We are offering up to 2,279,411
(the “Offering Amount”) shares of our common stock, par value $0.001 per share, to certain service providers and vendors
(the “Providers”) in connection with the satisfaction of current outstanding amounts payable to the providers in an
amount that will not exceed the aggregate offering amount at a price per share equal to $0.34. We will not receive cash proceeds
from the offering of these shares of common stock.
Our common stock is listed
on The NASDAQ Capital Market under the symbol “INPX.”
On December 5, 2017, the
last completed trading day prior to the date of this prospectus supplement, the last reported sale price of our common shares on
the NASDAQ Capital Market was $0.34. The aggregate market value of our outstanding voting common stock held by non-affiliates,
based upon the closing price of our common stock on October 20, 2017 ($0.53) was $8,646,239. During the 12 calendar month period
that ends on, and includes, the date of this prospectus supplement, we have offered securities with an aggregate market value of
$2 million pursuant to General Instruction I.B.6. of Form S-3. Pursuant to General Instruction I.B.6 of Form S-3, in no event will
we sell securities registered on the registration statement of which this prospectus supplement is a part in a public primary offering
with a value exceeding more than one-third of the aggregate market value of the voting and non-voting common equity in any 12 month
period so long as our public float remains below $75 million.
We currently anticipate that the final settlement of the offering will take place on or prior to December
7, 2017. See “Plan of Distribution.” The shares of common stock offered hereby are being sold directly by us without
the use of underwriters or agents.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus, and the documents that we incorporate by reference, may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking
statements in this prospectus supplement and any accompanying prospectus include, without limitation, statements related to our
plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking
statements involve risks and uncertainties including, without limitation, the following: (i) our plans, strategies, objectives,
expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will
be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time
in our filings with the Securities and Exchange Commission (the “SEC”). Important factors that could cause actual
results to differ materially from those indicated in the forward-looking statements include, but are not limited to, the rate
and degree of market acceptance of our products, our ability to develop and market new and enhanced products, our ability to obtain
financing as and when we need it, competition from existing and new products and our ability to effectively react to other risks
and uncertainties described from time to time in our SEC filings, such as fluctuation of quarterly financial results, reliance
on third party manufacturers and suppliers, litigation or other proceedings, government regulation and stock price volatility.
In
some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,”
“continue,” “could,” “depends,” “estimates,” “expects,” “intends,”
“may,” “ongoing,” “plan,” “potential,” “predict,” “project,”
“should,” “will,” “would” or the negative of such terms or other comparable terminology. Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. We do not undertake any obligation to publicly update or review any forward-looking statement.
PROSPECTUS
SUPPLEMENT SUMMARY
This
is only a summary and may not contain all the information that is important to you. You should carefully read both this prospectus
supplement and the accompanying prospectus and any other offering materials, together with the additional information described
under the heading “Where You Can Find More Information.”
The
Company
Inpixon
is a technology company that helps to secure, digitize and optimize any premises with Indoor Positioning Analytics, sometimes
referred to in this prospectus as “IPA,” for businesses and governments in the connected world. Inpixon Indoor Positioning
Analytics is based on new sensor technology that finds all accessible cellular, Wi-Fi, Bluetooth and RFID signals anonymously.
Paired with a high-performance, data analytics platform, this technology delivers visibility, security and business intelligence
on any commercial or government premises world-wide. Inpixon’s products, infrastructure solutions and professional services
group help customers take advantage of mobile, Big Data, analytics and the Internet of Things (“IoT”).
Inpixon
Indoor Positioning Analytics offer:
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New
sensors with proprietary technology that can find all accessible cellular, Wi-Fi, Bluetooth and RF signals. Utilizing various
radio signal technologies ensures precision device positioning accurately down to arm’s length. This enables a highly
detailed understanding of customer journey and dwell time in retail scenarios, detection and identification of authorized
and unauthorized devices, and prevention of rogue devices through alert notification based on rules when unknown devices are
detected in restricted areas.
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Data
science analytics with lightning fast data mining using an in-memory database that uses a dynamic blend of RAM and NAND along
with specially optimized algorithms that both minimize data movement and maximize system performance. This enables the system
to deliver reports with valuable insights to the user as well as to integrate with common third party visualization, charting,
graphing and dashboard systems.
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Insights
that deliver visibility and business intelligence about detailed customer journey and flow analysis of in-stores and storefronts
allowing businesses to better understand customer preferences, measure campaign effectiveness, uncover revenue opportunities
and deliver an exceptional shopping experience.
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Inpixon
Indoor Positioning Analytics can assist all types of establishments, including brands, retailers, shopping malls and shopping
centers, hotels and resorts, gaming operators, airports, healthcare facilities, office buildings and government agencies, by providing
greater security, gaining better business intelligence, increasing consumer confidence and reducing risk while being compliant
with applicable “Personal Identifiable Information” regulations.
Inpixon
also provides supporting products and services including enterprise computing and storage, virtualization, business continuity,
data migration, custom application development, networking and information technology business consulting services. These allow
Inpixon to offer turnkey solutions when requested by customers.
Our
Products and Services
We
provide the following products and services that may be used by any number of businesses and government agencies. The AirPatrol
products and LightMiner Studio product and their related services form the foundation and have been integrated into our IPA for
businesses and governments.
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LightMiner
Analytics Platform
— This is an advanced solution for aggregating and mining multi-terabyte Big Data sets in
real time for instant insights. The product is Cloud-based so there’s nothing to install and it is fully scalable to
meet even the most demanding business requirements. Our quick start analytics modules are available for a variety of industry
verticals and applications.
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Data
Science and Advanced Analytics Consulting Services —
Our consulting services are backed by our data science
and analytics team that develops data driven solutions for the most complex challenges. Our team’s extensive experience
and unique strategies allow it to leverage Big Data in new ways to uncover hidden insights and create new business opportunities.
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AirPatrol
for Security (formerly ZoneDefense)
— This is a mobile security and detection product that locates devices operating
within a monitored area, determines their compliance with network security policies for that zone, and if the device is not
compliant, can trigger policy modification of device apps and/or features either directly or via third party mobile device,
application and network management tools.
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AirPatrol
for Retail (formerly ZoneAware)
— This is a commercial product for enabling location and/or context-based marketing
services and information delivery to mobile devices based on zones as small as 10 feet or as large as a square mile. The monitored
areas may include a building, a campus, a mall, and outdoor regions like a downtown. Unlike other mobile locationing technologies,
AirPatrol technologies use passive sensors that work over both cellular and WiFi networks and offer device locationing and
zone-based app and information delivery accurate to within 10 feet. Additionally, unlike geo-fencing systems, AirPatrol technologies
are capable of simultaneously enabling different policies and delivering different apps or information to multiple devices
within the same zone based on contexts such as the type of device, the device user and time of day.
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Shoom
Products
(eTearsheets; eInvoice, AdDelivery, ePaper) — The Shoom products are Cloud based applications and analytics
for the media and publishing industry. These products also generate critical data analytics for the customers.
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Enterprise
Infrastructure Solutions and Services —
These products and services help organizations tackle challenges and
accelerate business goals by implementing best of breed technology solutions. We believe that our expertise in a broad range
of infrastructure solutions, from storage and Big Data solutions to converged infrastructure and cyber security, delivers
the results our clients want and need.
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IT
Services
— From enterprise architecture design to custom application development, Inpixon offers a full range
of information technology development and implementation services with expertise in a broad range of IT practices including
project design and management, systems integration, outsourcing, independent validation and verification, cyber security and
more.
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Corporate
History and Structure
The
Company was formed in Nevada in April 1999.
On
July 29, 2011, we acquired all of the stock of the U.S. federal government business of the Company, which included Sysorex Federal,
Inc. and its subsidiary Sysorex Government Services, Inc., and 50.2% of the stock of the operating unit of the Company engaged
in Saudi Arabian government contracts, Sysorex Arabia, LLC.
On
March 20, 2013, we completed the acquisition of the assets of Lilien LLC, including all the outstanding capital stock of Lilien
Systems. In conjunction with our name change to Inpixon, effective on March 1, 2017, Lilien Systems was renamed Inpixon USA. Inpixon
USA, based in Larkspur, California, is an information technology company that provides a Big Data analytics platform and enterprise
infrastructure capabilities. Inpixon USA delivers right-fit information technology solutions in enterprise computing and storage,
virtualization, business continuity, networking and IT business consulting that help organizations reach their next level of business
advantage.
Effective
August 31, 2013, we acquired 100% of the stock of Shoom, Inc. Shoom, Inc., which was merged into Inpixon USA in January 2016,
provides us with Cloud based data analytics and enterprise solutions to the media, publishing and entertainment industries.
Effective
April 18, 2014, we acquired 100% of the stock of AirPatrol Corporation (“AirPatrol”). AirPatrol, which was merged
into Inpixon USA in January 2016, developed indoor device locationing, monitoring and management technologies for mobile devices
operating on WiFi, cellular and wideband RF networks. Through AirPatrol we acquired two product lines, ZoneDefense (now rebranded
“AirPatrol for Security”) and ZoneAware (now rebranded “AirPatrol for Retail”). These products and technologies
deliver solutions to address an exploding global location-based mobile security and services (“LBS”) and real-time
location systems (“RTLS”) market estimated to be more than $15.0 billion in 2016 and to grow to $77.8 billion by 2021,
growing at 37.5% (Source: http://
www.marketsandmarkets.com
/Market Reports/location based service market 96994431.html?gclid=CKz8gKml69ICFQx6fgodTkoBNQ).
AirPatrol for Retail also serves as a location-based services, sales and marketing system. The security platform, which connects
to third party apps on a user’s mobile device, provides functions including, but not limited to, location-based offers,
discounts and suggestive selling, VIP service functions (for hotels, resorts, casinos, etc.), and location-based information delivery
such as mobile-based guided tours of historic sites, points of interest and museums, shopping center maps and building floor plans.
These products require no app installation for anonymous collection of behavioral data such as traffic flow, entry and exit patterns,
length of stay and other business intelligence and analytics functions.
On
April 24, 2015, we completed the acquisition of substantially all of the assets of LightMiner Systems, Inc. (“LightMiner”),
which was in the business of developing and commercializing in-memory structured query language, or SQL, databases. The assets
acquired from LightMiner included an in-memory, real-time, data analysis system designed to perform very large, highly complex
and extremely difficult calculations using off-the-shelf hardware and memory. The system supports both traditional SQL-based business
intelligence and analytics applications as well as a host of integrated statistical, machine learning and artificial intelligence
algorithms allowing it to provide supercomputer-like performance at competitive prices.
