Quarterly report pursuant to Section 13 or 15(d)

Jibestream Acquisition

Jibestream Acquisition
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
Jibestream Acquisition

Note 6 - Jibestream Acquisition


On August 15, 2019, the Company, through its wholly owned subsidiary, Inpixon Canada as purchaser (the "Purchaser"), completed its acquisition of Jibestream Inc. ("Jibestream"), a provider of indoor mapping and location technology, for consideration consisting of: (i) CAD $5,000,000, plus an amount equal to all cash and cash equivalents held by Jibestream at the closing, minus, if a negative number, the absolute value of the Estimated Working Capital Adjustment (as defined in the purchase agreement (the "Purchase Agreement")), minus any amounts loaned by the Purchaser to Jibestream to settle any Indebtedness (as defined in the Purchase Agreement) or other fees, minus any cash payments to the holders of outstanding options to settle any in-the-money options, minus the deferred revenue costs of CAD $150,000, and minus the costs associated with the audit and review of the financial statements of Jibestream required by the Purchase Agreement (collectively, the "Estimated Cash Closing Amount"); plus (ii) 176,289 shares of the Company's common stock, which was equal to CAD $3,000,000, converted to U.S. dollars based on the exchange rate at the time of the closing, divided by $12.4875 which was the price per share at which shares of the Company's common stock were issued in the Company's common stock offering on August 12, 2019 ("Inpixon Shares").


Jibestream provided a dynamic interactive map that allowed customers to put their digitized map into their mobile app or provide the map on a kiosk or other interface. Inpixon can now utilize the Jibestream map to offer a more intuitive interface to see its locationing data and analytics.


The Nasdaq listing rules required the Company to obtain the approval of the Company's stockholders for the issuance of 63,645 of the Inpixon Shares (the "Excess Shares"), which was obtained on October 31, 2019, and the shares were issued on November 5, 2019. A number of Inpixon Shares representing fifteen percent (15%) of the value of the purchase price (the "Holdback Amount") were subject to stop transfer restrictions and forfeiture to secure the indemnification and other obligations of the Vendors in favor of the Company arising out of or pursuant to Article VIII of the Purchase Agreement and, at the option of the Company, to secure the obligation of the Vendors' to pay any adjustment to the purchase price pursuant to Section 2.5 of the Purchase Agreement.


The total recorded purchase price for the transaction was approximately $5,062,000, which consisted of cash at closing of approximately $3,714,000 and $1,348,000 representing the value of the stock issued upon closing determined based on the closing price of the Company's common stock as of the closing date on August 15, 2019. Subsequently, the Company agreed not to enforce any right of setoff resulting from a Working Capital Adjustment. 


The purchase price was allocated based on the receipt of a final valuation report and modified for measurement period adjustments due to updated tax provision estimates as follows (in thousands):


    Preliminary Allocation     Tax Provision Measurement Period Adjustments     Adjusted Allocation  
Assets Acquired:                  
Cash   $ 5     $ --     $ 5  
Accounts receivable     309       --       309  
Other current assets     137       --       137  
Fixed assets     10       --       10  
Other assets     430       --       430  
Developed technology     3,193       --       3,193  
Customer relationships     1,253       --       1,253  
Non-compete agreements     420       --       420  
Goodwill     2,407       (919 )     1,488  
    $ 8,165     $ (919 )   $ 7,245  
Liabilities Assumed:                        
Accounts payable     51       --       51  
Accrued liabilities     94       --       94  
Deferred revenue     1,156       --       1,156  
Other liabilities     513       --       513  
Deferred tax liability     1,289       (919 )     370  
      3,103       (919 )     2,183  
Total Purchase Price   $ 5,062     $ --     $ 5,062  


The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company. The deferred revenue included in the condensed consolidated financial statements is the expected liability to service the projects. The goodwill represents the excess fair value after the allocation to the intangibles. The calculated goodwill is not deductible for tax purposes. As part of the acquisition, the Company acquired a lease obligation with an operating lease right of use asset of approximately $371,000 and an operating lease obligation of approximately $371,000 which are included in other assets and other liabilities, respectively, in the purchase price allocation. The financial data of Jibestream is included in the Company's financial statements starting on the acquisition date through the period ended September 30, 2020.


Jibestream was amalgamated into Inpixon Canada on January 1, 2020.