Annual report pursuant to Section 13 and 15(d)

Organization and Nature of Business and Going Concern

v3.19.3.a.u2
Organization and Nature of Business and Going Concern
12 Months Ended
Dec. 31, 2019
Organization and Nature of Business and Going Concern [Abstract]  
Organization and Nature of Business and Going Concern

Note 1 - Organization and Nature of Business and Going Concern

 

Inpixon, and its wholly-owned subsidiaries, Inpixon Canada, Inc. ("Inpixon Canada") and Jibestream, Inc. ("Jibestream"), which was amalgamated into Inpixon Canada on January 1, 2020, and its majority-owned subsidiary Inpixon India Limited ("Inpixon India") (unless otherwise stated or the context otherwise requires, the terms "Inpixon" "we," "us," "our" and the "Company" refer collectively to Inpixon and the aforementioned subsidiaries), provide Big Data analytics and location based products and related services. The Company is headquartered in Palo Alto, California, and has subsidiary offices in Coquitlam, Canada, New Westminster, Canada, Toronto, Canada and Hyderabad, India.

 

On August 31, 2018, the Company completed the spin-off of its enterprise infrastructure business from its indoor positioning analytics business by way of a distribution of all the shares of common stock of its wholly-owned subsidiary, Sysorex, Inc. ("Sysorex"), to its stockholders of record as of August 21, 2018 and certain warrant holders. 

 

On May 21, 2019, the Company acquired Locality Systems Inc. ("Locality"), a technology company based near Vancouver, Canada, specializing in wireless device positioning and radio frequency augmentation of video surveillance systems (See Note 3). On June 27, 2019, the Company acquired certain global positioning system ("GPS") products, software, technologies, and intellectual property from GTX Corp ("GTX"), a U.S. based company specializing in GPS technologies (See Note 4). These transactions expanded our patent portfolio and included certain granted or licensed patents and GPS and radio frequency ("RF") technologies. Additionally, on August 15, 2019, the Company acquired Jibestream, a provider of indoor mapping and location technology based in Toronto, Canada (See Note 5).

 

Going Concern and Management's Plans

 

As of December 31, 2019, the Company has a working capital deficiency of approximately $7.0 million. For the year ended December 31, 2019, the Company incurred a net loss of approximately $34.0 million. The aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern within one year after the date the financial statements are issued.

 

On January 15, 2019, the Company completed a rights offering whereby it sold 12,000 units at a price to the public of $1,000 per unit for aggregate net proceeds of approximately $10.77 million after commissions and expenses. On August 12, 2019, the Company completed a capital raise whereby the Company sold an aggregate of (i) 144,387 shares of our common stock, (ii) 2,997 shares of its Series 6 Convertible Preferred Stock, and (iii) Series A warrants to purchase up to an aggregate of 384,387 shares of common stock at an exercise price per share of $12.4875, resulting in net proceeds of approximately $4 million after deducting the underwriting discounts and offering expenses. The Company also raised approximately $3 million, $1.5 million, $1.5 million, $750,000 and $750,000 in net proceeds from the sale of promissory notes on May 3, 2019, June 26, 2019, August 8, 2019, September 17, 2019 and November 22, 2019, respectively. From October 16, 2019 through December 20, 2019 under an at-the-market ("ATM") program, the Company sold an aggregate of 1,470,900, shares of common stock, at a weighted average price of approximately $4.42 per share resulting in net proceeds of approximately $5.9 million to the Company after deduction of sales commissions and other offering expenses.

 

The Company does not expect its capital resources as of December 31, 2019, availability on the Payplant facility to finance purchase orders and invoices in an amount equal to 80% of the face value of purchase orders received (as described in Note 14), and funds from revenue to be sufficient to fund planned operations for the next twelve months from the date the financial statements are issued.  In addition, the Company is pursuing possible strategic transactions and may raise such additional capital as needed, through the issuance of equity, equity-linked or debt securities. 

 

The Company's consolidated financial statements as of December 31, 2019 have been prepared under the assumption that the Company will continue as a going concern for the next twelve months from the date the financial statements are issued. Management's plans and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the Company's ability to continue as a going concern is dependent upon the ability to attain further operating efficiency, reduce expenditures, and, ultimately, to generate sufficient levels of revenue. The Company's consolidated financial statements as of December 31, 2019 do not include any adjustments that might result from the outcome of this uncertainty.