On
December 4, 2015 and effective January 1, 2016, our board of directors (“Board” or “Board of Directors”)
approved a series of reorganization transactions to streamline the organizational structure of the Company and its direct and
indirect subsidiaries. In 2015, we had five operating subsidiaries: (i) Sysorex Federal, Inc. (100% ownership) (“Sysorex
Federal”) and its wholly owned subsidiary Sysorex Government Services, Inc. (“Sysorex Government” or “Sysorex
Government Services”) based in Herndon, Virginia, which focused on the U.S. federal government market; (ii) Lilien Systems
(100% ownership) (“Lilien”) based in Larkspur, California; (iii) Shoom, Inc. (100% ownership) (“Shoom”)
based in Encino, California, (iv) AirPatrol Corporation (100% ownership) (“AirPatrol”) based in Maple Lawn, Maryland
and its wholly owned subsidiary AirPatrol Research Corp. based in Coquitlam, British Columbia, and (v) Sysorex Arabia LLC (50.2%
ownership) (“Sysorex Arabia”) based in Riyadh, Saudi Arabia. As a result of the reorganization transactions, effective
January 1, 2016 we have three operating subsidiaries: (i) Inpixon USA (100% ownership) based in Larkspur, California and its wholly-owned
subsidiary Inpixon Federal, Inc. (“Inpixon Federal”) based in Herndon, Virginia, which focuses on the U.S. federal
government market; (ii) Inpixon Canada Corp. based in Coquitlam, British Columbia; and (iii) Sysorex Arabia LLC (50.2% ownership)
based in Riyadh, Saudi Arabia.
On
November 21, 2016 we completed the acquisition of the business and certain assets of Integrio Technologies, LLC (“Integrio”
or “Integrio Technologies”) and Emtech Federal, LLC (“Emtech Federal”). Integrio, together with Emtech
Federal, is an IT integration and engineering company that provides solutions for network performance, secure wireless infrastructure,
software application lifecycle support, and physical cyber security for federal, state and local government agencies.
Effective
March 1, 2017, the Company changed its name to Inpixon through a statutory merger with a wholly owned subsidiary. Each of its
wholly-owned subsidiaries, Sysorex USA, Sysorex Government Services, Inc. and Sysorex Canada Corp. also amended their corporate
charters and changed their names to Inpixon USA, Inpixon Federal, Inc. and Inpixon Canada, Inc., respectively. Also effective
March 1, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada to effect a 1-for-15 reverse stock split of the Company’s issued and outstanding shares of common stock.
Our
consolidated subsidiaries operate in the following business segments:
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Indoor
Positioning Analytics: This segment includes Inpixon’s proprietary products and services delivered on premise or
in the Cloud as well as our hosted SaaS based solutions. Our Indoor Positioning Analytics product is based on a unique and
patented sensor technology that detects and locates accessible cellular, Wi-Fi and Bluetooth devices and then uses a lightning
fast data-analytics engine to deliver actionable insights and intelligent reports for security, marketing, asset management,
etc.
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Infrastructure: This
segment includes third party hardware, software and related maintenance/warranty products and services that Inpixon resells
to commercial and government customers. It includes but is not limited to products for enterprise computing; storage; virtualization;
networking; etc. as well as services including custom application/software design; architecture and development; staff augmentation
and project management.
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Although
the subsidiaries are separate legal entities, the Company is structured by function and organized to operate in an integrated
fashion as one business.
Corporate
Strategy
Management’s
corporate strategy is to continue to build and develop Inpixon as a technology company that provides turnkey solutions from the
collection of data to delivering insights from that data to our customers with a focus on securing, digitizing and optimizing
premises with IPA for businesses and governments. In connection with such strategy and in order to facilitate our long-term growth,
we have acquired certain companies, technologies and intellectual property (“IP”) that complement such goals and will
continue to consider completing additional strategic acquisitions as long as our financial condition permits. An important element
of this mergers and acquisitions strategy is to acquire companies with complementary capabilities and/or innovative and commercially
proven technologies in indoor positioning and Big Data analytics and to obtain an established customer base. We believe that acquiring
complementary products and/or IP will add value to the Company, and the customer base of each potential acquisition will also
present an opportunity to cross-sell our existing solutions. Candidates with proven technologies that complement our overall strategy
may come from anywhere in the world, so long as there are strategic and financial reasons to make the acquisition. If we make
any acquisitions in the future, we expect to pay for such acquisitions using restricted common stock, cash and debt financing
in combinations appropriate for each acquisition. In connection with our strategic business plan, Inpixon may also consider the
sale or divestment of certain assets for strategic and financial purposes should management deem such transactions necessary or
desirable in order to facilitate its overall strategy.
Implications
of Being an Emerging Growth Company
We
qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, which
we refer to as the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging
growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in
general, to public companies that are not emerging growth companies. These provisions include:
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reduced
disclosure about our executive compensation arrangements;
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no
non-binding shareholder advisory votes on executive compensation or golden parachute arrangements;
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exemption
from the auditor attestation requirement in the assessment of our internal control over financial reporting; and
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reduced
disclosure of financial information in this prospectus supplement and the accompanying prospectus, limited to two years of
audited financial information.
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We
may take advantage of these exemptions as an emerging growth company until the earlier of (i) the last day of the fiscal year
following the fifth anniversary of the first sale of our common equity securities in a public offering, (ii) we have more than
$1.0 billion in annual revenues as of the end of a fiscal year, (iii) the date on which we are deemed to be a large accelerated
filer under the rules of the SEC, or (iv) the date on which we issue more than $1.0 billion of non-convertible debt over a three-year-period.
The
JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting
standards applicable to public companies. We have chosen to “opt out” of this provision. Therefore, we are subject
to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Corporate
Information
Our
principal executive offices are located at 2479 E. Bayshore Road, Suite 195, Palo Alto, California 94303, and our telephone number
is (408) 702-2167. Our subsidiaries maintain offices in Herndon Virginia, Larkspur California, Honolulu Hawaii, Bellevue Washington,
Carlsbad California, Encino California, and Coquitlam, British Columbia. Our Internet website is
www.inpixon.com
. The information
contained on, or that may be obtained from, our website is not a part of this prospectus supplement and the accompanying prospectus
and should not be considered a part of this prospectus supplement or such accompanying prospectus. We have included our website
address in this prospectus supplement and accompanying prospectus solely as an inactive textual reference.
For
a description of our business, financial condition, results of operations and other important information regarding us, we refer
you to our filings with the SEC incorporated by reference in this prospectus supplement. For instructions on how to find copies
of these documents, see “Where You Can Find More Information.”
The
Offering
Common
stock offered by us pursuant
to this prospectus supplement
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Up to 2,279,411 shares of Common Stock (the “Shares”), including the shares of Common Stock issuable
upon exercise of the Rights (defined below).
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Common
stock to be outstanding immediately after the offering
(1)
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As of December 5, 2017, the number of shares of common stock outstanding was 16,583,635. The number of
shares outstanding after giving effect to the offering, including the shares issuable upon exercise of the Rights, will be 18,863,046.
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Use
of proceeds
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We
will receive no proceeds from the offering of the Shares, which are being offered in connection with the satisfaction of certain
outstanding amounts payable to certain service providers and vendors (the “Providers”) of the Company.
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The
NASDAQ Capital Market symbol
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“INPX.”
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Right
to Shares
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In
the event that the number of Shares issuable to any Provider in order to satisfy the amounts payable to such Provider will exceed
4.99% of the Company’s outstanding Common Stock after giving effect to the issuance of the Shares, such additional Shares
will be reserved for issuance to the Company and the Provider will have the right (the “Rights”) to receive such additional
Shares of Common Stock upon the delivery of a notice of issuance to the Company at any time for no additional consideration.
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Risk
factors
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See
“Risk Factors” beginning on page S-6 of this prospectus supplement, as well as the other information included
in or incorporated by reference in this prospectus supplement and the accompanying prospectus, for a discussion of risks you
should carefully consider before investing in our securities.
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(1)
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The number of shares of our common stock outstanding after this offering is based on 16,583,635 shares of
common stock outstanding as of December 5, 2017 and excludes, as of that date:
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286,894 shares of common stock issuable upon the exercise of outstanding non-plan stock options and stock
options under our Amended and Restated 2011 Employee Stock Incentive Plan, as amended (the “2011 Employee Stock Incentive
Plan”), having a weighted average exercise price of $25.64 per share;
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2,626,592
shares of common stock issuable upon the exercise of outstanding warrants, having a weighted average exercise price of $0.84
per share;
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391,992
shares of common stock issuable upon the conversion of the outstanding balance of $2,763,545 of the Company’s 8% Original
Issue Discount Senior Secured Convertible Debenture (the “Debenture”), originally issued on August 9, 2016 at
the present conversion price of $7.05 per share; and
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3,877,777
shares of common stock issuable upon the conversion of the outstanding balance of $1,745,000 of the Company’s convertible
promissory note originally issued on November 17, 2017.
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Unless
otherwise indicated, all information in this prospectus supplement:
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has
been adjusted to give effect to the 1-for-15 reverse stock split effected on March 1, 2017;
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assumes
no exercise of any outstanding options or warrants to purchase our common stock; and
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assumes
no conversion of our outstanding Debenture.
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RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks
described below, together with all of the other information included in this prospectus supplement, the accompanying prospectus,
and the information incorporated by reference herein and therein.
For
a discussion of additional risks associated with our business, our intellectual property, government regulation, our industry
and an investment in our securities, see the section entitled “Risk Factors” in our most recent Annual Report on Form
10-K, as filed with the SEC on March 23, 2017, and any other subsequently filed document that is also incorporated or deemed to
be incorporated by reference in this prospectus supplement.
If
any of the risks described below, or those incorporated by reference into this prospectus supplement actually occur, our business,
financial condition or results of operations could suffer. In that case, the trading price of our common stock may decline and
you may lose all or part of your investment. The risks and uncertainties we have described are not the only ones we face. Additional
risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, financial
condition and results of operations. Certain statements below are forward-looking statements. See the information included under
the heading “Disclosure Regarding Forward-Looking Statements.”
