Item 1.01. Entry into a Material Definitive Agreement.
Private Placement
On March 30, 2023, Oblong, Inc. ("we" or the "Company") entered into a
Securities Purchase Agreement (the "Purchase Agreement") with certain accredited
investors (the "Investors"), pursuant to which we issued and sold, in a private
placement transaction (the "Private Placement") (i) 6,550 shares ("Preferred
Shares") of our newly designated Series F convertible preferred stock, $0.0001
par value per share (the "Series F Preferred Stock"), initially convertible into
up to 3,830,409 shares of our common stock, par value $0.0001 per share ("Common
Stock"), (ii) preferred warrants ("Preferred Warrants") to acquire up to 32,750
shares of Series F Preferred Stock (the "Warrant Preferred Shares") and (iii)
common warrants ("Common Warrants", and with the Preferred Warrants, the
"Warrants"), to acquire up to 3,830,413 shares of Common Stock. The terms of the
Series F Preferred Stock are as set forth in the Certificate of Designations of
Series F Preferred Stock of Oblong, Inc. (the "Certificate of Designations"),
which was filed and became effective with the Secretary of State of the State of
Delaware on March 31, 2023. The Private Placement closed on March 31, 2023 (the
"Closing").
The Private Placement is exempt from the registration requirements of the
Securities Act pursuant to the exemption for transactions by an issuer not
involving any public offering under Section 4(a)(2) of the Securities Act of
1933, as amended (the "Securities Act") and Rule 506 of Regulation D of the
Securities Act and in reliance on similar exemptions under applicable state
laws. Each of the Investors has represented to the Company that it is an
accredited investor within the meaning of Rule 501(a) of Regulation D and that
it is acquiring the securities for investment only and not with a view towards,
or for resale in connection with, the public sale or distribution thereof. The
Preferred Shares and Warrants are being offered without any general solicitation
by the Company or its representatives.
The aggregate gross proceeds from the Private Placement are expected to be
$6,386,250. All of the Preferred Shares and Warrants were issued at the Closing,
but part of the purchase price equivalent to $4,000,000 was placed in an escrow
account with American Stock Transfer & Trust Company, to be released upon our
obtaining stockholder approval permitting the issuance of more than 19.99% of
our outstanding shares of Common Stock at less than the Minimum Price (as
defined under the Nasdaq Rules) in accordance with Nasdaq listing standards and
as otherwise may be required (the "Stockholder Approval"). The Company expects
to use the net proceeds from the Private Placement and the proceeds, if any,
from the exercise of the Warrants for general corporate purposes.
The Purchase Agreement contains certain representations and warranties,
covenants and indemnities customary for similar transactions. The
representations, warranties and covenants contained in the Purchase Agreement
were made solely for the benefit of the parties to the Purchase Agreement and
may be subject to limitations agreed upon by the contracting parties.
Engagement Letter
In connection with the Private Placement, pursuant to an Engagement Letter dated
March 30, 2023 (the "Engagement Letter"), between the Company and Dawson James
Securities Inc. (the "Placement Agent"), the Company has agreed to (i) pay the
Placement Agent a cash fee equal to 8% of the aggregate gross proceeds raised in
the Private Placement, and (ii) grant to the Placement Agent warrants (the
"Placement Agent Warrants") to purchase 306,433 shares of Common Stock at an
initial exercise price of $1.71. The Placement Agent Warrants have the same
terms and conditions as the Common Warrants issued in the Private Placement (as
described below). Additionally, we agreed to reimburse the Placement Agent for
certain expenses incurred in connection with the Private Placement and to pay
certain contingent fees upon the occurrence of specified future events.
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Preferred Shares
The terms of the Preferred Shares are as set forth in the Certificate of
Designations.
The Preferred Shares are convertible into fully paid and non-assessable shares
of the Company's Common Stock at the election of the holder at any time at an
initial conversion price of $1.71 (the "Conversion Price"). The holders of the
Preferred Shares may also elect to convert their Preferred Shares at an
alternative conversion price equal to the lower of (i) 80% of the applicable
Conversion Price as in effect on the date of the conversion, (ii) 80% of the
closing price on the trading day immediately preceding the delivery of the
conversion notice, and (iii) the greater of (a) the Floor Price (as defined in
the Certificate of Designations) and (b) the quotient of (x) the sum of the five
lowest Closing Bid Prices (as defined in the Certificate of Designations) for
trading days in the 30 consecutive trading day period ending and including the
trading day immediately preceding the delivery of the applicable Conversion
Notice, divided by (y) five, provided that that such price may not be lower than
the Minimum Price (as defined under the Nasdaq Rules) prior to obtaining
Stockholder Approval for the issuance. The Conversion Price is subject to
customary adjustments for stock splits, stock dividends, stock combination
recapitalizations or other similar transactions involving the Common Stock, and
subject to price-based adjustment, on a full ratchet basis, in the event of any
issuances of our common stock, or securities convertible, exercisable or
exchangeable for Common Stock, at a price below the then-applicable Conversion
Price (subject to certain exceptions).
