Exhibit 99.3
Inpixon and Subsidiaries
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined balance sheet as of June 30, 2019 and the unaudited pro forma condensed combined statements of operations for each of the six months ended June 30, 2019 and for the year ended December 31, 2018 combine the financial statements of Inpixon and Subsidiaries (“Inpixon”)andJibestream Inc. (“Jibestream”), giving effect to the acquisition of Jibestream as described in the Acquisition Agreement, as amended, plus the completion of a minimum capital raise as required by the Acquisition Agreement (collectively the “Transactions”), as if they had occurred on January 1, 2018 in respect of the unaudited pro forma condensed combined statements of operations and on June 30, 2019 in respect of the unaudited pro forma condensed combined balance sheet.
The unaudited pro forma condensed combined financial information should be read in conjunction with:
| ● | Inpixon’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2018, as contained in its Annual Report on Form 10-K filed on March 28, 2019 with the United States Securities and Exchange Commission (the “SEC”). |
| ● | Inpixon’s unaudited condensed consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2019, as contained in its Quarterly Report on Form 10-Q filed on August 14, 2019 with the SEC. |
| ● | Jibestream’s audited financial statements as of and for the years ended December 31, 2018 and 2017, as contained inInpixon’s Current Report on Form 8-K/A filed with the SEC on July 25, 2019. |
| ● | Jibestream’s unaudited condensed financial statements as of and for the six months ended June 30, 2019 and 2018, contained elsewhere in this filing. |
| ● | the other information contained in or incorporated by reference into this filing. |
The financial statements of Jibestream were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements of Inpixon were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The unaudited pro forma condensed combined financial information includes adjustments to convert the financial information of Jibestream from IFRS to U.S. GAAP as issued by the Financial Accounting Standards Board (“FASB”), as well as reclassifications to conform Jibestream’s historical accounting presentation to Inpixon’s accounting presentation.
In addition, the consolidated financial statements of Inpixon are presented in US dollars (“USD”) whereas, the financial statements of Jibestream are presented in Canadian Dollars (“CAD”). Therefore, the unaudited pro forma condensed combined financial information includes adjustments to convert Jibestream’s financial information from CAD to USD.
The final purchase consideration and the allocation of the purchase consideration may materially differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition.
The unaudited pro forma adjustments give effect to events that are directly attributable to the Transactions and are based on available data and certain assumptions that management believes are factually supportable. In addition, with respect to the unaudited condensed combined statement of operations, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results.
The unaudited pro forma condensed combined financial information is presented for informational purposes only and to aid you in your analysis of the financial aspects of the Transactions. The unaudited pro forma condensed combined financial information described above has been derived from the historical financial statements of Inpixon and Jibestream and the related notes included elsewhere in this filing. The unaudited pro forma condensed combined financial information is based on Inpixon’s accounting policies. Further review may identify additional differences between the accounting policies of Jibestream and Inpixon. The unaudited pro forma adjustments and the pro forma condensed combined financial information don’t reflect the impact of synergies or post-transaction management actions and are not necessarily indicative of the financial position or results of operations that may have actually occurred had the Transaction taken place on the dates noted, or of Inpixon’s future financial position or operating results.
Inpixon and Subsidiaries
Unaudited Pro Forma Condensed Combined Balance Sheet
June 30, 2019
(USD 000’s)
| Inpixon | Jibestream | Capital Raise | Acquisition | Pro Forma Combined | |||||||||||||||||
| Note A | Note B | Note C | Note D | ||||||||||||||||||
| Assets | |||||||||||||||||||||
| Current assets: | |||||||||||||||||||||
