Business Context and Reporting Period
This Form 8-K, dated June 27, 2019, reports on Inpixon (trading symbol: INPX), a Nevada corporation. The filing details the completion of an Asset Purchase Agreement (APA) with GTX Corp on June 27, 2019. The transaction involves the acquisition of GPS technologies, intellectual property, and specific software solutions including a Smart School Safety Network (SSSN) and personnel tracking systems.
Key Financial Metrics and Transaction Terms
The filing does not provide standard financial metrics such as revenue, profit, cash flow, or margins for the reporting period. The transaction consideration and financial obligations are as follows:
- Cash Consideration: $250,000 paid at closing.
- Equity Consideration: 1,000,000 shares of Inpixon restricted common stock (par value $0.001).
- Holdback Provision: 100,000 of the issued shares are subject to forfeiture to satisfy indemnification claims.
- Contingent Debt: Inpixon may be required to loan GTX up to $50,000 per month (maximum $250,000 aggregate) if a resale registration statement is not filed or declared effective within specified deadlines. Notes accrue interest at 5% per annum with a 210-day maturity.
- Consulting Fees: GTX will receive a monthly fee of $15,000 plus 5% commissions on revenues from customers introduced by GTX within 180 days of the agreement.
- Royalty Rights: Inpixon acquired a right to 30% of royalty payments GTX receives from Inventergy LBS, LLC.
Material Changes and Asset Acquisition
Inpixon acquired a portfolio of assets from GTX Corp, including:
- One registered patent and over 20 pending patent applications or licenses related to GPS technologies.
- Smart School Safety Network (SSSN) solution utilizing Bluetooth Low-Energy (BLE) and 2.4Ghz platforms.
- Personnel Equipment Tracking System (P.E.T.S.) and Ground Personnel Safety System (GPSS) for government and military applications.
- 30% interest in royalty payments from Inventergy LBS, LLC.
The Company determined the acquisition does not constitute a "significant amount of assets," and therefore, pro forma financial information and separate financial statements for the acquired business are not required.
Outlook, Risks, and Contingencies
Management Commentary and Agreements:
- License-Back Agreement: Inpixon granted GTX a royalty-free, non-exclusive license to the transferred patents. In the event of Inpixon's bankruptcy, GTX has the right to buy back the patents for the original consideration.
- Non-Compete: GTX agreed not to sell or attempt to sell the SSSN, P.E.T.S., GPSS, or specific firearm tracker technology for four years.
- Employee Non-Solicit: A one-year restriction applies to soliciting employees.
- Registration Obligation: Inpixon must file a resale registration statement within 30 days of closing. Failure to do so triggers the contingent loan obligation.
Risks and Contingencies:
- Bankruptcy Risk: If Inpixon enters bankruptcy proceedings, GTX may repurchase the transferred patents.
- Patent Abandonment: If Inpixon plans to abandon issued patents, GTX has the right to assume control and prosecution of those patents at its own expense.
- Termination Rights: Inventergy may terminate its agreement with Inpixon if Inpixon challenges the validity of licensed patents or if the patents are sold to a third party.
Investor Verification Checklist
- Verify the status of the resale registration statement for the 1,000,000 shares issued to GTX to assess potential contingent debt obligations.
- Review the specific patents included in the portfolio to evaluate their commercial viability and remaining life.
- Monitor the 100,000 share holdback to understand potential dilution or forfeiture scenarios.
- Assess the impact of the $15,000 monthly consulting fee and 5% revenue commission on future operating expenses.
- Confirm the terms of the royalty split with Inventergy LBS, LLC and the likelihood of future royalty payments.