Item 1.01. Entry into a Material Definitive Agreement.
On March 3, 2020, Spherix Incorporated, a Delaware
corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
certain purchasers named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a best-efforts
registered direct offering by the Company directly to the Purchasers (the “Registered Offering”) 3,245,745 shares (the
“Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and common
warrants (the “Common Warrants”) to purchase up to 7,142,858 shares of Common Stock and the shares of Common Stock
that are issuable from time to time upon exercise of the Common Warrants, at a public offering
price of $1.05 per share of Common Stock and Common Warrant. The Company also
offered 3,897,113 pre-funded warrants (the “Pre-Funded Warrants”) to purchase shares of Common Stock to certain Purchasers
whose purchase of shares of Common Stock in the Registered Offering would otherwise result in such Purchaser, together with its
affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the
Company’s outstanding Common Stock immediately following the consummation of the Registered Offering.
The purchase price of each Pre-Funded Warrant
was equal to the price at which a share of Common Stock was sold to the public in the Registered Offering, minus $0.0001, and the
exercise price of each Pre-Funded Warrant was $0.0001 per share. The Pre-Funded Warrants are immediately exercisable and
may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The Shares and Pre-Funded Warrants, and
the accompanying Common Warrants, could only be purchased together in this offering but will be issued separately and will be immediately
separable upon issuance. Each Common Warrant will have an exercise price of $1.05 per share of Common Stock, will be exercisable
upon issuance, and will expire five years from the date of issuance.
The Registered Offering resulted in gross proceeds
of approximately $7.5 million before deducting the placement agent’s fee and related offering expenses.
The Purchase
Agreement contains customary representations and warranties and agreements of the Company and the Investors and customary
indemnification rights and obligations of the parties. Pursuant to the terms of the Purchase
Agreement, the Company has agreed to certain restrictions on the issuance and sale of its Common Stock or Common Stock Equivalents
(as defined in the Purchase Agreement) during the 90-day period following the closing
of the Registered Offering.
The Shares, the Pre-Funded Warrants, the Common
Warrants, and the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and the Common Warrants were offered
by the Company pursuant to a registration statement on Form S-1, as amended (File No. 333- 236199), which was filed with the Securities
and Exchange Commission (the “Commission”) on January 31, 2020, and was declared effective by the Commission on March
3, 2020 (the “Registration Statement”).
The Registered Offering closed on March 5,
2020.
Placement Agent’s Fees and Expenses
Pursuant to an engagement agreement, dated
January 24, 2020, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as the Company’s
exclusive placement agent in connection with the Registered Offering, on a reasonable best efforts basis. The terms of the Registered
Offering were subject to market conditions and negotiations between us, the Placement Agent, and prospective investors. The Placement
Agreement received a cash fee equal to 8.0% of the aggregate gross proceeds raised in the Registered Offering, a management fee
of $75,000 (equal to 1.0% of the aggregate gross proceeds raised in Registered Offering, a $30,000 non-accountable expense allowance
payable to the Placement Agent, and the reimbursement of certain other expenses related to the Registered Offering.
We issued to the Placement Agent warrants (the
“Placement Agent’s Warrants”) to purchase 571,429 shares of Common Stock, which represents 8.0% of the number
of shares of Common Stock (including the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants) being sold in
the Registered Offering.
The Company also agreed to pay the Placement
Agent, subject to certain exceptions, a tail fee equal to the cash and warrant compensation in the Registered Offering, if any
Purchasers, who was contacted or introduced to the Company by the Placement Agent during the term of its engagement, provide the
Company with capital in any public or private offering or other financing or capital raising transaction during the 12-month period
following expiration or termination of the Company’s engagement of the Placement Agent.
Lock-Up Agreements
The Company’s officers, directors and
each of their respective affiliates and associated persons agreed with the Placement Agent to be subject to a lock-up period of
90 days after the date of the Purchase Agreement. This means that, during the applicable lock-up period, such persons may not offer
for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, or exercisable or exchangeable
for, shares of Common Stock. Certain limited transfers are permitted during the lock-up period if the transferee agrees to these
lock-up restrictions. The Company also agreed to similar lock-up restrictions on the issuance and sale of our securities for 90
days following the closing of the Registered Offering, subject to certain customary exceptions.
The foregoing summaries of the Purchase Agreement,
the Pre-Funded Warrants, the Common Warrants, and the Placement Agent Warrants do not purport to be complete and are subject to,
and qualified in their entirety by, such documents attached as Exhibits 10.49, 4.9, 4.11 and 4.10, respectively, to the Registration
Statement.
On March 3, 2020, the Company issued a press
release announcing the pricing of the Registered Offering. A copy of the press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference.
This
Current Report on Form 8-K does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities,
nor shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.