SYSOREX, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction the audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis here and throughout the Form 10-K contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, risks described in the section entitled "Risk Factors". Overview
We were incorporated inCalifornia onJanuary 3, 1994 as Lilien Systems and were acquired by Inpixon onMarch 20, 2013 . EffectiveJanuary 1, 2016 , Inpixon consummated a reorganization transaction pursuant to which certain Inpixon subsidiaries, including,AirPatrol Corporation and Shoom were merged with and intoLilien andLilien changed its name to "Sysorex USA "; and all outstanding shares of capital stock of SGS were assigned toLilien , pursuant to which SGS became a direct subsidiary ofLilien .Sysorex USA changed its name toInpixon USA onMarch 1, 2017 . OnJuly 26, 2018 ,Inpixon USA merged intoSysorex, Inc. , a wholly-owned subsidiary of Inpixon, for the purpose of changing its name and moving its state of formation fromCalifornia toNevada .Lilien significantly expanded Inpixon's operations providing it with a big data analytics platform and enterprise infrastructure capabilities. OnAugust 31, 2018 , Inpixon completed the spin-off (the "Spin-off") of its value-added reseller business from its indoor positioning analytics business by way of a distribution of all the shares of common stock of Inpixon's wholly-owned subsidiary,Sysorex, Inc. , aNevada corporation ("Sysorex ," "we," "us," "our" and similar terms), to holders of Inpixon's common stock, preferred stock and certain Inpixon warrants as ofAugust 21, 2018 (the "Record Date"). The distribution occurred by way of a pro rata stock distribution to such holders of common stock, preferred stock and warrants, each of whom received one share ofSysorex common stock for every three shares of Inpixon common stock held (or into which such preferred stock was convertible or warrants were exercisable) on the Record Date.
As a result of the Spin-off,
The financial statements present the combined results of operations, financial condition, and cash flows ofSysorex and its subsidiary. These financial statements were prepared on a combined basis because the operations were under common control. All intercompany accounts and transactions have been eliminated between the combined entities. We are a provider of information technology solutions from multiple vendors, including hardware products, software, IT services, warranty and maintenance support, offered through our dedicated sales force, ecommerce channels, existing federal contracts and service team. Since our founding, we have served our customers by offering products and services from key industry vendors such as Cisco, Hewlett Packard Enterprises, Aruba Networks, Microsoft,Canon ,Dell , Samsung, Tek84, Panasonic, Lexmark and others. We provide our customers with comprehensive solutions incorporating leading products and services across a variety of technology practices and platforms such as cyber, cloud, networking, security, and mobility. We utilize our professional services, consulting services and partners to develop and implement these solutions. Our sales and marketing efforts in collaboration with our vendor partners, allows us to reach multiple customer public sector segments including federal, state and local governments, as well as educational institutions. Revenues from our business are typically driven by public sector delivery orders that are received on a monthly basis. During the years endedDecember 31, 2020 and 2019, approximately 100% of our revenues were from these delivery orders. These delivery orders include information technology hardware, software, professional services, warranty and maintenance support, and highly integrated solutions that include two or more of the aforementioned items. The Company's performance obligation is to work with customers to identify the computer maintenance and warranty services that best suit the customer's needs and sell them those products and services however, the maintenance is provided to the customer by the manufacturer. For these contracts, the customer is invoiced one time and pays us upfront for the full term of the warranty and maintenance
contract.
26
We experience variability in our net sales and operating results on a quarterly
basis as a result of many factors. We experience some seasonal trends in our
sales of technology solutions to government and educational institutions. For
example, the fiscal year-ends of U.S. public sector customers vary for those in
the federal government space and those in the state and local government and
educational institution ("SLED") space. We generally see an increase in our
second quarter sales related to customers in the U.S. SLED sector and in our
third quarter sales related to customers in the federal government space as
these customers close out their budgets for their fiscal year (June 30 and
September 30 , respectively). We may also experience variability in our gross
profit and gross profit margin as a result of changes in the various vendor
programs we participate in and its effect on the amount of vendor consideration
we receive from a particular vendor or their authorized distributor/wholesaler,
which may be impacted by a number of events outside of our control. As such, the
results of interim periods are not necessarily indicative of the results that
may be expected for any other interim period or for the full year.
