari Holdings Inc.) reports a material definitive agreement entered into on March 3, 2020. The filing details a registered direct offering of common stock and warrants, which closed on March 5, 2020.
Key Financial Metrics
- Gross Proceeds: Approximately $7.5 million before deducting placement agent fees and offering expenses.
- Offering Price: $1.05 per share of Common Stock and Common Warrant.
- Securities Issued:
- 3,245,745 shares of Common Stock.
- Common Warrants to purchase up to 7,142,858 shares.
- 3,897,113 Pre-Funded Warrants (exercise price $0.0001).
- Placement Agent Fees:
- Cash fee: 8.0% of aggregate gross proceeds.
- Management fee: $75,000 (1.0% of gross proceeds).
- Expense allowance: $30,000.
- Warrants: 571,429 Placement Agent Warrants (8.0% of shares sold).
Note: The filing does not provide specific values for revenue, profit, cash flow, margins, or existing debt levels.
Material Changes
The primary material change is the increase in share count and dilution resulting from the issuance of approximately 3.25 million shares of common stock, 3.9 million pre-funded warrants, and 7.14 million common warrants. The company also incurred immediate cash expenses related to the placement agent fees and offering costs.
Guidance, Outlook, and Restrictions
- Lock-Up Agreements: Officers, directors, and affiliates are subject to a 90-day lock-up period following the Purchase Agreement date. The Company is also restricted from issuing or selling securities for 90 days post-closing, subject to exceptions.
- Warrant Terms: Common Warrants have an exercise price of $1.05 and expire five years from issuance. Pre-Funded Warrants are immediately exercisable.
- Tail Fee: The Company agreed to pay a tail fee to the placement agent equal to the cash and warrant compensation if introduced investors provide capital within 12 months of the engagement ending.
- Outlook: The filing does not contain specific forward-looking guidance or management commentary regarding future operational performance.
Investor Verification Checklist
- Verify the exact net proceeds after deducting the 8.0% cash fee, management fee, and expense allowance.
- Confirm the total fully diluted share count post-offering to assess dilution impact.
- Review the Registration Statement (File No. 333-236199) for detailed risk factors and use of proceeds.
- Check the company's current cash balance to determine the runway provided by the $7.5 million gross proceeds.
- Monitor compliance with the 90-day lock-up restrictions for insiders and the company.