Business Context and Reporting Period
This Form 8-K, filed on June 23, 2017, reports on events occurring between June 23 and June 29, 2017, for Inpixon (referred to as the Company). The filing details the entry into a material definitive underwriting agreement for a public offering of equity and convertible preferred stock, as well as several waiver and consent agreements with existing lenders and investors to facilitate the transaction.
Key Financial Metrics and Transaction Details
- Gross Proceeds: The Company expects to receive approximately $6,000,000 in gross proceeds from the Offering.
- Net Proceeds: Expected net proceeds are approximately $5.8 million after underwriting discounts and commissions. If the over-allotment option is exercised in full, net proceeds could reach approximately $6.6 million.
- Offering Structure:
- Class A Units: 1,849,460 units at $1.05 per unit (1 Common Stock share + 1 Warrant).
- Class B Units: 4,060 units at $1,000 per unit (1 Series 2 Convertible Preferred share + Warrants).
- Debt Repayment: Proceeds are intended to repay approximately $2,850,000 in principal and accrued interest owed to Hillair Capital Investments L.P. under an 8% OID Senior Convertible Debenture.
- Warrant Terms: Warrants are immediately exercisable at $1.3125 per share with a 5-year term, subject to a floor of $0.50 per share and anti-dilution adjustments.
Material Changes and Agreements
The filing discloses significant changes to the Company's capital structure and debt obligations:
- Underwriting Agreement: Entered into with Aegis Capital Corp. on June 28, 2017, for the sale of Units. The offering is expected to close on or about June 30, 2017.
- Debt Waivers:
- GemCap/Hillair Waiver: Permits the Company to use offering proceeds to repay junior indebtedness owed to Hillair.
- Hillair Waiver: Allows for the redemption of up to $2.85 million in debt and waives prohibitions on issuing securities below a $7.05 per share price, enabling the current offering price.
- Investor Waivers: December 2016 Purchasers waived the variable rate transaction prohibition, allowing for the adjustment of warrant exercise prices in the new offering.
Outlook, Risks, and Management Commentary
The Company anticipates the Offering to close on or about June 30, 2017, subject to customary closing conditions, including the filing of a Certificate of Designation for the Series 2 Preferred stock. The Underwriting Agreement includes an indemnification clause where the Company agrees to indemnify the Underwriter against certain liabilities under the Securities Act of 1933. The filing notes that the description of the agreements is qualified by reference to the full text of the exhibits attached to the report.
Investor Verification Checklist
- Verify the final closing date of the Offering and whether the over-allotment option was exercised.
- Confirm the exact amount of debt repaid to Hillair and GemCap using the offering proceeds.
- Review the full text of the Underwriting Agreement (Exhibit 1.1) for specific underwriting discounts and lock-up provisions.
- Examine the Certificate of Designation (Exhibit 3.1) for detailed rights and conversion mechanics of the Series 2 Preferred stock.
- Monitor the impact of the warrant exercise price adjustments on existing shareholders and the potential for future dilution.