| Cash and cash equivalents | $ | 1,651 | - | $ | 4,041 | (a) | (3,879 | ) | (b), (d) | $ | 1,813 | ||||||||||
| Accounts receivable, net | 2,384 | 438 | - | - | 2,822 | ||||||||||||||||
| Notes and other receivables | - | 50 | - | - | 50 | ||||||||||||||||
| Restricted short-term investments | - | 252 | - | (252 | ) | (b) | - | ||||||||||||||
| Inventory | 680 | - | - | - | 680 | ||||||||||||||||
| Prepaid assets and other current assets | 444 | 43 | - | - | 487 | ||||||||||||||||
| Total current assets | 5,159 | 783 | 4,041 | (4,131 | ) | 5,852 | |||||||||||||||
| Non-current assets: | |||||||||||||||||||||
| Property and equipment, net | 138 | 11 | - | - | 149 | ||||||||||||||||
| Operating lease right-of-use asset, net | 473 | 503 | - | 4 | (d) | 980 | |||||||||||||||
| Software development costs, net | 1,641 | - | - | - | 1,641 | ||||||||||||||||
| Intangible assets, net | 5,609 | - | - | 5,075 | (d) | 10,684 | |||||||||||||||
| Goodwill | 634 | - | - | 3,554 | (d) | 4,188 | |||||||||||||||
| Loan to related party | 10,031 | - | - | - | 10,031 | ||||||||||||||||
| Other assets | 201 | - | - | - | 201 | ||||||||||||||||
| Total non-current assets | 18,727 | 514 | - | 8,633 | 27,874 | ||||||||||||||||
| Total assets | $ | 23,886 | 1,297 | $ | 4,041 | 4,502 | $ | 33,726 | |||||||||||||
| - | |||||||||||||||||||||
| Liabilities, temporary equity and stockholders’ equity | |||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 2,578 | 274 | $ | - | 219 | (e) | $ | 3,071 | ||||||||||||
| Operating lease obligation | 282 | 258 | - | - | 540 | ||||||||||||||||
| Deferred lease inducement | - | 63 | - | (63 | ) | (d) | - | ||||||||||||||
| Deferred revenue | 195 | 1,382 | - | - | 1,577 | ||||||||||||||||
| Convertible promissory notes | - | 699 | - | (699 | ) | (c) | - | ||||||||||||||
| Convertible debenture | - | 536 | - | (536 | ) | (b) | - | ||||||||||||||
| Acquisition liability | 460 | - | - | - | 460 | ||||||||||||||||
| Long-term debt, current portion | - | 436 | - | (436 | ) | (b) | - | ||||||||||||||
| Other indebtedness | 7,094 | 572 | - | (572 | ) | (b) | 7,094 | ||||||||||||||
| Total current liabilities | 10,609 | 4,221 | - | (2,087 | ) | 12,743 | |||||||||||||||
| Non-current liabilities: | |||||||||||||||||||||
| Promissory notes | - | - | - | - | - | ||||||||||||||||
| Long-term debt | 73 | - | - | - | 73 | ||||||||||||||||
| Other liabilities | 491 | - | - | - | 491 | ||||||||||||||||
| Acquisition liability, noncurrent | 750 | - | - | - | 750 | ||||||||||||||||
| Deferred tax liability | - | - | - | 1,345 | (d) | 1,345 | |||||||||||||||
| Operating lease obligation | 220 | 249 | - | - | 469 | ||||||||||||||||
| Total non-current liabilities | 1,534 | 249 | - | 1,345 | 3,128 | ||||||||||||||||
| Total liabilities | 12,143 | 4,470 | - | (742 | ) | 15,871 | |||||||||||||||
| Temporary equity: | |||||||||||||||||||||
| Preferred stock | - | 1,454 | - | (1,454 | ) | (b), (c) | - | ||||||||||||||
| Stockholders’ equity: | |||||||||||||||||||||
| Preferred stock | - | - | - | (a) | - | - | |||||||||||||||
| Common stock | 13 | 115 | 6 | (a) | (107 | ) | (b), (c), (d) | 27 | |||||||||||||
| Additional paid-in capital | 140,503 | 144 | 4,035 | (a) | 2,139 | (b), (c), (d) | 146,821 | ||||||||||||||
| Treasury stock | (695 | ) | - | - | - | (695 | ) | ||||||||||||||
| Accumulated other comprehensive income | 57 | - | - | - | 57 | ||||||||||||||||
| Accumulated deficit | (128,157 | ) | (4,885 | ) | - | 4,666 | (b), (c), (d), (e) | (128,376 | ) | ||||||||||||
| Non-controlling interests | 22 | - | - | - | 22 | ||||||||||||||||
| Total stockholders’ equity | 11,743 | (4,627 | ) | 4,041 | 6,698 | 17,856 | |||||||||||||||
| Total liabilities, temporary equity and stockholders’ equity | $ | 23,886 | 1,297 | $ | 4,041 | 4,502 | $ | 33,726 | |||||||||||||
See notes to the unaudited pro forma condensed combined financial information
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Inpixon and Subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2019
(USD 000’s except for shares and per share amounts)
| Inpixon | Jibestream | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
| Note A | Note B | Note C | ||||||||||||||
| Revenues | $ | 2,854 | $ | 1,013 | $ | - | $ | 3,867 | ||||||||
| Cost of revenues | 727 | 279 | - | 1,006 | ||||||||||||
| Gross profit | 2,127 | 735 | - | 2,862 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 1,752 | - | - | 1,752 | ||||||||||||
| Sales and marketing | 1,314 | 22 | - | 1,336 | ||||||||||||
| General and administrative | 6,368 | 1,084 | - | 7,452 | ||||||||||||
| Acquisition related costs | 647 | - | (82 | )(d) | 565 | |||||||||||