Our
obligations to our senior secured lender, Payplant LLC (“PayPlant”) and the holders of the Debenture (the “Debenture
Holders”), are secured by a security interest in substantially all of our assets, so if we default on those obligations,
the lenders could foreclose on, liquidate and/or take possession of our assets. If that were to happen, we could be forced to
curtail, or even to cease, our operations.
We
originally issued the Debenture, on August 9, 2016 at the present conversion price of $7.05 per share. As of September 30, 2017,
we had approximately $2,850,000 outstanding under the Debentures. We issued a revolving Secured Promissory Note to GemCap Lending
I, LLC dated as of November 14, 2016 which was assigned to Payplant LLC, or “Payplant”, on August 14, 2017 together
with the Amended and Restated GemCap Loan and Security Agreement: Payplant Loan and Security Agreement, dated as of August 14,
2017 (the “Payplant Loan Agreement”). As of September 30, 2017, we had approximately $3.4 million in outstanding revolving
credit loans. All amounts due under the Secured Promissory Note and Debenture are secured by our assets. As a result, if we default
on our obligations under the Secured Promissory Note or the Debenture, Payplant or the Debenture Holders could foreclose on its
security interest and liquidate or take possession of some or all of these assets, which would harm our business, financial condition
and results of operations and could require us to curtail, or even to cease, our operations.
Payplant,
the Debenture Holders and the holders of convertible promissory notes (the “November 2017 Notes”) issued in November
2017 ( the “November Noteholders”) have certain rights upon an event of default under their respective agreements
that could harm our business, financial condition and results of operations and could require us to curtail or cease our operations.
Payplant,
the Debenture Holders, and the November Noteholders have certain rights upon an event of default. With respect to Payplant, such
rights include an increase in the interest rate on any advances made pursuant to the Payplant Loan Agreement, the right to accelerate
the payment of any outstanding advances made pursuant to the Payplant Loan Agreement, the right to directly receive payments made
by account debtors and the right to foreclose on our assets, among other rights. The Payplant Loan Agreement includes in its definition
of an event of default, among other occurrences, the failure to pay any principal when due within two business days, the termination,
winding up, liquidation or dissolution of any borrower, the filing of a tax lien by a governmental agency against any borrower,
and any reduction in ownership of our wholly owned subsidiaries, Inpixon USA and Inpixon Federal.
With
respect to the Debenture Holders, such rights include the right to accelerate all amounts outstanding under the Debenture and
demand a mandatory default payment in an amount equal to the greater of (i) the outstanding principal amount of the Debenture,
plus all accrued and unpaid interest, divided by the conversion price on the date the mandatory default amount is either (A) demanded
(if demand or notice is required to create an event of default) or otherwise due or (B) paid in full, whichever has a lower conversion
price, multiplied by the VWAP (as defined in the Debenture) on the date the mandatory default amount is either (x) demanded or
otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 125% of the outstanding principal amount plus 100% of
accrued and unpaid interest, and (b) all other amounts, costs, expenses and liquidated damages due in respect of the Debenture.
Each of the following events shall constitute an event of default: failure to make a payment obligation, failure to observe certain
covenants of the Debenture or related agreements (subject to applicable cure periods), breach of a representation or warranty,
bankruptcy, default under another significant contract or credit obligation, delisting of the common stock, a change in control,
or failure to deliver stock certificates in a timely manner.
The
November Holders have the right to accelerate all amounts outstanding under the November 2017 Notes payble in cash in an amount
equal to the greater of (a) the outstanding balance divided by $0.45(subject to adjustment as set forth in the November 2017 Notes)
on the date the note is demanded, multiplied by the VWAP on such date, or (b) the outstanding balance following multiplying the
putstanding balance as of the date the applicable default occurred by (a) 15% for each occurrence of any Major Default (as defined
in the November 2017 Notes), or (b) 5% for each occurrence of any Minor Default (as defined in the November 2017 Notes), and then
adding the resulting product to the outstanding balance as of the date the applicable default occurred, with the sum of the foregoing
then becoming the outstanding balance under the November 2017 Notes as of the date the applicable default occurred; provided that
the Default Effect (as defined in the November 2017 Notes) may only be applied three (3) times with respect to Major Defaults
and three (3) times with respect to Minor Defaults; and provided further that the Default Effect shall not apply to any default
pursuant to Section 4.1(b) of the November 2017 Notes. Each of the following events shall constitute an event of default: failure
to pay any principal, interest, fees, charges, or any other amount when due and payable under the November 2017 Notes; (b) failure
to deliver any Lender Conversion Shares (as defined in the November 2017 Notes); (c) failure to deliver any Redemption Conversion
Shares (as defined below); (d) a receiver, trustee or other similar official shall be appointed over the Company or a material
part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged
within sixty (60) days; (e) Company becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any; (f) Company makes a general assignment for the benefit
of creditors; (g) Company files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); (h)
an involuntary bankruptcy proceeding is commenced or filed against Company; (i) Company defaults or otherwise fails to observe
or perform any covenant, obligation, condition or agreement of the Company, with certain limitations; (j) any representation,
warranty or other statement made or furnished by or on behalf of the Company in connection with the issuance of the November 2017
Notes is false, incorrect, incomplete or misleading in any material respect when made or furnished; (k) the occurrence of a Fundamental
Transaction (as defined in the November 2017 Notes) without lender’s prior written consent; (l) the Company fails to maintain
the Share Reserve (as defined in the November 2017 Notes); (m) the Company effectuates a reverse split of its common stock without
twenty (20) trading days prior written notice to lender; (n) any money judgment, writ or similar process is entered or filed against
the Company or any subsidiary or any of its property or other assets for more than $600,000.00, and shall remain unvacated, unbonded
or unstayed for a period of twenty (20) calendar days unless otherwise consented to by lender; (o) the Company fails to be DWAC
eligible; (p) the Company fails to observe or perform any covenant set forth in the purchase agreement; and (q) the Company breaches
any covenant or other term or condition contained in any Other Agreements (as defined in the November 2017 Notes).
The
exercise of any of these rights upon an event of default could substantially harm our financial condition and force us to curtail,
or even to cease, our operations.
If
we are unable to comply with certain financial and operating restrictions required by the Payplant Loan Agreement, we may be limited
in our business activities and access to credit or may default under the Payplant Loan Agreement.
Provisions
in the Payplant Loan Agreement impose restrictions or require prior approval on our ability, and the ability of certain of our
subsidiaries to, among other things:
|
●
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sell,
lease, transfer, convey, or otherwise dispose of any or all of our assets or collateral, except in the ordinary course of
business;
|
|
●
|
make
any loans to any person, as that term is defined in the Payplant Loan Agreement, with the exception of employee loans made
in the ordinary course of business;
|
|
●
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declare
or pay cash dividends, make any distribution on, redeem, retire or otherwise acquire directly or indirectly, any of our Equity
Interests, as defined in the Payplant Loan Agreement;
|
|
●
|
guarantee
the indebtedness of any person;
|
|
●
|
compromise,
settle or adjust any claims in any amount relating to any of the collateral;
|
|
●
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incur,
create or permit to exist any lien on any of our property or assets;
|
|
●
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engage
in new lines of business;
|
|
●
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change,
alter or modify, or permit any change, alteration or modification of our organizational documents in any manner that might
adversely affect Payplant’s rights;
|
|
●
|
sell,
assign, transfer, discount or otherwise dispose of any accounts or any promissory note payable to us, with or without recourse;
|
|
●
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incur,
create, assume, or permit to exist any indebtedness or liability on account of either borrowed money or the deferred purchase
price of property; and
|
|
●
|
make
any payments of cash or other property to any affiliate.
|
The
Payplant Loan Agreement also contains other customary covenants. We may not be able to comply with these covenants in the future.
Our failure to comply with these covenants may result in the declaration of an event of default and cause us to be unable to borrow
under the Payplant Loan Agreement. In addition to preventing additional borrowings under the Payplant Loan Agreement, an event
of default, if not cured or waived, may result in the acceleration of the maturity of indebtedness outstanding under the Loan
Agreement, which would require us to pay all amounts outstanding. If the maturity of our indebtedness is accelerated, we may not
have sufficient funds available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the
accelerated indebtedness on terms acceptable to us or at all. Our failure to repay the indebtedness would result in Payplant foreclosing
on all or a portion of our assets and force us to curtail, or even to cease, our operations.
Adverse
judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results and cash
flows.
We
are currently subject to pending claims for non-payment by certain vendors in an aggregate amount of approximately $1.7 million,
which is approximately 8% of our total current assets. In addition, as of the date of this prospectus we have received a notice
to cure in connection with the failure to pay charges of approximately $150,000 in connection with certain property lease agreements.
We may also be a party to other claims that arise from time to time in the ordinary course of our business, which may include
those related to, for example, contracts, sub-contracts, protection of confidential information or trade secrets, adversary proceedings
arising from customer bankruptcies, employment of our workforce and immigration requirements or compliance with any of a wide
array of state and federal statutes, rules and regulations that pertain to different aspects of our business. We may also be required
to initiate expensive litigation or other proceedings to protect our business interests. There is a risk that we will not be successful
or otherwise be able to satisfactorily resolve any pending or future litigation. In addition, litigation and other legal claims
are subject to inherent uncertainties and management’s view of currently pending legal matters may change in the future.
Those uncertainties include, but are not limited to, litigation costs and attorneys’ fees, unpredictable judicial or jury
decisions and the differing laws and judicial proclivities regarding damage awards among the states in which we operate. Unexpected
outcomes in such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such
proceedings (possibly resulting in changes in established reserves), could have a material adverse effect on our business, financial
condition, results of operations and cash flows. Due to recurring losses and net capital deficiency, our current financial status
may increase our default and litigation risks and may make us more financially vulnerable in the face of pending or threatened
litigation.
Our
common stock may be delisted from The NASDAQ Capital Market if we cannot satisfy NASDAQ’s continued listing requirements
in the future.
On
May 19, 2017, we received written notice from the Listing Qualifications Staff of NASDAQ notifying us that we no longer comply
with NASDAQ Listing Rule 5550(b)(1) due to our failure to maintain a minimum of $2,500,000 in stockholders’ equity (the
“Minimum Stockholders’ Equity Requirement”) or any alternatives to such requirement. We reported stockholders’
equity of ($11,867,000) in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017.
