Business Context and Reporting Period
This Form 8-K was filed by Inpixon (referred to in metadata as XTI Aerospace, Inc.) on October 12, 2018. The filing reports the entry into a material definitive agreement involving the issuance of debt securities and provides updates on pro forma financial information related to a prior spin-off.
Key Financial Metrics and Transaction Details
The primary financial event reported is the execution of a Note Purchase Agreement with an institutional investor.
- Principal Amount: $2,520,000 (Initial Principal Amount).
- Cash Proceeds: $2,000,000 (Purchase Price).
- Original Issue Discount (OID): $500,000.
- Transaction Costs: $20,000 (legal, accounting, due diligence).
- Interest Rate: 10% per annum.
- Maturity: 12 months from issuance.
- Default Interest Rate: 22%.
- Prepayment Penalty: 115% of the prepaid portion.
- Outstanding Equity (as of Oct 17, 2018): 62,115,129 shares of common stock and 1 share of Series 4 convertible preferred stock (convertible into 5,622 common shares).
The filing does not provide specific revenue, profit, cash flow, or liquidity metrics for the current period, other than the proceeds from this transaction.
Material Changes and Pro Forma Information
The filing references unaudited pro forma financial information (Exhibit 99.1) reflecting the spin-off of Sysorex, Inc. as if it had occurred on January 1, 2018. This data adjusts historical financial conditions for the six months ended June 30, 2018. No specific numerical changes in revenue or profit are detailed in the text of this filing.
Terms, Risks, and Management Commentary
Use of Proceeds: The Company intends to use net proceeds for general working capital purposes.
Redemption Rights: The Holder has the right to redeem up to 1/3 of the initial principal balance monthly, starting 6 months after issuance. Unused redemption amounts can be carried forward.
Default Provisions: Upon a default event (excluding bankruptcy), the Holder may declare the entire balance due immediately at 115% of the outstanding balance. In the event of a Bankruptcy-Related Event of Default, the Mandatory Default Amount becomes due without notice.
Future Financing Restrictions: The agreement includes a Right of First Refusal and Participation Right. If the Company intends to issue securities with conversion rights or variable conversion prices ("Future Offering"), it must first offer the opportunity to the Holder. These rights do not apply to Exempt Issuances or registered public offerings (Form S-1 or S-3).
Investor Verification Checklist
- Verify the full text of the Promissory Note (Exhibit 4.1) and Note Purchase Agreement (Exhibit 10.1) for specific covenants and definitions of "Exempt Issuance."
- Review Exhibit 99.1 for the specific pro forma financial impact of the Sysorex, Inc. spin-off on the Company's balance sheet and operations.
- Confirm the Company's current cash position and ability to service the 10% interest and potential 115% prepayment/default penalties.
- Monitor future financing announcements to determine if the Right of First Refusal is triggered, which could delay or alter capital raising efforts.