A substantial portion of our business is dependent on sales through existing
federal contracts, known as Government-wide Acquisition Contracts ("GWAC"). We
have three key GWAC contracts, known in the industry as GSA Federal Supply
Schedule IT 70, NASA SEWP V, and NIH CIO-CS. Maintaining current vendor
offerings and pricing is critical to attaining sales.
Our planned operating expenditures each quarter are based in large part on sales
forecasts for the quarter. If our sales do not meet expectations in any given
quarter, our operating results for the quarter may be materially adversely
affected. Our narrow margins may magnify the impact of these factors on our
operating results. Management regularly reviews our operating performance using
a variety of financial and non-financial metrics including sales, shipments,
margin, vendor consideration, advertising expense, personnel costs, account
executive productivity, accounts receivable aging, supplier inventory turnover,
liquidity and cash resources. Our management monitors the various metrics
against goals and budgets, and makes necessary adjustments intended to enhance
our performance.
Our current debt repayment to key vendors due to prior non-payment of invoices
has affected our ability to receive the most favorable cost, terms, and delivery
priority. General economic conditions also have an effect on our business and
results of operations. For example, if the federal government fails to pass a
budget or a continuing resolution before adopting an annual budget, our primary
customers will not have the ability to make purchases off our existing contracts
until such budget issue is resolved. If current tariffs and stipulation by the
government to require the purchase of goods that are substantially made or
assembled in America are enacted, this could severely affect our ability to
source from vendors that manufacture overseas. These factors affect sales of our
products, sales cycles, adoption rates of new technologies and level of price
competition. We continue to focus our efforts paying down our debt, cost
controls, competitive pricing strategies, capturing new contracts, and driving
higher margin service and solution sales. We also continue to make selective
investments in our sales force personnel, service and solutions capabilities and
internal information technology infrastructure and tools in an effort to meet
vendor program requirements and to position us for enhanced productivity and
future growth.
For the years ended December 31, 2020 and 2019, the Company incurred net losses
of approximately $3.5 million and $5.4 million , respectively. We cannot assure
that we will ever earn revenues sufficient to support our operations, or that we
will ever be profitable. In order to continue our operations, we continue to
avail ourselves to the SouthStar facility to finance purchase orders and
invoices in an amount equal to 80% of the face value of purchase orders
received, continued financing through our Related Party Note (as further defined
in this section) and other Short-Term Debt (as further defined in this section),
higher margin public sector contracts capture, reauthorization of key vendors
and credit limitation improvements. The Company will need additional funds to
support its obligations for the next twelve months. The Company is exploring a
number of possible solutions to its financing needs, including efforts to raise
additional capital as needed, through the issuance of equity, equity-linked or
debt securities, as well as possible transactions with other companies,
strategic partnerships, and other mechanisms for addressing our financial
condition.
27
Critical Accounting Policies and Estimates
Our consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles ("GAAP"). In connection
with the preparation of our consolidated financial statements and related
disclosures in conformity with GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. These estimates and assumptions are based on historical experience
and on various other factors that we believe are reasonable under the
circumstances. We periodically review our accounting policies, estimates and
assumptions and make adjustments when facts and circumstances dictate. In
addition to the accounting policies that are more fully described in the Notes
to the Consolidated Financial Statements included elsewhere in this Form 10-K,
we consider the critical accounting policies described below to be affected by
accounting estimates. Our critical accounting policies that are affected by
accounting estimates require us to use judgments, often as a result of the need
to make estimates and assumptions regarding matters that are inherently
uncertain, and actual results could differ materially from these estimates.
Historically changes in management estimates have not been material.