On
October 24, 2017, the Company received notification (the “Staff Delisting Determination”) from NASDAQ that it has
not regained compliance with the Minimum Stockholders’ Equity Requirement. The Company has appealed the Staff Delisting
Determination and requested a hearing which is currently scheduled for December 7, 2017. As a result, the suspension and delisting
will be stayed until pending the issuance of a written decision by the hearings panel. The Company is currently evaluating various
alternative courses of action to regain compliance with the Minimum Stockholders’ Equity Requirement.
If
we are unable to comply with the Minimum Stockholders’ Equity Requirement, our common stock may be delisted, which could
make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity.
Without a NASDAQ listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale
or purchase of our stock would likely be made more difficult and the trading volume and liquidity of our stock could decline.
Delisting from NASDAQ could also result in negative publicity and could also make it more difficult for us to raise additional
capital. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales
of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders
to sell our common stock in the secondary market. If our common stock is delisted by NASDAQ, our common stock may be eligible
to trade on an over-the-counter quotation system, such as the OTCQB market, where an investor may find it more difficult to sell
our stock or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock,
if delisted from NASDAQ, will be listed on another national securities exchange or quoted on an over-the counter quotation system.
On
August 14, 2017, we received a deficiency letter from NASDAQ indicating that, based on our closing bid price for the last 30 consecutive
business days, we do not comply with the minimum bid price requirement of $1.00 per share, as set forth in NASDAQ Listing Rule
5550(a)(2). The notification has no immediate effect on the listing of our common stock on The NASDAQ Capital Market.
In
accordance with NASDAQ Listing Rule 5810(c)(3)(A), we have a grace period of 180 calendar days, or until February 12, 2018, to
regain compliance with the minimum closing bid price requirement for continued listing. In order to regain compliance, the minimum
closing bid price per share of our common stock must be at least $1.00 for a minimum of ten consecutive business days. In the
event INPX does not regain compliance by February 12, 2018, we may be afforded an additional 180-day compliance period, provided
we demonstrate that we meet all other applicable standards for initial listing on The NASDAQ Capital Market (except the bid price
requirement), and provide written notice of our intention to cure the minimum bid price deficiency during the second grace period,
by effecting a reverse stock split, if necessary. If we fail to regain compliance after the second grace period, our common stock
will be subject to delisting by NASDAQ.
There
may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
We
are generally not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable
for, or that represent the right to receive, common stock. The market price of our common stock could decline as a result of sales
of common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, common stock
after this offering or the perception that such sales could occur.
You
will experience immediate and substantial dilution in the net tangible book value per share of our common stock.
The public offering price
of our common stock being offered is substantially higher than the net tangible book value per share of our common stock outstanding
prior to this offering. Therefore, if you purchase our common stock in this offering, you will incur an immediate substantial
dilution of $2.16 in net tangible book value per share from the price you paid, based on our financial statements as of
September 30, 2017. If outstanding options or warrants to purchase our common stock are exercised, you will experience additional
dilution. For a further description of the dilution that you will experience immediately after this offering, see “Dilution.”
If
securities or industry analysts do not publish research or reports about our business, or if they change their recommendations
regarding our stock adversely, our stock price and trading volume could decline.
The
trading market for our common stock relies in part on the research and reports that equity research analysts publish about us
and our business. We do not control these analysts. The price of our common stock could decline if one or more equity research
analysts downgrade our common stock or if they issue other unfavorable commentary or cease publishing reports about us or our
business.
USE
OF PROCEEDS
We will receive no proceeds
from the offering of the shares of common stock, which are being offered for the purpose of satisfying outstanding amounts payable
to certain service providers and vendors of the Company at a price per share that is based upon the closing price of the Company’s
common stock as last reported by Nasdaq.
DILUTION
The
shares of common stock issued to in the offering may be diluted to the extent of the difference between the price each share of
common stock and the net tangible book value per share of our common stock immediately after this offering. Our net tangible book
value as of September 30, 2017 was approximately $(32.9 million), or ($2.14) per share of our common stock. Net tangible book
value per share is equal to our total tangible assets minus total liabilities, all divided by 15,397,847 shares of common stock
outstanding as of September 30, 2017.
Assuming that we issue
an aggregate of 2,279,411 shares of common stock in this Offering at a price of $0.34, our net tangible book deficit as of September
30, 2017 would have been approximately ($32.2 million), or ($1.82) per share of our common stock. This amount represents an immediate
increase in net tangible book value of $0.32 per share to our existing stockholders and an immediate dilution in net tangible
book value of $2.16 per share to the investors in this offering.
We
determine dilution by subtracting the adjusted net tangible book value per share after this offering from the conversion price
per share of our common stock. The following table illustrates the per share dilution to investors purchasing securities in the
offering:
Price per share of common stock to be issued in the Offering
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|
|
|
|
|
$
|
0.34
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|
Net tangible book value per share as of September 30, 2017
|
|
$
|
(2.14
|
)
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|
|
|
|
Increase in net tangible book value per share attributable to Offering
|
|
$
|
0.32
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|
|
|
|
|
Adjusted net tangible book value per share as of September 30, 2017 after giving effect to the Offering
|
|
|
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$
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(1.82
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)
|
Dilution in net tangible book value per share to investors in this Offering
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|
|
|
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$
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2.16
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|
The
amounts above are based on 15,397,847 shares of common stock outstanding as of September 30, 2017, which excludes as of that date:
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●
|
309,609
shares of common stock issuable upon the exercise of outstanding non-plan stock options and stock options under our Amended
and Restated 2011 Employee Stock Incentive Plan, as amended (the “2011 Employee Stock Incentive Plan”), having
a weighted average exercise price of $25.18 per share;
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|
●
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3,812,449
shares of common stock issuable upon the exercise of outstanding warrants, having a weighted average exercise price of $0.67
per share;
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|
●
|
404,255
shares of common stock issuable upon the conversion of the outstanding balance of $2,850,000 of the Debentures issued on August
9, 2016 to at the present conversion price of $7.05 per share;
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|
●
|
shares
of common stock or other securities of the Company convertible or exercisable for shares of common stock issued after September
30, 2017.
|
To the extent that any of our outstanding options or warrants are exercised or the Debenture or any other
outstanding securities of the Company convertible or exercisable for shares of common stock are converted or exercised, we grant
additional options under our stock option plans or issue additional warrants or preferred stock, or we issue additional shares
of common stock in the future, there may be further dilution to the Providers.
DESCRIPTION
OF SECURITIES
Authorized
and Outstanding Capital Stock
We have authorized 55,000,000
shares of capital stock, par value $0.001 per share, of which 50,000,000 are shares of common stock and 5,000,000 are shares of
“blank check” preferred stock. As of December 5, 2017, we had 16,583,635 shares of common stock outstanding and held
by 587 stockholders of record, and 0 shares of preferred stock outstanding. For information on how to obtain copies of our articles
of incorporation, as amended, amended and restated bylaws, certificate of designation, outstanding warrants, Debenture and other
outstanding notes, see “Where You Can Find Additional Information” and “Information Incorporated by Reference.”
Common
Stock
The
holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled
to receive pro rata dividends, if any, declared by our Board of Directors out of legally available funds; however, the current
policy of our Board of Directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up,
the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution. The holders
of our common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges
of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred
stock, which may be designated solely by action of our Board of Directors and issued in the future.
Preferred
Stock
Our
Board of Directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders,
to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number
of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined
by our Board of Directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion
rights and preemptive rights.
The
issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have
the effect of delaying, deferring or preventing a change of control or other corporate action. We have no current plan to issue
any additional shares of preferred stock.
Series
2 Preferred
Our
Board of Directors designated 4,669 shares of preferred stock as Series 2 Preferred. As of the date of this Prospectus, there
are no more shares of Series 2 Preferred stock outstanding. Although there is no current intent to do so, our Board may, without
stockholder approval, issue shares of an additional class or series of preferred stock with voting and conversion rights which
could adversely affect the voting power of the holders of the common stock or the convertible preferred stock.
Warrants
As of December 5, 2017,
we have warrants issued and outstanding for the purchase of up to 2,626,592 shares of our common stock, at exercise prices ranging
from $0.30 to $112.50. The warrants are held by 34 security holders. Outstanding warrants to purchase our common stock are as
follows:
Issuance Date
|
|
Number of Shares
|
|
Exercise Period
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|
Exercise Price
|
|
December 21, 2012
|
|
18,113
|
|
From December 21, 2012 to December 21, 2017
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$
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4.68
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|
March 20, 2013
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5,556
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From March 20, 2013 to March 20, 2020 (except the Lock-Up Period as defined in the warrant)
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$
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13.50
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August 29, 2013
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3,750
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From August 29, 2013 to August 29, 2020 (except the Lock-Up Period as defined in the warrant)
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$
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36.00
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April 15, 2014
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6,672
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From April 15, 2015 to April 14, 2019
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$
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112.50
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|
November 17, 2015
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3,334
|
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From November 17, 2015 to November 17, 2018
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$
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15.00
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December 15, 2016
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250,001
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From June 15, 2017 to June 15, 2022
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$
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0.50
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June 30, 2017
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1,243,447
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June 30, 2017 to June 30, 2022
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$
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0.30
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August 9, 2017
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1,095,719
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From August 9, 2017 to August 9, 2022
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$
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0.55
|
|
Debenture
The
following is a summary of the material terms of the Debenture.
Interest
and Conversion
. Interest on the Debenture accrues at a rate of 8.0% per annum and is payable in cash, or upon notice
to the holder and compliance with certain equity conditions as set forth in the Debenture in shares of the Company’s common
stock. The number of shares of common stock to be paid for any interest payment equals the quotient of (x) the applicable dollar
amount to be paid divided by (y) the Conversion Price (as defined below). Subject to certain limitations including the beneficial
ownership limitation, the Debenture is convertible at any time at the option of the holder at a conversion price of $7.05 per
share, subject to adjustments provided in the Debenture (the “Conversion Price”). The current amount outstanding under
the Debenture is $2,763,545.
Redemption
. Subject
to certain equity conditions, the Company has the option to redeem the Debenture before its maturity by payment in cash of 120%
or 110% (depending on the timing of the redemption) of the then outstanding principal amount plus accrued interest and other charges.
The Company is required to redeem 25% of the initial principal amount plus accrued unpaid interest and other charges on November
9, 2017, February 9, 2018, May 9, 2018, and August 9, 2018 (each, a “Periodic Redemption”). In lieu of a cash Periodic
Redemption payment, the Company may, upon notice to the holder and compliance with certain equity conditions, elect to pay all
or part of a Periodic Redemption in shares of common stock based on a conversion price equal to the Conversion Price.