| Amortization of intangibles | 1,633 | 6 | 120 | (a) | 1,759 | |||||||||||
| Total operating expenses | 11,714 | 1,112 | 38 | 12,864 | ||||||||||||
| Loss from operations | (9,587 | ) | (377 | ) | (38 | ) | (10,002 | ) | ||||||||
| Other income/(expense) | ||||||||||||||||
| Interest expense | (865 | ) | (112 | ) | 112 | (b) | (865 | ) | ||||||||
| Loss on exchange of debt for equity | (160 | ) | - | - | (160 | ) | ||||||||||
| Other income | 232 | - | - | 232 | ||||||||||||
| Total other expense | (793 | ) | (112 | ) | 112 | (793 | ) | |||||||||
| Pre-tax loss | (10,380 | ) | (489 | ) | 74 | (10,795 | ) | |||||||||
| Income tax benefit | - | - | 32 | (a) | 32 | |||||||||||
| Net loss | (10,380 | ) | (489 | ) | 106 | (10,763 | ) | |||||||||
| Net loss attributable to non-controlling interest | 4 | - | - | 4 | ||||||||||||
| Net loss attributable to stockholders of Inpixon | (10,384 | ) | (489 | ) | 106 | (10,767 | ) | |||||||||
| Deemed dividend for triggering of warrant down round feature | (1,250 | ) | - | - | (1,250 | ) | ||||||||||
| Net loss attributable to common stockholders | $ | (11,634 | ) | $ | (489 | ) | $ | 106 | $ | (12,017 | ) | |||||
| Loss per share: | ||||||||||||||||
| - basic and diluted | $ | (1.69 | ) | $ | (0.66 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| - basic and diluted | 6,889,873 | 11,257,193 | (c) | 18,147,066 | ||||||||||||
See notes to the unaudited pro forma condensed combined financial information
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Inpixon and Subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2018
(USD 000’s except for shares and per share amounts)
| Inpixon | Jibestream | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
| Note A | Note B | Note C | ||||||||||||||
| Revenues | $ | 3,756 | $ | 2,441 | $ | - | $ | 6,197 | ||||||||
| Cost of revenues | 1,076 | 671 | - | 1,747 | ||||||||||||
| Gross profit | 2,680 | 1,770 | - | 4,450 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 1,231 | - | - | 1,231 | ||||||||||||
| Sales and marketing | 1,726 | 97 | - | 1,823 | ||||||||||||
| General and administrative | 14,149 | 2,546 | - | 16,695 | ||||||||||||
| Acquisition related costs | 108 | - | - | 108 | ||||||||||||
| Impairment of goodwill | 636 | - | - | 636 | ||||||||||||
| Amortization of intangibles | 3,232 | 19 | 240 | (a) | 3,491 | |||||||||||
| Total operating expenses | 21,082 | 2,662 | 240 | 23,984 | ||||||||||||
| Loss from operations | (18,402 | ) | (893 | ) | (240 | ) | (19,535 | ) | ||||||||
| Other income/(expense) | ||||||||||||||||
| Interest expense | (1,241 | ) | (132 | ) | 132 | (b) | (1,241 | ) | ||||||||
| Gain on sale of Sysorex Arabia | 23 | - | - | 23 | ||||||||||||
| Change in fair value of derivative liabilities | 48 | - | - | 48 | ||||||||||||
| Other expense | (211 | ) | - | - | (211 | ) | ||||||||||
| Total other expense | (1,381 | ) | (132 | ) | 132 | (1,381 | ) | |||||||||
| Pre-tax loss from continuing operations | (19,783 | ) | (1,025 | ) | (108 | ) | (20,916 | ) | ||||||||
| Income tax benefit | - | - | 64 | (a) | 64 | |||||||||||
| Net loss from continuing operations | (19,783 | ) | (1,025 | ) | (44 | ) | (20,852 | ) | ||||||||
| Deemed dividend to preferred stockholders | (6,407 | ) | - | - | (6,407 | ) | ||||||||||
| Deemed dividend for triggering of warrant down round feature | (13,645 | ) | - | - | (13,645 | ) | ||||||||||
| Net loss from continuing operations attributable to common stockholders | $ | (39,835 | ) | $ | (1,025 | ) | $ | (44 | ) | $ | (40,904 | ) | ||||
| Loss per share: | ||||||||||||||||
| - basic and diluted | $ | (51.62 | ) | $ | (3.40 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| - basic and diluted | 771,688 | 11,257,193 | (c) | 12,028,881 | ||||||||||||
See notes to the unaudited pro forma condensed combined financial information
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Inpixon and Subsidiaries
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Basis of Presentation
The unaudited pro forma condensed combined financial information set forth herein is based upon the consolidated financial statements of Inpixon and Jibestream. The unaudited pro forma condensed combined financial information is presented as if the Transactions had been completed on January 1, 2018 with respect to the unaudited pro forma condensed combined statements of operations for each of the six months ended June 30, 2019 and for the year ended December 31, 2018 and on June 30, 2019 in respect of the unaudited pro forma condensed combined balance sheet.