Revenue Recognition
In March 2016 , the Financial Accounting Standards Board ('FASB") issued
Accounting Standards Update ("ASU") No. 2016-08, "Revenue from Contracts with
Customers - Principal versus Agent Considerations", in April 2016 , the FASB
issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606) -
Identifying Performance Obligations and Licensing" and in May 9, 2016 , the FASB
issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606)", or
ASU 2016-12. This update provides clarifying guidance regarding the application
of ASU No. 2014-09 - Revenue from Contracts with Customers which is not yet
effective. These new standards provide for a single, principles-based model for
revenue recognition that replaces the existing revenue recognition guidance. In
July 2015 , the FASB deferred the effective date of ASU 2014-09 until annual and
interim periods beginning on or after December 15, 2017 . It has replaced most
existing revenue recognition guidance under GAAP. The ASU may be applied
retrospectively to historical periods presented or as a cumulative-effect
adjustment as of the date of adoption. The Company has adopted Topic 606 using a
modified retrospective approach and will be applied prospectively in the
financial statements from January 1, 2018 forward. Revenues under Topic 606 are
required to be recognized either at a "point in time" or "over time", depending
on the facts and circumstances of the arrangement, and will be evaluated using a
five-step model. The adoption of Topic 606 did have a material impact on our
financial statements.
Hardware and Software Revenue Recognition
The Company is a primary resale channel for a large group of vendors and suppliers, including OEMs, software publishers and wholesale distributors.
The Company accounts for a contract when it has approval and commitment from
both parties, the rights of the parties are identified, payment terms are
established, the contract has commercial substance and collectability of
consideration is probable. The Company evaluates the following indicators
amongst others when determining whether it is acting as a principal in the
transaction and recording revenue on a gross basis: (i) the Company is primarily
responsible for fulfilling the promise to provide the specified goods or
service, (ii) the Company has inventory risk before the specified good or
service has been transferred to a customer or after transfer of control to the
customer and (iii) the Company has discretion in establishing the price for the
specified good or service. If the terms of a transaction do not indicate the
Company is acting as a principal in the transaction, then the Company is acting
as an agent in the transaction and the associated revenues are recognized on a
net basis.
28
The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company's products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company's warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company's shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides direct warranty to the customer with the Company's own personnel as the customer requires warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross
basis at the point of sale.
License and Maintenance Services Revenue Recognition
The Company provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer's needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company's performance obligation to provide the overall systems solution is satisfied at that time. The Company's customers generally pay within 30 to 60 days from the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis.
Professional Services Revenue Recognition
The Company's professional services include fixed fee and time and materials contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company's time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company's right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company's contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the years endedDecember 31, 2020 and 2019, the Company did not incur any such losses. These amounts are based on known and estimated factors. Revenues from time and material or firm fixed price long-term and short-term contracts are derived principally with variousUnited States government agencies and commercial customers.
Impairment of Long-Lived Assets
The Company amortizes intangible assets with finite lives over their estimated useful lives and review them for impairment whenever an impairment indicator exists. The Company continually monitors events and changes in circumstances that could indicate carrying amounts of our long-lived assets, including our intangible assets, may not be recoverable. When such events or changes in circumstances occur, we assess recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize any intangible asset impairment charges for the years endedDecember 31, 2020 and 2019. 29 Recent Accounting Standards InFebruary 2016 , the FASB issued ASU No. 2016-02, "Leases (Topic 842)," ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning afterDecember 15, 2018 . As an emerging growth company, the Company delayed adoption of ASU 2016-02 untilJanuary 1, 2020 . As a result of the new standard, all of the Company's leases greater than one year in duration are recognized in its balance sheets as both operating lease liabilities and right-of-use assets upon adoption of the standard. The Company adopted the standard using the modified-retrospective method effectiveJanuary 1, 2020 . This adoption primarily affected the Company's consolidated balance sheet based on the recording of right-of-use assets and the lease liability, current and noncurrent, for its operating leases. The adoption of ASU 2016-02 did not change the Company's historical classification of these leases or the straight-line recognition of related expenses. Upon adoption, the Company recorded approximately$217,000 in right-of-use assets and operating lease liabilities on the Company's balance sheet. InDecember 2019 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ('ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which simplifies income tax accounting in various areas including, but not limited to, the accounting for hybrid tax regimes, tax implications related to business combinations, and interim period accounting for enacted changes in tax law, along with some codification improvements. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2020 , with early adoption permitted. Certain changes in the standard require retrospective or modified retrospective adoption, while other changes must be adopted prospectively. The Company is currently evaluating ASU 2019-12 and its impact on our consolidated financial statements. Long-lived Assets We account for our long-lived assets in accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("ASC 360"), which requires that long-lived assets be evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Some of the events or changes in circumstances that would trigger an impairment test include, but are not limited to:
? significant under-performance relative to expected and/or historical
results (negative comparable sales growth or operating cash flows for
two consecutive years);
? significant negative industry or economic trends;
? knowledge of transactions involving the sale of similar property at
amounts below our carrying value; or
? our expectation to dispose of long-lived assets before the end of their
estimated useful lives, even though the assets do not meet the criteria
to be classified as "held for sale."
Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of our long-lived assets by comparing their net carrying value to the sum of undiscounted estimated future cash flows directly associated with and arising from our use and eventual disposition of the assets. If the net carrying value of a group of long-lived assets exceeds the sum of related undiscounted estimated future cash flows, we would be required to record an impairment charge equal to the excess, if any, of net carrying value over fair value. When assessing the recoverability of our long-lived assets, which include property and equipment and finite-lived intangible assets, we make assumptions regarding estimated future cash flows and other factors. Some of these assumptions involve a high degree of judgment and bear a significant impact on the assessment conclusions. Included among these assumptions are estimating undiscounted future cash flows, including the projection of comparable sales, operating expenses, capital requirements for maintaining property and equipment and residual value of asset groups. We formulate estimates from historical experience and assumptions of future performance, based on business plans and forecasts, recent economic and business trends, and competitive conditions. In the event that our estimates or related assumptions change in the future, we may be required to record an impairment charge. Based on our evaluation, we did not record a charge for impairment for the years endedDecember 31, 2020 and 2019. The benefits to be derived from our acquired intangibles, will take additional financial resources to continue the development of our technology. Management believes our technology has significant long-term profit potential, and to date, management continues to allocate existing resources to develop products and services to seek returns on its investment. We continue to seek additional resources, through both capital raising efforts and meeting with industry experts, as part of our continued efforts. Although there can be no assurance that these efforts will be successful, we intend to allocate financial and personnel resources when deemed possible and/or necessary. If we choose to abandon these efforts, or if we determine that such funding is not available, the related development of our technology (resulting in our lack of ability to expand our business), may be subject to significant impairment. 30
As described previously, we continue to experience weakness in market conditions, a depressed stock price, and challenges in executing our business plans. The Company will continue to monitor these uncertainties in future periods, to determine the impact.
We evaluate the remaining useful lives of long-lived assets and identifiable intangible assets whenever events or circumstances indicate that a revision to the remaining period of amortization is warranted. Such events or circumstances may include (but are not limited to): the effects of obsolescence, demand, competition, and/or other economic factors including the stability of the industry in which we operate, known technological advances, legislative actions, or changes in the regulatory environment. If the estimated remaining useful lives change, the remaining carrying amount of the long-lived assets and identifiable intangible assets would be amortized prospectively over that revised remaining useful life. We have determined that there were no events or circumstances during the years endedDecember 31, 2020 and 2019, which would indicate a revision to the remaining amortization period related to any of our long-lived assets. Accordingly, we believe that the current estimated useful lives of long-lived assets reflect the period over which they are expected to contribute to future cash flows and are therefore deemed appropriate.