Default
Events
. Each of the following events constitutes an event of default under the Debenture: failure to make a payment obligation,
failure to observe certain covenants of the Debenture or related agreements (subject to applicable cure periods), breach of a
representation or warranty, bankruptcy, default under another significant contract or credit obligation, delisting of the common
stock, a change in control, or failure to deliver stock certificates in a timely manner. In the event of a default, the holder
shall have the right to accelerate all amounts outstanding under the Debenture and demand a mandatory default payment in an amount
(the “Mandatory Default Amount”) equal to the greater of (i) the outstanding principal amount of the Debenture, plus
all accrued and unpaid interest, divided by the conversion price on the date the Mandatory Default Amount is either (A) demanded
(if demand or notice is required to create an event of default) or otherwise due or (B) paid in full, whichever has a lower conversion
price, multiplied by the VWAP (as defined in the Debenture) on the date the Mandatory Default Amount is either (x) demanded or
otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 125% of the outstanding principal amount plus 100% of
accrued and unpaid interest, and (b) all other amounts, costs, expenses and liquidated damages due in respect of the Debenture.
Security
. The
Debenture is secured with a subordinated lien by certain property of the Company in accordance with the terms of a Security Agreement,
dated August 9, 2016 by and among the Company, each of its subsidiaries and the holder. Each of the subsidiaries also entered
into a guarantee in favor of the holder, pursuant to which each subsidiary guaranteed the complete payment and performance by
the Company of its obligations under the Debenture and related agreements.
Payplant
Accounts Receivable Bank Line
Pursuant
to the terms of a Commercial Loan Purchase Agreement, dated as of August 14, 2017, Gemcap Lending I, LLC (“Gemcap”)
sold and assigned to Payplant LLC, as agent for Payplant Alternatives Fund LLC, all of its right, title and interest to that certain
revolving Secured Promissory Note in an aggregate principal amount of up to $10,000,000 issued in accordance with that certain
Loan and Security Agreement, dated as of November 14, 2016 by and among Gemcap and the Company and its wholly-owned subsidiaries,
Inpixon USA and Inpixon Federal, Inc. for an aggregate purchase price of $1,402,770.16. In connection with the purchase and assignment,
the GemCap loan was amended and restated in accordance with the terms and conditions of the Payplant Loan and Security Agreement,
dated as of August 14, 2017, between the Company and Payplant (the “Loan Agreement”) The Loan Agreement allows the
Company to request loans from Payplant with a term of no greater than 360 days in amounts that are equivalent to 80% of the face
value of purchase orders received. In connection with the assignment, the Company entered into the Payplant Client Agreement (the
“Client Agreement”), pursuant to which the Company will offer to Payplant for purchase those receivables payable to
the Company in connection with the purchase orders under which advances have been made pursuant to the Loan Agreement for the
purposes of paying off any notes issued pursuant to the Loan Agreement. Under the Client Agreement, the Company cannot raise additional
financings, without Payplant’s approval, which will not be unreasonably withheld by Payplant unless it is an equity financing
or a convertible equity financing, where the Company can force conversion, while Payplant’s advances are outstanding. In
accordance with the terms of the Loan Agreement, Inpixon Federal, Inc. issued a promissory note to Payplant with a term of 30
days in an aggregate principal amount of $995,472.61 in connection with a purchase order received. The promissory note is subject
to the interest rates described in the Loan Agreement and is secured by the assets of the Company pursuant to the Loan Agreement
and will be satisfied in accordance with the terms of the Client Agreement.
November
2017 Notes
On
November 17, 2017, the Company issued a $1,745,000 principal face amount note to an accredited investor which yielded net proceeds
of $1,500,000 to the Company. The note bears interest at the rate of 10% per year and is due 10 months after the date of issuance.
There is a fixed conversion price of $0.45 per share, and the Company is required to reserve 25 million of the 50 million shares
set forth in Proposal 8 of the Definitive Schedule 14A filed with the SEC in October 2017. Redemptions may occur at any time after
the 6 month anniversary of the date of issuance of the note with a minimum redemption price of $0.57 per share, and if the conversion
rate is less than the market price, then the redemptions must be made in cash. The note contains standard events of default and
a schedule of redemption premiums. There is also a most favored nations clause for the term of the note.
The
note contains customary events of default (defined terms as defined in the Note): 1)The Company fails to pay any principal, interest,
fees, charges, or any other amount when due and payable hereunder; 2)The Company fails to deliver any Lender Conversion Shares
in accordance with the terms hereof; 3)The Company fails to deliver any Redemption Conversion Shares (as defined below) in accordance
with the terms hereof; 4)a receiver, trustee or other similar official shall be appointed over The Company or a material part
of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within
sixty (60) days; 5)The Company becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its debts
as they become due, subject to applicable grace periods, if any; 6)The Company makes a general assignment for the benefit of creditors;
7)The Company files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); 8)an involuntary
bankruptcy proceeding is commenced or filed against The Company; 9)The Company defaults or otherwise fails to observe or perform
any covenant, obligation, condition or agreement of The Company contained herein or in any other Transaction Document (as defined
in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement;
10)any representation, warranty or other statement made or furnished by or on behalf of The Company to Lender herein, in any Transaction
Document, or otherwise in connection with the issuance of this Note is false, incorrect, incomplete or misleading in any material
respect when made or furnished; 11)the occurrence of a Fundamental Transaction without Lender’s prior written consent; 12)The
Company fails to maintain the Share Reserve as required under the Purchase Agreement; 13)The Company effectuates a reverse split
of its Common Stock without twenty (20) Trading Days prior written notice to Lender; 14)any money judgment, writ or similar process
is entered or filed against The Company or any subsidiary of The Company or any of its property or other assets for more than
$600,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented
to by Lender; 15)The Company fails to be DWAC Eligible; 16)The Company fails to observe or perform any covenant set forth in Section
4 of the Purchase Agreement; and 17)The Company breaches any covenant or other term or condition contained in any Other Agreements.
There
is also a most favored nations clause for six months from the date of issuance of the note such that if during that term, the
Company enters into a transaction with terms more favorable than the terms under the note transaction, the note holder has a right
to substitute the existing note terms with the more favorable terms in the new transaction. Furthermore, so long as the note is
outstanding, if the Company issues a lower priced security than the conversion price of the note, the conversion price of the
note is reduced to the price of that lower priced security.
Prepayments
may be made on the note as follows:
Prepayment Date
|
|
Prepayment Amount
|
|
|
|
On or before December 31, 2017
|
|
100% of the Outstanding Balance
|
|
|
|
On or after January 1, 2018 until February 1, 2018
|
|
115% of the Outstanding Balance
|
|
|
|
On or after February 1, 2018 until the Maturity Date
|
|
120% of the Outstanding Balance
|
The
note documents are governed by Utah law and jurisdiction for disputes is Utah. Furthermore, the parties agree to settle all disputes
through binding arbitration.
PLAN
OF DISTRIBUTION
We are offering 2,279,411
shares of our common stock directly to the Providers in connection with the satisfaction of outstanding amounts payable by the
Company in an aggregate amount equal to $775,000.
We
will not receive any proceeds from the Offering of these securities. No underwriters or agents will be involved, and no commissions
will be payable by us with respect to the Offering.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon for us by Mitchell Silberberg & Knupp, LLP,
New York, New York.
EXPERTS
Marcum
LLP, independent registered public accounting firm, has audited our consolidated financial statements as of December 31, 2016
and 2015, and for the years then ended, included in our Annual Report on Form 10-K for the year ended December 31, 2016, as set
forth in their report, which is incorporated by reference in this prospectus supplement, the accompanying prospectus and elsewhere
in the registration statement. Our consolidated financial statements are incorporated by reference in reliance on Marcum LLP,
given on their authority as experts in accounting and auditing.
Mitchell Silberberg &
Knupp, LLP (“MSK”), with an office at 11377 W. Olympic Blvd., Los Angeles, CA 90064, will pass upon the validity of
the shares of common stock offered by this prospectus. MSK may receive up shares of our common stock pursuant to this prospectus
supplement in connection with the satisfaction of outstanding legal fees payable to MSK. Although MSK is not under any obligation
to accept shares of our common stock in payment for services, it may do so in the future.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-3 under the Securities Act, with respect to the securities covered
by this prospectus supplement and any accompanying prospectus. This prospectus supplement and the accompanying prospectus, which
is a part of the registration statement, does not contain all of the information set forth in the registration statement or the
exhibits and schedules filed therewith. For further information with respect to us and the securities covered by this prospectus
supplement, please see the registration statement and the exhibits filed with the registration statement. A copy of the registration
statement and the exhibits filed with the registration statement may be inspected without charge at the Public Reference Room
maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the Public Reference Room. The SEC also maintains an Internet website that contains reports, proxy and
information statements and other information regarding registrants that file electronically with the SEC. The address of the website
is http://
www.sec.gov
.
We
are subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we file periodic
reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information are
available for inspection and copying at the Public Reference Room and website of the SEC referred to above. We maintain a website
at http://
www.inpixon.com
. You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and amendments to those reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with the SEC free of
charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the
SEC. Our website and the information contained on that site, or connected to that site, are not incorporated into and are not
a part of this prospectus supplement, or any accompanying prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC and applicable law permits us to “incorporate by reference” into this prospectus supplement information that we
have or may in the future file with the SEC (excluding those portions of any Form 8-K that are not deemed “filed”
pursuant to the General Instructions of Form 8-K). This means that we can disclose important information by referring you to those
documents. You should read carefully the information incorporated herein by reference because it is an important part of this
prospectus supplement. We hereby incorporate by reference the following documents into this prospectus supplement:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on April 17, 2017;
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our Quarterly Reports on Form 10-Q for the periods ended March 31, 2017, June 30, 2017 and September 30, 2017 filed with the SEC on May 15, 2017, August 21, 2017 and November 20, 2017, respectively;
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our Current Reports on Form 8-K filed with the SEC on March 1, 2017, April 20, 2017, May 22, 2017, June 1, 2017, June 29, 2017, July 3, 2017, July 20, 2017, August 9, 2017, August 14, 2017, August 18, 2017, September 8, 2017 and October 27, 2017; and
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The description of our common stock included in our Registration Statement on Form 8-A, as filed with the SEC on April 7, 2014 pursuant to Section 12(b) of the Exchange Act, including any amendment or report filed for the purpose of updating such description.
