Item 1.01.
Entry into a Material Definitive Agreement.
Public Offering
On August 2, 2017, InfoSonics Corporation (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors, relating to the sale and issuance by the Company of shares of Company common stock in a transaction registered pursuant to a Form S-3 registration statement (the “Offering”). Subject to the terms and conditions contained in the Purchase Agreement, the investors purchased 2,500,000 shares of Company common stock at a purchase price of $0.40 per share. The shares of common stock are being issued pursuant to an effective shelf registration statement on Form S-3 that the Company filed with the Securities and Exchange Commission (the “SEC”) on May 27, 2015 (File No. 333-204469). A prospectus supplement relating to the Offering has been filed with the SEC.
Concurrently with the offering of 2,500,000 shares of Company common stock pursuant to the registration statement, the Company agreed to issue an equal number of warrants (the “Warrants”) to the investors pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) contained in Section 4(a)(2) thereof and/or Regulation D thereunder. Each Warrant will allow the holder to purchase up to a number of shares of common stock equal to 100% of the common stock purchased by the investor with an exercise price equal to $0.484 per share, subject to adjustment therein. The Warrants shall be exercisable commencing six months from the date hereof and have a term of exercise equal to three years from the initial exercise date.
The Company intends to use the approximately $1 million in net proceeds from the Offering towards expenses relating to the previously announced proposed merger with Cooltech Holdings Corp. (“Cooltech”). The Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.
The foregoing descriptions of the Purchase Agreement and the Warrants do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the full text of such document, each of which are attached hereto as Exhibit 10.1 and Exhibit 4.1, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.
The legal opinion of Perkins Coie LLP relating to the issuance and sale of the securities in the Offering is attached as Exhibit 5.1 to this Current Report on Form 8-K.
PIPE Offering
On August 3, 2017, the Company entered into a securities purchase agreement (“PIPE Purchase Agreement”) for the sale of 4,375,000 shares of its common stock at $0.40 per share and an equal number of Warrants to purchase its common stock (the “PIPE Offering”) pursuant to a private placement exempt from the registration under the requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D thereunder. Each Warrant will allow the holder to purchase up to a number of shares of common stock equal to 100% of the common stock purchased by the purchaser at exercise price equal to $0.484 per share, subject to adjustment as provided therein. The Warrants shall be exercisable commencing six months from the closing date and have a term of exercise equal to three years from the initial exercise date.
The closing of the PIPE Offering is contingent upon approval by the Company’s stockholders pursuant to the requirements of the NASDAQ Stock Market. The proceeds of the PIPE Offering will be held in escrow pending the receipt of stockholder approval. If holders of the majority of the Company’s outstanding shares do not approve the PIPE Offering, the proceeds will be returned to the purchasers.
The PIPE Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.
The foregoing description of the PIPE Purchase Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to, the full text of the document which is attached hereto as Exhibit 10.2 to this Current Report on Form 8-K, and is incorporated herein by reference.