Business Context and Reporting Period
This Form 8-K, dated July 9, 2019, reports material events for Inpixon (trading symbol: INPX), a company incorporated in Nevada. The filing details the entry into a Share Purchase Agreement to acquire Jibestream Inc., a British Columbia corporation, and an exchange agreement regarding outstanding debt. The reporting period covers events occurring between July 9, 2019, and July 11, 2019.
Key Financial Metrics and Transaction Terms
- Acquisition Consideration: The purchase price for Jibestream consists of CAD $5,000,000 in cash plus a variable amount of Inpixon common stock valued at CAD $3,000,000.
- Stock Issuance: The number of Inpixon shares to be issued is calculated by dividing CAD $3,000,000 by the lesser of the financing price per share or the five-day average closing price prior to closing.
- Holdback Provision: Inpixon will retain 15% of the purchase price value in Inpixon shares as a holdback to secure vendor indemnification obligations.
- Debt Exchange: Inpixon exchanged a promissory note with an outstanding balance of $214,806.81 for 403,772 shares of common stock at an effective price of $0.532 per share.
- Capitalization: As of July 11, 2019, Inpixon had 14,195,201 shares of common stock outstanding, along with convertible preferred stock and warrants exercisable at $3.33 per share.
Material Changes and Conditions
The primary material change is the pending acquisition of Jibestream, which will become an indirect, wholly-owned subsidiary of Inpixon upon closing. The transaction is subject to several critical conditions:
- Financing Requirement: Closing is contingent upon Inpixon completing an equity or equity-linked securities offering raising at least $15 million in gross proceeds.
- Regulatory Approvals: The transaction requires approval for the listing of new shares on the Nasdaq Stock Market and, if required by listing rules, stockholder approval by August 30, 2019.
- Cash Alternative: If stockholder approval is not obtained by the deadline, the stock portion of the purchase price will be converted to a cash payment.
Outlook, Risks, and Management Commentary
Management intends to file an "evergreen" shelf registration statement within 30 days of the closing date to facilitate the continuous offering of shares issued to vendors. The filing includes standard forward-looking statements regarding the anticipated benefits of the transaction, noting that actual results may differ materially due to various risks.
Risks and Contingencies:
- Financing Failure: The transaction cannot close without the successful completion of the $15 million financing.
- Listing Status: Inpixon commits to maintaining its listing on a national securities exchange or, if ineligible, moving to over-the-counter markets.
- Non-Competition: Chris Weigand, a vendor representative, is subject to a two-year non-compete and non-solicitation agreement covering Canada, the U.S., the Middle East, and Australia.
Investor Verification Checklist
- Verify the status of the required $15 million equity financing to determine if the acquisition closing condition has been met.
- Confirm whether stockholder approval was obtained by the August 30, 2019, deadline to assess if the consideration will be paid in stock or cash.
- Review the final "Estimated Cash Closing Amount" calculation, which adjusts for Jibestream's cash on hand, working capital, and deferred revenue costs.
- Monitor the filing of Jibestream's financial statements and pro forma information, which are due within 71 days of this report.
- Check the current trading price of INPX to estimate the final number of shares to be issued to Jibestream vendors.