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Additionally,
all documents filed by us subsequent to those listed above with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act (other than any portions of filings that are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current
Report on Form 8-K), prior to the termination or completion of the offering shall be deemed to be incorporated by reference into
this prospectus supplement from the respective dates of filing of such documents. Any information that we subsequently file with
the SEC that is incorporated by reference as described above will automatically update and supersede any previous information
that is part of this prospectus supplement.
Upon
written or oral request, we will provide you without charge, a copy of any or all of the documents incorporated by reference,
other than exhibits to those documents unless the exhibits are specifically incorporated by reference in the documents. Please
send requests to Inpixon, 2479 E. Bayshore Road, Suite 195, Palo Alto, CA 94303, Attn: Corporate Secretary, 408-702-2167.
PROSPECTUS
$75,000,000
Common Stock
Preferred Stock
Warrants
Units
By
this prospectus and an accompanying prospectus supplement, we may from time to time offer and sell, in one or more offerings,
up to $75,000,000 in any combination of common stock, preferred stock, warrants, and units.
We
will provide you with more specific terms of these securities in one or more supplements to this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest.
We
may offer these securities from time to time in amounts, at prices and on other terms to be determined at the time of offering.
We may offer and sell these securities to or through underwriters, dealers or agents, or directly to investors, on a continuous
or delayed basis. The supplements to this prospectus will provide the specific terms of the plan of distribution. The price to
the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus
supplement.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “SYRX.” On May 22, 2015, the closing price of
our common stock as reported by the NASDAQ Capital Market was $1.97 per share. The aggregate market value of our outstanding voting
common stock held by non-affiliates, based upon a closing sale price of our common stock on May 22, 2015 was $26,724,976. During
the 12 calendar month period that ends on, and includes, the date of this prospectus, we have not offered any securities pursuant
to General Instruction I.B.6. of Form S-3. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities
registered on this registration statement in a public primary offering with a value exceeding more than one-third of the aggregate
market value of the voting and non-voting common equity in any 12 month period so long as our public float remains below $75 million.
As
of May 22, 2015, the registration statement on Form S-1 (No. 333-198502), declared effective by the Securities and Exchange Commission
on September 11, 2014, is available for use by the selling stockholders listed therein to offer up to 5,768,470 shares of common
stock, including 139,584 shares of common stock issuable upon exercise of certain warrants. We will not receive any proceeds from
the sale of shares of common stock by the selling stockholders, except in connection with the exercise of the warrants.
An
investment in our common stock involves a high degree of risk. See “Risk Factors” on page 3 of this
prospectus for more information on these risks.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is , 2015.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement filed with the Securities and Exchange Commission (the “SEC”) using
a “shelf” registration process. Under this shelf process, we may sell the securities described in this prospectus
in one or more offerings. This prospectus provides you with a general description of the securities which may be offered. Each
time we offer securities for sale, we will provide a prospectus supplement that contains specific information about the terms
of that offering. Any prospectus supplement may also add or update information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with additional information described below under “Where You Can
Find More Information” and “Information Incorporated by Reference.”
The
registration statement that contains this prospectus (including the exhibits thereto) contains additional important information
about us and the securities we may offer under this prospectus. Specifically, we have filed certain legal documents that establish
the terms of the securities offered by this prospectus as exhibits to the registration statement. We will file certain other legal
documents that establish the terms of the securities offered by this prospectus as exhibits to reports we file with the SEC. You
may obtain copies of that registration statement and the other reports and documents referenced herein as described below under
the heading “Where You Can Find More Information.”
You
should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement.
We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making offers to sell or solicitations to buy the securities in any jurisdiction
in which an offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified
to do so or to anyone to whom it is unlawful to make an offer or solicitation. You should not assume that the information in this
prospectus or any prospectus supplement, as well as the information we file or previously filed with the SEC that we incorporate
by reference in this prospectus or any prospectus supplement, is accurate as of any date other than its respective date. Our business,
financial condition, results of operations and prospects may have changed since those dates.
In
this prospectus, unless the context otherwise requires, references to “we,” “us,” “our,” “the
Company” or “Sysorex” refer to Sysorex Global Holdings Corp. and its subsidiaries.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and any accompanying prospectus supplement, including the documents that we incorporate by reference, may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking
statements in this prospectus and any accompanying prospectus supplement include, without limitation, statements related to our
plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking
statements involve risks and uncertainties including, without limitation, the following: (i) our plans, strategies, objectives,
expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will
be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time
in our filings with the SEC. Important factors that could cause actual results to differ materially from those indicated in the
forward-looking statements include, but are not limited to, the rate and degree of market acceptance of our products, our ability
to develop and market new and enhanced products, our ability to obtain financing as and when we need it, competition from existing
and new products and our ability to effectively react to other risks and uncertainties described from time to time in our SEC
filings, such as fluctuation of quarterly financial results, reliance on third party manufacturers and suppliers, litigation or
other proceedings, government regulation and stock price volatility.
In
some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’
‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’
‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’
‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative
of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation
to publicly update or review any forward-looking statement.
OUR
BUSINESS
This
is only a summary and may not contain all the information that is important to you. You should carefully read both this prospectus
and any accompanying prospectus supplement and any other offering materials, together with the additional information described
under the heading “Where You Can Find More Information.”
About
Sysorex Global Holdings Corp.
Sysorex
provides data analytics and location-based solutions and services to commercial and government customers worldwide. We have developed
a new kind of discovery platform that blends data from traditional software and network systems with the growing universe of mobile
and Internet-connected things. In doing so we have created a high velocity, secure and scalable platform that we believe allows
our customers to evaluate their most complex business issues, and compete successfully in their respective markets. Our analytics
products provide turnkey vertical solutions from ETL (extract, transfer, load) to BI (business intelligence) to the final visualization
of the data. These solutions are available on-premise or in the Cloud.
Our
data analytics products integrate with our AirPatrol product line, which includes technology for enterprises, government agencies,
developers, and services providers aimed at improving mobile security, improving information access and boosting application engagement
by adding location-based delivery and management by collecting data from any wireless device in close proximity (Cellular, WiFi,
BLE, RFID, etc.) and extending to any connected device in the Internet of Things (IoT) landscape. We believe our products can
deliver critical information at the right time based on our integrated solutions allowing us to uniquely blend the real world
and the digital world. We believe our AirPatrol product line is also well positioned for the Cyber Security market as a mobile
device management and detection technology solution. We believe our location accuracy of less than 10-feet and ability to capture
all RF frequencies is unmatched. Detecting rogue devices that could be a security threat to an enterprise or government agency
and then providing accurate location of that device is an important security application for our customers. Our AirPatrol product
line has two patents and several others pending worldwide.
Sysorex
also provides supporting products and services including enterprise computing and storage, virtualization, business continuity,
data migration, custom application development, networking and information technology business consulting services. These allow
Sysorex to offer turnkey solutions when requested by customers.
Sysorex’s
core practice areas include:
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Big
Data — mining terabytes of data from disparate sources in real time
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Location-based
security and detection (ZoneDefense)
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Location-based
context aware marketing (ZoneAware)
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Secure
wireless networking
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Enterprise
IT as a service
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Converged
infrastructure
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Cloud
based applications and analytics for Media & Publishing
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Corporate
Information
Our
principal executive offices are located at 2479 E. Bayshore Road, Suite 195, Palo Alto, CA 94303, and our telephone number is
(408) 702-1267. Our subsidiaries maintain offices in Herndon Virginia, Larkspur California, Encino California, Carlsbad California,
Maple Lawn Maryland and Coquitlam, British Columbia. Our Internet website is
www.sysorex.com
. The information on, or that
can be accessed through, our website is not part of this prospectus, and you should not rely on any such information in making
any investment decision relating to our common stock. Our common stock, par value $0.001 per share, is currently traded on The
NASDAQ Capital Market under the ticker symbol “SYRX.”
For
a description of our business, financial condition, results of operations and other important information regarding us, we refer
you to our filings with the SEC incorporated by reference in this prospectus. For instructions on how to find copies of these
documents, see “
Where You Can Find More Information
.”
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Please see the risk factors set forth in Part I, Item 1A of our Annual Report
on Form 10-K and other filings we make with the SEC, which are incorporated by reference in this prospectus. Additional risk factors
may be included in a prospectus supplement relating to a particular offering of securities. Before making an investment decision,
you should carefully consider these risks as well as other information we include or incorporate by reference in this prospectus.
The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our business operations. These risks could materially affect
our business, results of operations or financial condition and cause the value of our securities to decline.
USE
OF PROCEEDS
Unless
we state otherwise in an accompanying prospectus supplement, we intend to use the net proceeds from the sale of the securities
offered by us under this prospectus and any related prospectus supplement for general corporate purposes. These purposes may include
working capital, acquisitions, retirement of debt and other business opportunities. Pending the application of the net proceeds,
we may invest the proceeds in short-term, interest-bearing instruments or other investment-grade securities.
DILUTION
We
will set forth in a prospectus supplement the following information regarding any material dilution of the equity interests of
investors purchasing securities sold by Sysorex in an offering under this prospectus:
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the
net tangible book value per share of our equity securities before and after the offering;
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the
amount of the increase in such net tangible book value per share attributable to the cash payments made by purchases in the
offering; and
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the
amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.
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DESCRIPTION
OF THE SECURITIES THAT MAY BE OFFERED
Description
of Common Stock
The
following summary of the rights of our common stock is not complete and is subject to and qualified in its entirety by reference
to our certificate of incorporation and bylaws, copies of which are filed as exhibits to our registration statement on Form S-3,
of which this prospectus forms a part. See “Where You Can Find More Information.”
We
have authorized 55,000,000 shares of capital stock, par value $0.001 per share, of which 50,000,000 are shares of common stock
and 5,000,000 are shares of “blank check” preferred stock.
As
of May 22, 2015, we had 19,811,407 shares of common stock outstanding. Our authorized but unissued shares of common stock are
available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules
of any stock exchange or automated quotation system on which our securities may be listed or traded.
The
holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled
to receive pro rata dividends, if any, declared by our board of directors out of legally available funds; however, the current
policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up,
the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution. The holders
of our common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges
of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred
stock, which may be designated solely by action of our board of directors and issued in the future.
