Quarterly report pursuant to Section 13 or 15(d)

Integrio Technologies, LLC Asset Acquisition

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Integrio Technologies, LLC Asset Acquisition
 3 Months Ended
Mar. 31, 2017
Integrio Technologies, LLC [Member]  
Business Acquisition [Line Items]  
Integrio Technologies, LLC Asset Acquisition

Note 4 - Integrio Technologies, LLC Asset Acquisition

 

On November 14, 2016, the Company and its wholly-owned subsidiary, Sysorex Government Services, Inc. (collectively, the “Buyer”), entered into an Asset Purchase Agreement, as amended by the Amendment No. 1 to Asset Purchase Agreement (as so amended, the “Purchase Agreement”) with Integrio Technologies, LLC (“Integrio”) and Emtec Federal, LLC, a wholly-owned subsidiary of Integrio, (collectively, the “Seller”) which are in the business of providing IT integration and engineering services to customers, primarily government agencies. The transaction closed on November 21, 2016. The consideration paid for the assets included an aggregate of (A) $1,800,000 in cash, of which $1,400,000 minus certain amounts payable to creditors of the Seller were paid upon the closing of the acquisition and $400,000 will be paid in two annual installments of $200,000 each on the respective anniversary dates of the closing, subject to certain set offs and recoupment by Buyer; (B) 35,333 unregistered restricted shares of the Company’s voting common stock valued at $22.50 per share; (C) certain specified assumed liabilities as detailed in the purchase price table below; and (D) up to an aggregate of $1,200,000 in earnout payments, of which up to $400,000 shall be payable to the Seller per year for the three years following the closing. Inpixon acquired these assets to pursue its previously stated strategy to expand its business into the federal government sector because of the large long-term contracts that the government sector offers. Inpixon started with bidding on government contracts directly and this acquisition provided an opportunity to accelerate this expansion. In addition, the acquisition allows Inpixon to offset the revenue softening in the commercial vertical for this business segment that it experienced in 2016.

 

The total recorded purchase price for the transaction was $2,332,000 at closing on November 21, 2016 (“Closing”) which consisted of the cash paid at Closing of $753,000, $400,000 cash that will be paid in two annual installments of $200,000 each on the respective anniversary dates of the Closing, $1,078,000 in contingent earnout payments and $101,000 representing the fair value of the stock issued at Closing.

 

The purchase price is allocated as follows (in thousands):      
       
Assets Acquired:      
Cash   $ 189  
Accounts receivable     2,365  
Other receivables     377  
Prepaid assets     4,164  
Fixed assets     64  
Other assets     34  
Customer relationships     1,873  
Supplier relationships     2,985  
Goodwill (A)     3,261  
      15,312  
Liabilities Assumed:        
Accounts payable   $ 8,341  
Accrued liabilities     344  
Deferred revenue     4,252  
Other long term liabilities     43  
      12,980  
Total Purchase Price   $ 2,332  

 

(A) The goodwill will be deductible for tax purposes once the contingent and assumed liabilities are settled.