Under the Certificate of Designations, the Preferred Shares have an initial
stated value of $1,000 per share (the "Stated Value"). The holders of the
Preferred Shares are entitled to dividends of 9% per annum, which will be
payable in arrears quarterly. Accrued dividends may be paid, at our option, in
cash and if not paid, shall increase the stated value of the Preferred Shares.
Upon the occurrence and during the continuance of a Triggering Event (as defined
in the Certificate of Designations), the Preferred Shares will accrue dividends
at the rate of 20% per annum (the "Default Rate"). The Preferred Shares have no
voting rights, other than with respect to certain matters affecting the rights
of the Preferred Shares. On matters with respect to which the holders of the
Preferred Shares have a right to vote, holders of the Preferred Shares will have
voting rights on an as-converted basis, provided that until receipt of
stockholder approval of this proposal, any adjustment to the Conversion Price
shall not cause the Conversion Price for voting purposes to be less than the
Minimum Price (as defined in Nasdaq Listing Rule 5635(d)).
Our ability to settle conversions is subject to certain limitations set forth in
the Certificate of Designations, including a limit on the number of shares of
Common Stock that may be issued until the time that the Stockholder Approval is
obtained permitting the issuance of more than 19.99% of our outstanding shares
of Common Stock in accordance with Nasdaq listing standards. We agreed to seek
stockholder approval of these matters at a meeting to be held no later than May
31, 2023. Further, the Certificate of Designations contains a certain beneficial
ownership limitation after giving effect to the issuance of shares of common
stock issuable upon conversion of the Preferred Shares.
The Certificate of Designations includes certain Triggering Events (as defined
in the Certificate of Designations), including, among other things, (i) the
failure to file and maintain an effective registration statement covering the
sale of the holder's securities registrable pursuant to the Registration Rights
Agreement, (ii) the failure to pay any amounts due to the holders of the
Preferred Shares when due, and (iii) if Peter Holst ceases to be the chief
executive officer of the Company other than because of his death and a qualified
replacement, reasonably acceptable to a majority of the holders of the Preferred
Shares, is not appointed within thirty (30) business days. In connection with a
Triggering Event, the Default Rate is triggered. The Default Rate is also
triggered in the event that we are unable, from the failure to obtain the
Stockholder Approval prior to May 31, 2023 (the "Approval Date"), to issue
shares of Common Stock in connection with a conversion of the Series F Preferred
Stock after the Approval Date.
We are subject to certain affirmative and negative covenants regarding the
incurrence of indebtedness, acquisition transactions, the existence of liens,
the repayment of indebtedness, the payment of cash in respect of dividends
(other than dividends pursuant to the Certificate of Designations), maintenance
of properties and the transfer of assets, among other matters.
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Common Warrants
The Common Warrants are exercisable for shares of common stock at an exercise
price of $1.71 per share, beginning on or after the sixth-month-and-one-day
anniversary of the issuance date and expiring five and a half years after the
date of issuance. The exercise price is subject to customary adjustments for
stock splits, stock dividends, stock combination recapitalizations or other
similar transactions involving the Common Stock, and subject to price-based
adjustment, on a full ratchet basis, in the event of any issuances of Common
Stock, or securities convertible, exercisable or exchangeable for Common Stock,
. . .
Item 3.02. Unregistered Sale of Equity Securities.
The information set forth above in Item 1.01 of this Current Report on Form 8-K,
including Exhibits 3.1, 4.1, 4.2, 4.3, 10.1, 10.2, 10.3 and 10.4 hereto, is
incorporated herein by reference in its entirety. Neither the Preferred Shares
nor the Warrants have been registered under the Securities Act or the securities
laws of any state, and were offered and issued in reliance on the exemption from
registration under the Securities Act afforded by Section 4(a)(2) and Rule 506
of Regulation D promulgated thereunder.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
3.1 Certificate of Designations.
4.1 Form of Common Warrant.
4.2 Form of Preferred Warrant
10.1 Securities Purchase Agreement.
10.2 Registration Rights Agreement.
10.3 Engagement Letter, dated March 30, 2023, between Oblong, Inc. and
Dawson James Securities, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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