In
the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our
assets which are legally available for distribution, after payments of all debts and other liabilities and subject to the prior
rights of any holders of preferred stock then outstanding. All of the outstanding shares of our common stock are fully paid and
non-assessable. The shares of common stock offered by this prospectus will also be fully paid and non-assessable.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “SYRX”. On May 22, 2015, the last sale price
of our common stock was $1.97 per share. The transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc.
with an address at 3200 Cherry Creek Drive South, Suite 430, Denver, CO 80209.
Description
of Preferred Stock
Our
certificate of incorporation permits us to issue up to 5,000,000 shares of preferred stock in one or more series and with rights
and preferences that may be fixed or designated by our board of directors without any further action by our stockholders. Each
series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special
or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights,
voting rights, liquidation preferences, conversion rights and preemptive rights.
It
is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our
common stock until the board of directors determines the specific rights of the holders of our preferred stock. However, the effects
might include, among other things:
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Impairing
dividend rights of our common stock;
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Diluting
the voting power of our common stock;
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Impairing
the liquidation rights of our common stock; and
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Delaying
or preventing a change of control without further action by our stockholders.
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Description
of Warrants
Warrants
to Purchase Common Stock or Preferred Stock
We
may issue warrants for the purchase of our preferred stock or common stock, which we refer to in this prospectus as “equity
warrants”. As explained below, each equity warrant will entitle its holder to purchase our equity securities at an exercise
price set forth in, or to be determined as set forth in, the related prospectus supplement. Equity warrants may be issued separately
or together with equity securities. The equity warrants are to be issued under equity warrant agreements.
The
particular terms of each issue of equity warrants and the equity warrant agreement relating to the equity warrants will be described
in the applicable prospectus supplement, including, as applicable:
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the
title of the equity warrants;
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the
initial offering price;
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the
aggregate number of equity warrants and the aggregate number of shares of the equity security purchasable upon exercise of
the equity warrants;
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if
applicable, the designation and terms of the equity securities with which the equity warrants are issued, and the number of
equity warrants issued with each equity security;
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the
date on which the right to exercise the equity warrants will commence and the date on which the right will expire;
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if
applicable, the minimum or maximum number of the equity warrants that may be exercised at any one time;
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anti-dilution
provisions of the equity warrants, if any;
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redemption
or call provisions, if any, applicable to the equity warrants;
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any
additional terms of the equity warrants, including terms, procedures and limitations relating to the exchange and exercise
of the equity warrants; and
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Holders
of equity warrants will not be entitled, solely by virtue of being holders, to vote, to consent, to receive dividends, to receive
notice as stockholders with respect to any meeting of stockholders for the election of directors or any other matter, or to exercise
any rights whatsoever as a holder of the equity securities purchasable upon exercise of the equity warrants.
Description
of Units
We
may, from time to time, issue units comprised of one or more of the other securities described in this prospectus in any combination.
A prospectus supplement will describe the specific terms of the units offered under that prospectus supplement, and any special
considerations applicable to investing in those units. You must look at the applicable prospectus supplement and any applicable
unit agreement for a full understanding of the specific terms of any units. We will incorporate by reference into the registration
statement of which this prospectus is a part the form of unit agreement, including a form of unit certificate, if any, that describes
the terms of the series of units we are offering before the issuance of the related series of units. While the terms we have summarized
below will generally apply to any future units that we may offer under this prospectus, we will describe the particular terms
of any series of units that we may offer in more detail in the applicable prospectus supplement and incorporated documents. The
terms of any units offered under a prospectus supplement may differ from the terms described below.
General
We
may issue units consisting of common stock, preferred stock, warrants or any combination thereof. Each unit will be issued so
that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred separately, at any time, or at any time before a specified
date.
We
will describe in the applicable prospectus supplement and any incorporated documents the terms of the series of units, including
the following:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
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any
unit agreement under which the units will be issued; and
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any
provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities comprising the units.
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The
provisions described in this section, as well as those described under “Description of Common Stock,” “Description
of Preferred Stock,” and “Description of Warrants” will apply to each unit and to any common stock, preferred
stock, or warrant included in each unit, respectively.
Issuance
in Series
We
may issue units in such amounts and in such numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship
of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series
of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or
unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a unit, without the consent of the related unit agent or the holder of any other unit, may enforce by appropriate legal
action its rights as holder under any security included in the unit.
Title
We,
the unit agent, and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units
evidenced by that certificate for any purposes and as the person entitled to exercise the rights attaching to the units so requested,
despite any notice to the contrary.
Anti-Takeover
Effects of Certain Provisions of Nevada Law, Our Charter Documents and Bylaws
Our
articles of incorporation, our bylaws and the Nevada Revised Statutes contain provisions that could delay or make more difficult
an acquisition of control of our company not approved by our board of directors, whether by means of a tender offer, open market
purchases, proxy contests or otherwise. These provisions have been implemented to enable us to develop our business in a manner
that will foster our long-term growth without disruption caused by the threat of a takeover not deemed by our board of directors
to be in the best interest of our company and our stockholders. These provisions could have the effect of discouraging third parties
from making proposals involving an acquisition or change of control of our company even if such a proposal, if made, might be
considered desirable by a majority of our stockholders. These provisions may also have the effect of making it more difficult
for third parties to cause the replacement of our current management without the concurrence of our board of directors.
Set
forth below is a description of the provisions contained in our articles of incorporation, bylaws and Nevada Revised Statutes
that could impede or delay an acquisition of control of our company that our board of directors has not approved. This description
is intended as a summary only and is qualified in its entirety by reference to our articles of incorporation and bylaws, forms
of each of which are included as exhibits to the registration statement of which this prospectus forms a part.
Authorized
But Unissued Preferred Stock
We
are currently authorized to issue a total of 5,000,000 shares of preferred stock. Our articles of incorporation provide that the
board of directors may issue preferred stock by resolutions, without any action of the stockholders. In the event of a hostile
takeover, the board of directors could potentially use this preferred stock to preserve control.
Filling
Vacancies
Our
bylaws establish that the board shall be authorized to fill any vacancies on the board arising due to the death, resignation or
removal of any director. The board is also authorized to fill vacancies if the stockholders fail to elect the full authorized
number of directors to be elected at any annual or special meeting of stockholders. Vacancies in the board may be filled by a
majority of the remaining directors then in office, even though less than a quorum of the board, or by a sole remaining director.
Removal
of Directors
The
provisions of our bylaws may make it difficult for our stockholders to remove one or more of our directors. Our bylaws provide
that the entire board of directors, or any individual director, may be removed from office at any special meeting of stockholders
called for such purpose by vote of the holders of two-thirds of the voting power entitling the stockholders to elect directors
in place of those to be removed. Furthermore, according to our bylaws, no director may be removed (unless the entire Board is
removed) when the votes cast against removal or not consenting in writing to such removal would be sufficient to elect such director
if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written
consent, all shares entitled to vote, were voted) and the entire number of directors authorized at the time of the directors’
most recent election were then being elected. Our bylaws also provide that when, by the provisions of our articles of incorporation,
the holders of the shares of any class or series voting as a class or series are entitled to elect one or more directors, any
director so elected may be removed only by the applicable vote of the holders of the shares of that class or series.
Board
Action Without Meeting
Our
bylaws provide that the board may take action without a meeting if all the members of the board consent to the action in writing.
Board action through consent allows the board to make swift decisions, including in the event that a hostile takeover threatens
current management.
No
Cumulative Voting
Our
bylaws and articles of incorporation do not provide the right to cumulate votes in the election of directors. This provision means
that the holders of a plurality of the shares voting for the election of directors can elect all of the directors. Non-cumulative
voting makes it more difficult for an insurgent minority stockholder to elect a person to the board of directors.
Stockholder
Proposals
Except
to the extent required under applicable laws, we are not required to include on our proxy card, or describe in our proxy statement,
any information relating to any stockholder proposal and disseminated in connection with any meeting of stockholders.
Amendments
to Articles of Incorporation and Bylaws
Our
articles of incorporation give both the directors and the stockholders the power to adopt, alter or repeal the bylaws of the corporation.
Any adoption, alteration, amendment, change or repeal of the bylaws by the stockholders requires an affirmative vote by a majority
of the outstanding stock of the company. Any bylaw that has been adopted, amended, or repealed by the stockholders may be amended
or repealed by the board, except that the board shall have no power to change the quorum for meetings of stockholders or of the
board or to change any provisions of the bylaws with respect to the removal of directors or the filling of vacancies in the board
resulting from the removal by the stockholders. Any proposal to amend, alter, change or repeal any provision of our articles of
incorporation requires approval by the affirmative vote of a majority of the voting power of all of the classes of our capital
stock entitled to vote on such amendment or repeal, voting together as a single class, at a duly constituted meeting of stockholders
called expressly for that purpose.
Nevada
Statutory Provisions
We
are subject to the provisions of NRS 78.378 to 78.3793, inclusive, an anti-takeover law which applies to any acquisition of a
controlling interest in an “issuing corporation.” In general, such anti-takeover laws permit the articles of incorporation,
bylaws or a resolution adopted by the directors of an “issuing corporation” (as defined in NRS 78.3788) to impose
stricter requirements on the acquisition of a controlling interest in such corporation than the provisions of NRS 78.378 to 78.3793,
inclusive, as well as permit the directors of an issuing corporation to take action to protect the interests of the corporation
and its stockholders, including, but not limited to, adopting plans, arrangements or other instruments that grant or deny rights,
privileges, power or authority to holder(s) of certain percentages of ownership and/or voting power. Further, an “acquiring
person” (and those acting in association) only obtains such voting rights in the control shares as are conferred by resolution
of the stockholders at either a special meeting requested by the acquiring person, provided it delivers an offeror’s statement
pursuant to NRS 78.3789 and undertakes to pay the expenses thereof, or at the next special or annual meeting of stockholders.
In addition, the anti-takeover law generally provides for (i) the redemption by the issuing corporation of not less than all of
the “control shares” (as defined) in accordance with NRS 78.3792, if so provided in the articles of incorporation
or bylaws in effect on the 10
th
day following the acquisition of a controlling interest in an “issuing corporation”,
and (ii) dissenter’s rights pursuant to NRS 92A.300 to 92A.500, inclusive, for stockholders that voted against authorizing
voting rights for the control shares.
We
are also subject to the provisions of NRS 78.411 to 78.444, inclusive, which generally prohibits a publicly held Nevada corporation
from engaging in a “combination” with an “interested stockholder” (each as defined) that is the beneficial
owner, directly or indirectly, of at least ten percent of the voting power of the outstanding voting shares of the corporation
or is an affiliate or associate of the corporation that previously held such voting power within the past three years, for a period
of three years after the date the person first became an “interested stockholder”, subject to certain exceptions for
authorized combinations, as provided therein.
