Business Context and Reporting Period
This Form 8-K was filed by Inpixon (trading symbol: INPX) on August 8, 2019. The registrant is a Nevada corporation incorporated in 2019, reporting material definitive agreements entered into on August 8, 2019, and an amendment to a prior acquisition agreement dated August 9, 2019.
Key Financial Metrics and Obligations
- New Debt Financing: Issued an unsecured promissory note with an initial principal amount of $1,895,000.00. The purchase price received was $1,500,000.00, reflecting an original issue discount of $375,000.00 and $20,000.00 in transaction costs.
- Interest Rates: The new note accrues interest at 10% per annum. A default interest rate of 22% applies upon an event of default.
- Existing Debt Exposure: As of August 8, 2019, the company held outstanding balances on prior notes with the same holder (Chicago Venture Partners, L.P.) of $3,872,946.95 (issued May 3, 2019) and $1,917,234.70 (issued June 27, 2019).
- Related Party Debt: An affiliate, Iliad Research and Trading, L.P., holds a note with an outstanding balance of $2,268,214.18 as of August 8, 2019.
- Acquisition Financing: The company agreed to loan up to $250,000 to Jibestream Inc. at 5% interest per annum, maturing December 31, 2019.
Material Changes and Agreements
- Note Purchase Agreement: The new note matures 9 months from issuance. It includes a prepayment penalty of 115% of the prepaid amount. The holder has a right to redeem up to 1/3 of the initial principal monthly starting 6 months after issuance.
- Standstill Agreement: Iliad Research and Trading, L.P. agreed not to redeem its December 2018 note for 90 days. In consideration, the outstanding balance of that note was increased by $206,149.23.
- Acquisition Amendment: The Share Purchase Agreement for Jibestream Inc. was amended to reduce the required funding from a new offering from $15 million to an amount sufficient to cover the estimated cash closing amount. The stock consideration price was tied to the offering price, and share issuance was capped at 19.99% of outstanding shares unless stockholder approval is obtained by December 31, 2019.
- Right of First Refusal: The new note holder has a right of first refusal on future convertible financings and a participation right in future offerings with more favorable terms.
Outlook, Risks, and Management Commentary
- Use of Proceeds: Net proceeds from the new note are intended for general working capital purposes.
- Default Risks: Upon an event of default (excluding bankruptcy), the holder may declare the entire balance due immediately at 115% of the outstanding balance. Bankruptcy-related defaults trigger immediate payment at the same 115% penalty without notice.
- Forward-Looking Statements: The filing contains forward-looking statements regarding the benefits of the Jibestream transaction, which are subject to risks and uncertainties that may cause actual results to differ materially.
Investor Verification Checklist
- Verify the total aggregate debt load, including the new $1.895M note and existing notes totaling over $8M with the same holder and affiliates.
- Confirm the company's ability to meet the 115% prepayment or default penalty clauses if liquidity becomes constrained.
- Monitor the status of the Jibestream acquisition closing, specifically whether the reduced funding requirement is met and if stockholder approval is needed for the equity issuance cap.
- Review the "Right of First Refusal" and "Participation Right" clauses to understand potential dilution or restrictions on future capital raises.