Impairment of Long-Lived Assets Subject to Amortization
We amortize intangible assets with finite lives over their estimated useful lives and review them for impairment whenever an impairment indicator exists. We continually monitor events and changes in circumstances that could indicate carrying amounts of our long-lived assets, including our intangible assets, may not be recoverable. When such events or changes in circumstances occur, we assess recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. We did not recognize any intangible asset impairment charges for the years endedDecember 31, 2020 and 2019. Deferred Income Taxes In accordance with ASC 740 "Income Taxes" ("ASC 740"), we routinely evaluate the likelihood of the realization of income tax benefits and the recognition of deferred tax assets. In evaluating the need for any valuation allowance, we will assess whether it is more likely than not that some portion, or all, of the deferred tax asset may not be realized. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary differences become deductible and/or tax credits and tax loss carryforwards can be utilized. In performing our analyses, we consider both positive and negative evidence including historical financial performance, previous earnings patterns, future earnings forecasts, tax planning strategies, economic and business trends and the potential realization of net operating loss carryforwards within a reasonable timeframe. To this end, we considered (i) that we have had historical losses in the prior years and cannot anticipate generating a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning strategies; and (iii) the adequacy of future income as of and for the year endedDecember 31, 2020 , based upon certain economic conditions and historical losses throughDecember 31, 2020 . After consideration of these factors, we deemed it appropriate to establish a full valuation allowance. A liability for "unrecognized tax benefits" is recorded for any tax benefits claimed in our tax filings that do not meet these recognition and measurement standards. As ofDecember 31, 2020 and 2019, no liability for unrecognized tax benefits was required to be reported. The guidance also discusses the classification of related interest and penalties on income taxes. Our policy is to record interest and penalties on uncertain tax positions as a component of general and administrative expense. No interest or penalties were recorded during the years endedDecember 31, 2020 and 2019.
Allowance for Doubtful Accounts
We maintain our reserves for credit losses at a level we believe to be adequate to absorb potential losses inherent in the respective balances. We assign an internal credit quality rating to all new customers and update these ratings regularly, but no less than annually. Our determination of the adequacy of the reserve for credit losses for our accounts and notes receivable is based on the age of the receivable balance, the customer's credit quality rating, an evaluation of historical credit losses, current economic conditions, and other relevant factors.
The Company's allowance for doubtful accounts was
Rounding
All dollar amounts in this section have been rounded to the nearest thousand.
31
Discussion of Results of Operations for the years ended
The following table sets forth selected financial data as a percentage of our revenue and the percentage of period-over-period change:
Years ended
December 31, 2020 December 31, 2019
% of % of %
(in thousands, except percentages) Amount Revenues Amount Revenues Change
Product Revenues $ 7,934 69 % $ 3,548 67 % 124 %
Services Revenues $ 3,592 31 % $ 1,727 33 % 108 %
Cost of revenues - Products $ 6,720 58 % $ 3,172 60 % 112 %
Cost of revenues - Services $ 2,458 21 % $ 984 19 % 150 %
Gross profit $ 2,348 26 % $ 1,119 21 % 110 %
Operating expenses $ 4,110 36 % $ 5,426 103 % 24 %
Loss from operations $ (1,762 ) (15 )% $ (4,307 ) (82 )% (59 )%
Net loss $ (3,464 ) (30 )% $ (5,415 ) (103 )% (36 )%
Net Revenues
Net revenues for the year ended December 31, 2020 were $11.5 million compared to
$5.3 million for the prior year, an increase of approximately 119%. The increase
in revenues of $6.3 million is primarily associated with increased orders from
existing contracts mainly attributable to service assessment studies performed
and better cash management with suppliers, which has enabled the Company to
accept more orders from our customers.
Cost of Revenues
Cost of revenues for the year ended December 31, 2020 was $9.2 million compared
to $4.2 million for the prior year, an increase of approximately 112%. The
increase in cost of revenues of $5.0 million is primarily attributable to
increased revenues, paying higher fees for cash needs such as supplier prepays,
financing ARs, and continued inability to receive more discounted costs through
supplier diversity due to credit risk.
The gross profit margin for the year ended December 31, 2020 was 26% compared to
21% during the prior year. This increase in gross margin is primarily due to
gains on settlement of liabilities offset by the capital constraints resulting
in our inability to obtain affordable pricing.
Operating Expenses
Operating expenses for the year ended December 31, 2020 were $4.1 million
compared to $5.4 million for the prior year, a decrease of approximately 24%.
This decrease of 1.3 million is primarily attributable to a decrease in
amortization of its intangible assets, offset by increases in amortization of
finance costs and right of use assets.
