Annual report pursuant to Section 13 and 15(d)

Locality Acquisition

v3.21.1
Locality Acquisition
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Locality Acquisition Locality Acquisition
On May 21, 2019, the Company, through its wholly owned subsidiary, Inpixon Canada as purchaser, completed its acquisition of Locality in which Locality’s stockholders sold all of their shares to the purchaser in exchange for consideration of (i) $1,500,000 (the “Aggregate Cash Consideration”) minus a working capital adjustment equal to $85,923, and (ii) 14,445 shares of the Company's common stock with a fair market value of $514,000. Locality was a technology company specializing in wireless device positioning and radio frequency augmentation of video surveillance systems. The Locality acquisition allows the Company to accept wireless device positioning from third-party Wi-Fi access points as well as surveillance systems and combine that information with Inpixon's own location data into their analytics platform, providing customers with additional data and ability to see video and radio frequency data concurrently.  
The Aggregate Cash Consideration, less the working capital adjustment applied against the Aggregate Cash Consideration of $85,923, is payable in installments as follows: (i) the initial installment representing $250,000 minus $46,422 of the working capital adjustment was paid on the closing date; (ii) $210,499 was paid on November 21, 2019, which was comprised of a $250,000 installment less $39,501 of the working capital adjustment; (iii) two additional installments, each equal to $250,000, were paid twelve months and eighteen months after the closing date; and (iv) one final installment representing $500,000 will be paid on the second anniversary of the closing date, in each case minus the cash fees payable to the advisor in connection with the acquisition. Inpixon Canada will have the right to offset any loss, as defined in the purchase agreement, first, against any installment of the installment cash consideration that has not been paid and second, against the sellers and the advisor on a several basis, in accordance with the indemnification provisions of the purchase agreement.
The total recorded purchase price for the transaction was approximately $1,928,000, which consisted of cash at closing of $204,000, approximately $1,210,000 of cash that will be paid in installments as discussed above and $514,000 representing the value of the stock issued upon closing.
The purchase price was allocated and modified for measurement period adjustments due to the receipt of the valuation report and updated tax provision estimates as follows (in thousands):
Preliminary Allocation Valuation Measurement Period Adjustments Tax Provision Measurement Period Adjustments Adjusted Allocation
Assets Acquired:
Cash $ 70  $ —  $ —  $ 70 
Accounts receivable —  — 
Other current assets —  — 
Inventory —  — 
Fixed assets —  — 
Developed technology 1,523  (78) —  1,445 
Customer relationships 216  (31) —  185 
Non-compete agreements 49  —  —  49 
Goodwill 619  80  (46) 653 
$ 2,491  $ (29) $ (46) $ 2,416 
Liabilities Assumed:
Accounts payable $ 13  $ —  $ —  $ 13 
Accrued liabilities 48  —  —  48 
Deferred revenue 28  —  —  28 
Deferred tax liability 474  (29) (46) 399 
563  (29) (46) 488 
Total Purchase Price $ 1,928  $ —  $ —  $ 1,928 
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 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. The financial data of Locality is included in the Company’s financial statements starting on the acquisition date through the year ended December 31, 2020. Proforma information has not been presented as it has been deemed to be immaterial.