The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the completion of the Transactions.
We have accounted for the acquisition in this unaudited pro forma condensed combined financial information using the acquisition method of accounting, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”). In accordance with ASC 805, we used our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.
Inpixon’s consolidated financial information is prepared in accordance with U.S. GAAP as issued by the FASB and is presented in USD. Jibestream’s financial information has been historically prepared in accordance with IFRS as issued by the IASB and was presented in CAD and has been converted for the purpose of this unaudited pro forma condensed consolidated financial information to be consistent with the Inpixon presentation.
Pro forma adjustments reflected in the unaudited pro forma condensed combined statements of operations are based on items that are factually supportable, directly attributable to the Transactions and expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from the acquisition, including potential synergies that may be generated in future periods.
All Monetary Amounts Other Than Per Share Information Are Presented in 000’s Unless Otherwise Indicated
Pro Forma Adjustments
The following pro forma adjustments give effect to the transaction.
Unaudited Pro Forma Condensed Combined Balance Sheet – As of June 30, 2019
| Note A | Derived from the unaudited condensed consolidated balance sheet of Inpixon as of June 30, 2019, as contained in its Quarterly Report on Form 10-Q filed on August 14, 2019 with the SEC. | |
| Note B | Derived from the unaudited condensed U.S. GAAP balance sheet of Jibestream as of June 30, 2019 included on the next page and translated from CAD to USD. The indicated exchange rate used to translate CAD to USD at June 30, 2019 was the rate of 0.7636 as set out in the table below. |
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CAD to USD Translation:
| EXCHANGE | ||||||||||||
| Jibestream GAAP | RATE 0.7636 | Jibestream GAAP | ||||||||||
| (CAD) | (USD) | |||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Restricted short-term investments | $ | 330 | $ | 252 | ||||||||
| Accounts receivable | 574 | 438 | ||||||||||
| Investment tax credits receivable | 66 | 50 | ||||||||||
| Prepaid expenses and deposits | 57 | 43 | ||||||||||
| Total current assets | 1,026 | 783 | ||||||||||
| Non-current assets: | ||||||||||||
| Property and equipment | 15 | 11 | ||||||||||
| Right of use asset | 658 | 503 | ||||||||||
| Total non-current assets | 673 | 514 | ||||||||||
| Total assets | $ | 1,699 | $ | 1,297 | ||||||||
| Liabilities, temporary equity and shareholders’ equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Bank indebtedness | $ | 749 | $ | 572 | ||||||||
| Accounts payable and accrued liabilities | 359 | 274 | ||||||||||
| Deferred lease inducement | 83 | 63 | ||||||||||
| Deferred revenue | 1,810 | 1,382 | ||||||||||
| Convertible promissory notes | 548 | 418 | ||||||||||
| Current portion of long-term debt | 571 | 436 | ||||||||||
| Current portion of convertible debenture | 702 | 536 | ||||||||||
| Current portion of promissory notes-shareholders | 368 | 281 | ||||||||||
| Current portion of lease obligation | 338 | 258 | ||||||||||
| Total current liabilities | 5,528 | 4,221 | ||||||||||
| Non-current liabilities: | ||||||||||||
| Lease obligation | 326 | 249 | ||||||||||
| Total non-current liabilities | 326 | 249 | ||||||||||
| Total liabilities | 5,854 | 4,470 | ||||||||||
| Temporary equity: | ||||||||||||
| Preferred stock | 1,904 | 1,454 | ||||||||||
| Shareholders’ equity: | ||||||||||||
| Share capital | 150 | 115 | ||||||||||
| Deficit | (6,398 | ) | (4,885 | ) | ||||||||
| Contributed surplus | 188 | 144 | ||||||||||
| Total shareholders’ equity | (6,059 | ) | (4,627 | ) | ||||||||
| Total liabilities, temporary equity and shareholders’ equity | $ | 1,699 | $ | 1,297 | ||||||||
The Jibestream U.S. GAAP balance sheet was derived from the unaudited condensed financial balance sheet of Jibestream as of June 30, 2019, prepared in accordance with IFRS as issued by the IASB and adjusted to conform with U.S. GAAP, as issued by the FASB. The table below provides a reconciliation between the unaudited condensed IFRS balance sheet and the unaudited condensed U.S. GAAP balance sheet.