In
accordance with NRS 78.195, our articles of incorporation provide for the authority of the board of directors to issue shares
of preferred stock in series by filing a certificate of designation to establish from time to time the number of shares to be
included in such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof, subject to limitations prescribed by law.
PLAN
OF DISTRIBUTION
We
may offer and sell the securities in any one or more of the following ways:
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to
or through underwriters, brokers or dealers;
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directly
to one or more other purchasers;
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through
a block trade in which the broker or dealer engaged to handle the block trade will attempt to sell the securities as agent,
but may position and resell a portion of the block as principal to facilitate the transaction;
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through
agents on a best-efforts basis;
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in
“at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing
at the time of sale or at prices related to such prevailing market prices, including sales made directly on the NASDAQ Capital
Market or sales made through a market maker other than on an exchange or other similar offerings through sales agents; or
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otherwise
through any other method permitted by applicable law or a combination of any of the above methods of sale.
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In
addition, we may enter into option, share lending or other types of transactions that require us to deliver shares of common stock
to an underwriter, broker or dealer, who will then resell or transfer the shares of common stock under this prospectus. We may
also enter into hedging transactions with respect to our securities. For example, we may:
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enter
into transactions involving short sales of the shares of common stock by underwriters, brokers or dealers;
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sell
shares of common stock short and deliver the shares to close out short positions;
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enter
into option or other types of transactions that require the delivery of shares of common stock to an underwriter, broker or
dealer, who will then resell or transfer the shares of common stock under this prospectus; or
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loan
or pledge the shares of common stock to an underwriter, broker or dealer, who may sell the loaned shares or, in the event
of default, sell the pledged shares.
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We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives,
the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by or borrowed from us or others to settle those sales or
to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives
to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not
identified in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective amendment). In
addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the
securities short using this prospectus. Such financial institution or other third party may transfer its economic short position
to investors in our securities or in connection with a concurrent offering of other securities.
Each
time we sell securities, we will provide a prospectus supplement that will name any underwriter, dealer or agent involved in the
offer and sale of the securities. Any prospectus supplement will also set forth the terms of the offering, including:
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the
purchase price of the securities and the proceeds we will receive from the sale of the securities;
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any
underwriting discounts and other items constituting underwriters’ compensation;
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any
public offering or purchase price and any discounts or commissions allowed or re-allowed or paid to dealers;
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any
commissions allowed or paid to agents;
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any
other offering expenses;
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any
securities exchanges on which the securities may be listed;
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the
method of distribution of the securities;
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the
terms of any agreement, arrangement or understanding entered into with the underwriters, brokers or dealers; and
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any
other information we think is important.
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If
underwriters or dealers are used in the sale, the securities will be acquired by the underwriters or dealers for their own account.
The securities may be sold from time to time by us in one or more transactions:
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at
a fixed price or prices, which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices;
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at
varying prices determined at the time of sale; or
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Such
sales may be effected:
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in
transactions on any national securities exchange or quotation service on which the securities may be listed or quoted at the
time of sale;
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in
transactions in the over-the-counter market;
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in
block transactions in which the broker or dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction, or in crosses, in which the same broker acts
as an agent on both sides of the trade;
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through
the writing of options; or
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through
other types of transactions.
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The
securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters
or directly by one or more of such firms. Unless otherwise set forth in the prospectus supplement, the obligations of underwriters
or dealers to purchase the securities offered will be subject to certain conditions precedent and the underwriters or dealers
will be obligated to purchase all the offered securities if any are purchased. Any public offering price and any discount or concession
allowed or reallowed or paid by underwriters or dealers to other dealers may be changed from time to time.
The
securities may be sold directly by us or through agents designated by us from time to time. Any agent involved in the offer or
sale of the securities in respect of which this prospectus is delivered will be named, and any commissions payable to such agent
will be set forth in, the prospectus supplement. Unless otherwise indicated in the prospectus supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
Unless
otherwise specified in the related prospectus supplement, all securities we offer, other than common stock, will be new issues
of securities with no established trading market. Any underwriters may make a market in these securities, but will not be obligated
to do so and may discontinue any market making at any time without notice. Any common stock sold pursuant to a prospectus supplement
will be listed for trading on the NASDAQ Capital Market or other principal market for our common stock. We may apply to list any
series of preferred stock or warrants on an exchange, but we are not obligated to do so. Therefore, there may not be liquidity
or a trading market for any series of securities.
Offers
to purchase the securities offered by this prospectus may be solicited, and sales of the securities may be made by us directly
to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect
to any resale of the securities. The terms of any offer made in this manner will be included in the prospectus supplement relating
to the offer.
Some
of the underwriters, dealers or agents used by us in any offering of securities under this prospectus may be customers of, engage
in transactions with, and perform services for us or affiliates of ours in the ordinary course of business. Underwriters, dealers,
agents and other persons may be entitled to indemnification against and contribution toward certain civil liabilities, including
liabilities under the Securities Act, and to be reimbursed for certain expenses.
Subject
to any restrictions relating to debt securities in bearer form, any securities initially sold outside the United States may be
resold in the United States through underwriters, dealers or otherwise.
Any
underwriters to which offered securities are sold by us for public offering and sale may engage in transactions that stabilize,
maintain or otherwise affect the price of the common shares during and after this offering, but those underwriters will not be
obligated to do so and may discontinue any market making at any time. Specifically, the underwriters may over-allot or otherwise
create a short position in the common shares for their own accounts by selling more shares of common stock than have been sold
to them by us. The underwriters may elect to cover any such short position by purchasing common stock in the open market or by
exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the
price of the common stock by bidding for or purchasing common stock in the open market and may impose penalty bids. If penalty
bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed
if shares of common stock previously distributed in the offering are repurchased, whether in connection with stabilization transactions
or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the common stock at a level
above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the
common stock to the extent that it discourages resales of the common stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on the NASDAQ Capital Market or otherwise and, if commenced, may
be discontinued at any time.
In
connection with this offering, the underwriters and selling group members may also engage in passive market making transactions
in our common stock. Passive market making consists of displaying bids on the NASDAQ Capital Market limited by the prices of independent
market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated
by the SEC limits the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive
market making may stabilize the market price of the common shares at a level above that which might otherwise prevail in the open
market and, if commenced, may be discontinued at any time.
We
are subject to the applicable provisions of the Exchange Act and the rules and regulations under the Exchange Act, including Regulation
M. This regulation may limit the timing of purchases and sales of any of the shares of common stock offered in this prospectus
by any person. The anti-manipulation rules under the Exchange Act may apply to sales of shares in the market and to our activities.
The
anticipated date of delivery of the securities offered by this prospectus will be described in the applicable prospectus supplement
relating to the offering.
Any
broker-dealer participating in the distribution of the shares of common stock may be deemed to be an “underwriter”
within the meaning of the Securities Act with respect to any securities such entity sells pursuant to this prospectus.
To
comply with the securities laws of some states, if applicable, the securities may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the securities may not be sold unless they have been registered
or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon for us by Richardson & Patel, LLP. Additional
legal matters may be passed on for us, or any underwriters, dealers or agents, by counsel we will name in the applicable prospectus
supplement.
EXPERTS
Marcum
LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2014, as set forth in their report, which is incorporated by reference in the prospectus
and elsewhere in this registration statement. Our consolidated financial statements are incorporated by reference in reliance
on Marcum LLP, given on their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-3 under the Securities Act, with respect to the securities covered
by this prospectus. This prospectus, which is a part of the registration statement, does not contain all of the information set
forth in the registration statement or the exhibits and schedules filed therewith. For further information with respect to us
and the securities covered by this prospectus, please see the registration statement and the exhibits filed with the registration
statement. A copy of the registration statement and the exhibits filed with the registration statement may be inspected without
charge at the Public Reference Room maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC also maintains an Internet
website that contains reports, proxy and information statements and other information regarding registrants that file electronically
with the SEC. The address of the website is http://
www.sec.gov
.
We
are subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we file periodic
reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information are
available for inspection and copying at the Public Reference Room and website of the SEC referred to above. We maintain a website
at http://
www.sysorex.com
. You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and amendments to those reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with the SEC free of
charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the
SEC. Our website and the information contained on that site, or connected to that site, are not incorporated into and are not
a part of this prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC and applicable law permits us to “incorporate by reference” into this prospectus information that we have or may
in the future file with the SEC (excluding those portions of any Form 8-K that are not deemed “filed” pursuant to
the General Instructions of Form 8-K). This means that we can disclose important information by referring you to those documents.
You should read carefully the information incorporated herein by reference because it is an important part of this prospectus.
We hereby incorporate by reference the following documents into this prospectus:
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC on March 27, 2015;
Our
Quarterly Report on Form 10-Q filed with the SEC on May 14, 2015;
Our
Current Reports on Form 8-K filed with the SEC on January 30, 2015, February 5, 2015, April 21, 2015, April 30, 2015, and May
7, 2015; and
The
description of our common stock included in our Registration Statement on Form 8-A, as filed with the SEC on April 7, 2014 pursuant
to Section 12(b) of the Exchange Act, including any amendment or report filed for the purpose of updating such description.
Additionally,
all documents filed by us subsequent to those listed above with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act (other than any portions of filings that are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current
Report on Form 8-K), prior to the termination or completion of the offering (including all such documents filed with the SEC after
the date of the initial registration statement and prior to the effectiveness of the registration statement) shall be deemed to
be incorporated by reference into this prospectus from the respective dates of filing of such documents. Any information that
we subsequently file with the SEC that is incorporated by reference as described above will automatically update and supersede
any previous information that is part of this prospectus.
Upon
written or oral request, we will provide you without charge, a copy of any or all of the documents incorporated by reference,
other than exhibits to those documents unless the exhibits are specifically incorporated by reference in the documents. Please
send requests to Sysorex Global Holdings Corp., 2479 E. Bayshore Road, Suite 195, Palo Alto, CA 94303, Attn: Interim Chief Financial
Officer, 408-702-2167.
Disclosure
of Commission Position on Indemnification
for Securities Act Liabilities
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling the company, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is therefore unenforceable.
2,279,411 Shares of Common Stock
PROSPECTUS SUPPLEMENT
December 5, 2017
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