Quarterly report pursuant to Section 13 or 15(d)

Nanotron Acquisition

v3.21.2
Nanotron Acquisition
6 Months Ended
Jun. 30, 2021
Business Combination And Asset Acquisition [Abstract]  
Nanotron Acquisition Nanotron Acquisition
On October 6, 2020, the Company, through its wholly-owned subsidiary, Inpixon Germany, a limited liability company incorporated under the laws of Germany (the "Purchaser" and together with Inpixon, the "Company"), completed the acquisition of all the outstanding capital stock of Nanotron, a limited liability company incorporated under the laws of Germany, pursuant to the terms and conditions of that certain Share Sale and Purchase Agreement (the "Purchase Agreement"), dated as of October 5, 2020, among the Company, Nanotron and Sensera Limited (the "Seller", and the owner of all outstanding shares of Nanotron), a stock corporation incorporated under the laws of Australia and the sole shareholder of Nanotron. As a result of the acquisition, the Company now owns 100% of Nanotron. Nanotron’s business consists of developing and manufacturing location-aware IoT systems and solutions.
The total paid to Sensera Limited was an aggregate purchase price of $8.7 million in cash (less the Holdback Funds (as defined below) and certain other closing adjustments) for the outstanding shares of Nanotron. The price was subject to certain post-Closing adjustments based on actual working capital as of the closing as described in the Purchase Agreement. Inpixon retained $750,000 (the “Holdback Funds”) from the Purchase Price (the "Purchase Price") to secure Sensera Limited's obligations under the Purchase Agreement, with any unused portion of the Holdback Funds to be released to the Seller on the date that is 18 months after the Closing Date. As discussed above, the certain adjustments to the Purchase Price are adjustments for severance payments and calculations of net working capital (as described in the Purchase Agreement) versus the working capital target (as described in the Purchase Agreement) (calculation defined as “Net Working Capital Adjustment”). The adjustment for severance payments includes a $214,000 reduction in purchase price for severance payments due after the closing date offset by a return credit of $50,000 for severance payments owed by Sensera Limited. As for Net Working Capital Adjustment, Net Working Capital was determined to be less than the Working Capital Target by an amount of $30,000, resulting in a reduction in the purchase price of $30,000. Inpixon Germany paid the purchase price from funds received in connection with a capital contribution from Inpixon, and a portion of the purchase price was used by the Seller to satisfy outstanding loans payable to obtain the release of certain existing security interests on Nanotron’s assets.
On February 24, 2021, the Company entered into an amendment to the Nanotron share sale and purchase agreement pursuant to which we agreed to the early release of the Holdback Funds, in exchange for a reduction in the total amount payable to the Seller by $225,000. In addition, the amount payable was further reduced by $59,157 in connection with a post closing working capital adjustment and the satisfaction of a claim related to a customer dispute. A balance of $465,843 was paid to the Seller in full satisfaction of the Holdback Funds payable by the Purchaser to the Seller pursuant to the Purchase Agreement.
The preliminary purchase price is allocated as follows (in thousands):
Fair Value Allocation
Assets acquired:
Cash and cash equivalents 301 
Trade and other receivables 576 
Inventory 827 
Prepaid expenses and other current assets 103 
Operating lease right-of-use asset 557 
Property, plant, and equipment 433 
Tradename 51 
Proprietary Technology 1,213 
Customer Relationships 1,055 
Non-compete Agreements 610 
In-Process R&D 505 
IP Agreement 178 
Goodwill 3,501 
Total assets acquired $ 9,910 
Liabilities assumed:
Accounts payable 526 
Lease liabilities 557 
Restructuring Costs 214 
Accrued Liabilities 361 
Total liabilities assumed 1,658 
Total Purchase Price $ 8,252 
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 goodwill represents the excess fair value after the allocation to the intangibles. The calculated goodwill is not tax deductible for local tax purposes, but will be amortizable in the computation of the shareholder’s U.S. tax liability.