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IFRS to U.S. GAAP Adjustments:
| Jibestream IFRS | GAAP Adjustments | Jibestream GAAP | ||||||||||
| (CAD) | (CAD) | (CAD) | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Restricted short-term investments | $ | 330 | $ | - | $ | 330 | ||||||
| Accounts receivable | 574 | - | 574 | |||||||||
| Investment tax credits receivable | 66 | - | 66 | |||||||||
| Prepaid expenses and deposits | 57 | - | 57 | |||||||||
| Total current assets | 1,026 | - | 1,026 | |||||||||
| Non-current assets: | ||||||||||||
| Property and equipment | 15 | - | 15 | |||||||||
| Right of use asset | 658 | - | 658 | |||||||||
| Total non-current assets | 673 | - | 673 | |||||||||
| Total assets | $ | 1,699 | $ | - | $ | 1,699 | ||||||
| Liabilities, temporary equity and shareholders’ equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Bank indebtedness | $ | 749 | $ | - | $ | 749 | ||||||
| Accounts payable and accrued liabilities | 359 | - | 359 | |||||||||
| Deferred lease inducement | 83 | - | 83 | |||||||||
| Deferred revenue | 1,810 | - | 1,810 | |||||||||
| Convertible promissory notes | 267 | 281 | (a) | 548 | ||||||||
| Current portion of long-term debt | 571 | - | 571 | |||||||||
| Current portion of convertible debenture | 676 | 26 | (b) | 702 | ||||||||
| Current portion of promissory notes-shareholders | 368 | - | 368 | |||||||||
| Current portion of lease obligation | 338 | - | 338 | |||||||||
| Derivative liability-convertible debenture | 127 | (127 | )(c) | - | ||||||||
| Derivative liability-convertible promissory notes | 830 | (830 | )(d) | - | ||||||||
| Total current liabilities | 6,178 | (650 | ) | 5,528 | ||||||||
| Non-current liabilities: | ||||||||||||
| Lease obligation | 326 | - | 326 | |||||||||
| Preferred shares | 1,904 | (1,904 | )(e) | - | ||||||||
| Total non-current liabilities | 2,230 | (1,904 | ) | 326 | ||||||||
| Total liabilities | 8,408 | (2,554 | ) | 5,854 | ||||||||
| Temporary equity: | ||||||||||||
| Preferred stock | - | 1,904 | (e) | 1,904 | ||||||||
| Shareholders’ equity: | ||||||||||||
| Share capital | 150 | - | 150 | |||||||||
| Deficit | (7,048 | ) | 650 | (a)(b)(c)(d) | (6,398 | ) | ||||||
| Contributed surplus | 188 | - | 188 | |||||||||
| Total shareholders’ equity | (6,709 | ) | 650 | (6,059 | ) | |||||||
| Total liabilities, temporary equity and shareholders’ equity | $ | 1,699 | $ | - | $ | 1,699 | ||||||
| a) | To reverse convertible promissory notes’ debt discount related to its bifurcated embedded conversion option under IFRS which, pursuant to the terms of their respective agreements, does not require bifurcation under U.S. GAAP. |
7
| b) | To reverse convertible debentures’ debt discount under IFRS which, pursuant to the terms of their respective agreements, does not require bifurcation under U.S. GAAP. |
| c) | To reverse convertible debentures’ bifurcated embedded conversion options under IFRS which, pursuant to the terms of their respective agreements, does not require bifurcation under U.S. GAAP. |
| d) | To reverse convertible promissory notes’ bifurcated embedded conversion options under IFRS which, pursuant to the terms of their respective agreements, does not require bifurcation under U.S.GAAP. |
| e) | To reclassify redeemable preferred stock accounted for as a liability under IFRS to temporary equity under U.S. GAAP. |
Note C – Capital Raise
Pro Forma Adjustments:
| (a) | The Acquisition Agreement required the completion of an offering whereby Inpixon would raise enough cash to pay the cash portion of the purchase consideration associated with the acquisition. On August 15, 2019, Inpixon closed an offering whereby Inpixon raised approximately$4,800 in gross proceeds in cash for the issuance of 6,497,410 shares of common stock, 2,997 shares of Series 6 preferred stock, and Series A warrants to purchase an aggregate of 17,297,410 shares of Inpixon common stock.
The placement agent fee was $384 was withheld from the proceeds of the transactions. This transaction also includes approximately $375 in deferred offering costs paid in cash charged to additional paid in capital upon closing. |
Note D – Acquisition
| (b) | To record a portion of the cash purchase consideration used to pay down $1,544 of certain debt. $252 of restricted short term investments will also be used to pay down certain debt. | |
| (c) | To give effect to the convertible promissory notes that will be converted into redeemable preferred stock prior to closing. | |
| (d) | The following table summarizes the purchase consideration and the preliminary allocation of the assets acquired and liabilities assumed, based on their fair values on the acquisition date. The purchase consideration constitutes the following: the payment of approximately $3,818 of cash (CAD 5,000), $61 of net cash adjustments to the purchase price and the issuance of 7,932,972 shares of Inpixon common stock plus warrants, with an aggregate value of approximately $2,291 (CAD 3,000) (collectively the “Purchase Consideration”). |
8
| Jibestream Purchase Price Allocation | ||||
| (000’s) USD | ||||
| Cash | $ | 3,818 | ||
| Common stock | 2,291 | |||
| Working capital adjustment- cash | 176 | |||
| Deferred revenue adjustment-cash | (115 | ) | ||
| Purchase consideration | $ | 6,170 | ||
| Less: | ||||
| Net working capital deficit | $ | (1,125 | ) | |
| Property and equipment | 11 | |||
| Proprietary technology (1) | 3,963 | |||
| Customer relationships (2) | 800 | |||
| Non-compete (3) | 312 | |||
| Deferred tax liability (4) | (1,345 | ) | ||
| Fair value of net assets acquired | $ | 2,616 | ||
| Goodwill value | $ | 3,554 | ||
| (1) | The proprietary technology is currently presumed to have an indefinite useful life. |
| (2) | The customer relationships are currently presumed to have an estimated useful life of 9.5 years. |
| (3) | The non-compete agreements are currently presumed to have an estimated useful life of 2 years. |
| (4) | The deferred tax liabilities relate to the acquired intangible assets. |
| (e) | To recognize the impact of estimated merger expenses of $219 incurred subsequent to June 30, 2019 through the closing date of the transaction. |
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Unaudited Pro Forma Condensed Combined Statement of Operations
For The Six Months Ended June 30, 2019
| Note A | Derived from the unaudited condensed consolidated statement of operations of Inpixon for the six months ended June 30, 2019, as contained in its Quarterly Report on Form 10-Q filed on August 14, 2019 with the SEC. | |
| Note B | Derived from the unaudited condensed U.S. GAAP statement of operations of Jibestream for the six months ended June 30, 2019 included on the next page and translated from CAD to USD. The average exchange rate used to translate CAD to USD for the six months ended June 30, 2019 was the rate of 0.7498 as set out in the table below. |
CAD to USD Translation:
| EXCHANGE | ||||||||||||
| Jibestream GAAP | RATE 0.7498 | Jibestream GAAP | ||||||||||
| (CAD) | (USD) | |||||||||||
| Revenues | $ | 1,351 | $ | 1,013 | ||||||||
| Cost of revenues | 372 | 279 | ||||||||||
| Gross profit | 980 | 735 | ||||||||||
| Operating expenses | ||||||||||||
| Salaries, wages and benefits | 1,023 | 767 | ||||||||||
| Office and general | 113 | 84 | ||||||||||
| Amortization | 8 | 6 | ||||||||||
| Travel and entertainment | 59 | 44 | ||||||||||
| Share-based compensation | 15 | 11 | ||||||||||
| Professional fees | 39 | 29 | ||||||||||
| Advertising and promotion | 29 | 22 | ||||||||||
| Bank charges | 4 | 3 | ||||||||||
| Occupancy | 187 | 140 | ||||||||||
| Foreign exchange loss | 15 | 11 | ||||||||||
| Bad debts | (6 | ) | (5 | ) | ||||||||
| Total operating expenses | 1,483 | 1,112 | ||||||||||
| Loss from operations | (503 | ) | (377 | ) | ||||||||
| Other (income)/expenses | ||||||||||||
| Interest | 150 | 112 | ||||||||||
| Total other expense | 150 | 112 | ||||||||||
| Net loss | $ | (652 | ) | $ | (489 | ) | ||||||
The Jibestream U.S. GAAP statement of operations were derived from the unaudited condensed statement of operations of Jibestream for the six months ended June 30, 2019, prepared in accordance with IFRS as issued by the IASB and adjusted to conform with U.S. GAAP as issued by the FASB. The table below provides a reconciliation between the unaudited condensed IFRS statement of operations and the unaudited condensed U.S. GAAP statement of operations.
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IFRS to U.S. GAAP Adjustments:
| Jibestream IFRS | GAAP Adjustments | Jibestream GAAP | ||||||||||
| (CAD) | (CAD) | (CAD) | ||||||||||
| Revenues | $ | 1,351 | $ | - | $ | 1,351 | ||||||
| Cost of revenues | - | 372 | (e) | 372 | ||||||||
| Gross profit | 1,351 | (372 | ) | 980 | ||||||||
| Operating expenses | ||||||||||||
| Salaries, wages and benefits | 1,354 | (332 | )(e) | 1,023 | ||||||||
| Office and general | 153 | (40 | )(e) | 113 | ||||||||
| Amortization | 155 | (148 | )(a) | 8 | ||||||||
| Travel and entertainment | 59 | - | 59 | |||||||||
| Interest | 150 | (150 | )(f) | - | ||||||||
| Share-based compensation | - | 15 | (d) | 15 | ||||||||
| Professional fees | 39 | - | 39 | |||||||||
| Advertising and promotion | 29 | - | 29 | |||||||||
| Bank charges | 4 | - | 4 | |||||||||
| Occupancy | - | 187 | (a) | 187 | ||||||||
| Foreign exchange loss | 15 | - | 15 | |||||||||
| Bad debts | (6 | ) | - | (6 | ) | |||||||
| Total operating expenses | 1,950 | (467 | ) | 1,483 | ||||||||
| Loss from operations | (598 | ) | 96 | (503 | ) | |||||||
| Other (income)/expenses | ||||||||||||
| Accretion expense | 190 | (190 | )(a) | - | ||||||||
| Interest | - | 150 | (f) | 150 | ||||||||
| Gain on derivative liability- convertible debenture | (16 | ) | 16 | (b) | - | |||||||
| Loss on derivative liability-convertible promissory notes | 128 | (128 | )(c) | - | ||||||||
| Share-based compensation | 15 | (15 | )(d) | - | ||||||||
| Total other expense | 318 | (168 | ) | 150 | ||||||||
| Net loss | $ | (916 | ) | $ | 264 | $ | (652 | ) | ||||
| a) | To reclassify amortization and accretion expense under IFRS 16 to lease expense under ASC 842. |
| b) | To reverse gain on change in fair value of convertible debenture’s bifurcated embedded conversion options. |
| c) | To reverse the loss on change in fair value of convertible promissory notes bifurcated embedded conversion options. |
| d) | To reclassify share-based compensation from other expenses into operating expenses. |
| e) | To reclassify certain operating expenses into cost of revenues. |
| f) | To reclassify interest expense from operating expenses to other income (expense). |
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Note C - Pro Forma Adjustments:
| (a) | To record the amortization of the fair value of customer relationships with a useful life of 9.5 years plus the non-compete agreements with a useful life of 2 years. An income tax benefit related to that amortization was also recorded. | |
| (b) | To eliminate interest expense associated with certain debt and other promissory notes as they were repaid or converted as a result of the Transactions. | |
| (c) | To adjust weighted average shares outstanding used in earnings per share calculations for an additional 11,257,193 shares of Inpixon common stock issued as a result of the Transactions. The 11,257,193 shares is comprised of 6,497,410 shares issued in the equity offering, plus the 7,932,972 shares issued in the acquisition, less the 3,173,189 shares being withheld for potential indemnification claims. All potentially dilutive securities are anti-dilutive. | |
| (d) | To remove the effect of one-time merger expenses totaling $82 related to the acquisition. |
Unaudited Pro Forma Condensed Combined Statement of Operations
For The Year Ended December 31, 2018
| Note A | Derived from the audited consolidated statement of operations of Inpixon for the year ended December 31, 2018,as contained in its Annual Report on Form 10-K filed on March 28, 2019 with the SEC. | |
| Note B | Derived from the unaudited condensed U.S. GAAP statement of operations of Jibestream for the year ended December 31, 2018 included on the next page and translated from CAD to USD. The average exchange rate used to translate CAD to USD for the year ended December 31, 2018 was the rate of 0.7717 as set out in the table below. |
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CAD to USD Translation:
| EXCHANGE | ||||||||||||
| Jibestream GAAP | RATE 0.7717 | Jibestream GAAP | ||||||||||
| (CAD) | (USD) | |||||||||||
| Revenues | $ | 3,163 | $ | 2,441 | ||||||||
| Cost of revenues | 870 | 671 | ||||||||||
| Gross profit | $ | 2,293 | $ | 1,770 | ||||||||
| Operating expenses | ||||||||||||
| Salaries, wages and benefits | 2,355 | 1,817 | ||||||||||
| Office and general | 337 | 260 | ||||||||||
| Occupancy | 345 | 266 | ||||||||||
| Advertising and promotion | 126 | 97 | ||||||||||
| Travel and entertainment | 119 | 92 | ||||||||||
| Professional fees | 111 | 86 | ||||||||||
| Bad debts | 58 | 45 | ||||||||||
| Amortization | 25 | 19 | ||||||||||
| Share-based compensation | 39 | 30 | ||||||||||
| Sub-contracts | 7 | 5 | ||||||||||
| Foreign exchange gain | (71 | ) | (54 | ) | ||||||||
| Total operating expenses | 3,450 | 2,662 | ||||||||||
| Loss from operations | (1,157 | ) | (893 | ) | ||||||||
| Other (income)/expenses | ||||||||||||
| Interest | 171 | 132 | ||||||||||
| Total other expense | 171 | 132 | ||||||||||
| Net loss | $ | (1,328 | ) | $ | (1,025 | ) | ||||||
The Jibestream U.S. GAAP statement of operations was derived from the unaudited condensed statement of operations of Jibestream for the year ended December 31, 2018, prepared in accordance with IFRS as issued by the IASB and adjusted to conform with U.S. GAAP as issued by the FASB. The table below provides a reconciliation between the unaudited condensed IFRS statement of operations and the unaudited condensed U.S. GAAP statement of operations.
13
IFRS to U.S. GAAP Adjustments:
| Jibestream IFRS | GAAP Adjustments | Jibestream GAAP | ||||||||||
| (CAD) | (CAD) | (CAD) | ||||||||||
| Revenues | $ | 3,163 | $ | - | $ | 3,163 | ||||||
| Cost of revenues | - | 870 | (g) | 870 | ||||||||
| Gross profit | $ | 3,163 | $ | (870 | ) | $ | 2,293 | |||||
| Operating expenses | ||||||||||||
| Salaries, wages and benefits | 3,145 | (790 | )(g) | 2,355 | ||||||||
| Office and general | 417 | (80 | )(g) | 337 | ||||||||
| Occupancy | 345 | - | 345 | |||||||||
| Interest | 171 | (171 | )(f) | - | ||||||||
| Advertising and promotion | 126 | - | 126 | |||||||||
| Travel and entertainment | 119 | - | 119 | |||||||||
| Professional fees | 111 | - | 111 | |||||||||
| Bad debts | 58 | - | 58 | |||||||||
| Amortization | 25 | - | 25 | |||||||||
| Share-based compensation | - | 39 | (e) | 39 | ||||||||
| Sub-contracts | 7 | - | 7 | |||||||||
| Foreign exchange gain | (71 | ) | - | (71 | ) | |||||||
| Total operating expenses | 4,452 | (1,002 | ) | 3,450 | ||||||||
| Loss from operations | (1,289 | ) | 132 | (1,157 | ) | |||||||
| Other (income)/expenses | ||||||||||||
| Accretion expense | 216 | (216 | )(a) | - | ||||||||
| Interest | - | 171 | (f) | 171 | ||||||||
| Loss on derivative liability- convertible debenture | 13 | (13 | )(b) | - | ||||||||
| Gain on extinguishment of convertible debentures | (287 | ) | 287 | (c) | - | |||||||
| Loss on derivative liability-convertible promissory notes | 332 | (332 | )(d) | - | ||||||||
| Share-based compensation | 39 | (39 | )(e) | - | ||||||||
| Total other expense | 312 | (140 | ) | 171 | ||||||||
| Net loss | $ | (1,601 | ) | $ | 273 | $ | (1,328 | ) | ||||
| a) | To reverse accretion of debt discount recognized for convertible debentures’ bifurcated embedded conversion option |
| b) | To reverse loss on change in fair value of convertible debentures’ bifurcated embedded conversion option. |
| c) | To reverse gain on extinguishment of convertible debentures. |
| d) | To reverse the loss on change in fair value of convertible promissory notes’ bifurcated embedded conversion option. |
| e) | To reclassify share-based compensation from other expenses into operating expenses. |
| f) | To reclassify interest expense from operating expenses into other expenses. |
| g) | To reclassify certain operating expenses into cost of revenues. |
14
Note C - Pro Forma Adjustments:
| (a) | To record the amortization of the fair value of customer relationships with a useful life of 9.5 years plus the non-compete agreements with a useful life of 2 years. An income tax benefit related to that amortization was also recorded. | |
| (b) | To eliminate interest expense associated with certain debt, convertible, and other promissory notes as they were deemed to be repaid as a result of the Transactions. | |
| (c) | To adjust weighted average shares outstanding used in earnings per share calculations for an additional 11,257,193 shares of Inpixon common stock issued as a result of the Transactions. The 11,257,193 shares is comprised of 6,497,410 shares issued in the equity offering, plus the 7,932,972 shares issued in the acquisition, less the 3,173,189 shares being withheld for potential indemnification claims. All potentially dilutive securities are anti-dilutive. |
15