Loss from Operations
Loss from operations for the year endedDecember 31, 2020 was$1.8 million compared to$4.3 million for the prior year, a decrease of approximately 59%. This decrease in loss of$2.5 million was primarily attributable to a decrease in amortization of intangibles of$1.3 million and an increase in gross profit of$1.2 million , as described above. Provision for Income Taxes There was no provision for income taxes for the years endedDecember 31, 2020 and 2019. Deferred tax assets resulting from such losses are fully reserved as ofDecember 31, 2020 and 2019 since, at present, we have no history of taxable income and it is more likely than not those such assets will not be realized. Net Loss
Net loss for the year endedDecember 31, 2020 was$3.5 million compared to$5.4 million for the prior year, a decrease of approximately 36%. This decrease in net loss of$1.9 million was attributable to the changes discussed above. 32
Non-GAAP Financial information
EBITDA EBITDA is defined as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Adjusted EBITDA is used by our management as the matrix in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.
Adjusted EBITDA for the year ended
The following table presents a reconciliation of net loss attributable to
stockholders, which is our GAAP operating performance measure, to Adjusted
EBITDA for the year ended
For the Years Ended
December 31,
2020 2019
Net loss $ (3,464 ) $ (5,415 )
Adjustments:
Non-recurring one-time charges:
Gain on earnout - (62 )
Gain on the settlement of obligations (702 ) (62 )
Interest expense 1,721 1,049
Amortization of debt discount 147 105
Depreciation and amortization 440 1,676
Adjusted EBITDA $ (1,858 ) $ (2,709 ) We rely on Adjusted EBITDA, which is a non-GAAP financial measure for the following:
? to review and assess the operating performance of our Company as
permitted by Accounting Standards Codification Topic 280, Segment
Reporting;
? to compare our current operating results with corresponding periods and
with the operating results of other companies in our industry;
? as a basis for allocating resources to various projects;
? as a measure to evaluate potential economic outcomes of acquisitions,
operational alternatives and strategic decisions; and
? to evaluate internally the performance of our personnel.
We have presented Adjusted EBITDA above because we believe it conveys useful
information to investors regarding our operating results. We believe it provides
an additional way for investors to view our operations, when considered with
both our GAAP results and the reconciliation to net income (loss). By including
this information, we can provide investors with a more complete understanding of
our business. Specifically, we present Adjusted EBITDA as supplemental
disclosure because of the following:
? we believe Adjusted EBITDA is a useful tool for investors to assess the
operating performance of our business without the effect of interest,
income taxes, depreciation and amortization and other non-cash items
including stock based compensation, amortization of intangibles, change
in the fair value of shares to be issued, change in the fairvalue of
derivative liability, impairment of goodwill and one time charges
including gain/loss on the settlement of obligations, severance costs,
provision for doubtful accounts, acquisition costs and the costs
associated with the public offering;
? we believe that it is useful to provide to investors a standard
operating metric used by management to evaluate our operating
performance; and
? we believe that the use of Adjusted EBITDA is helpful to compare our
results to other companies.
33
Even though we believe Adjusted EBITDA is useful for investors, it does have
limitations as an analytical tool. Thus, we strongly urge investors not to
consider this metric in isolation or as a substitute for net income (loss) and
the other consolidated of operations data prepared in accordance with GAAP. Some
of these limitations include the fact that:
? Adjusted EBITDA does not reflect our cash expenditures or future
requirements for capital expenditures or contractualcommitments;
? Adjusted EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
? Adjusted EBITDA does not reflect the significant interest expense or
the cash requirements necessary to service interest or principal
payments on our debt;
? Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and Adjusted EBITDA does not reflect any cashrequirements for
such replacements;
? Adjusted EBITDA does not reflect income or other taxes or the cash
requirements to make any tax payments; and
? other companies in our industry may calculate Adjusted EBITDA
differently than we do, thereby potentially limiting itsusefulness as
a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered a measure
of discretionary cash available to us to invest in the growth of our business or
as a measure of performance in compliance with GAAP. We compensate for these
limitations by relying primarily on our GAAP results and providing Adjusted
EBITDA only as supplemental information.
Indebtedness of the Company
Related Party Note
On December 31, 2018 , the Company entered into a note purchase agreement with
Inpixon (the "Note Purchase Agreement") pursuant to which Inpixon, the Company's
former parent, agreed to purchase from the Company at a purchase price equal to
the Loan Amount (as defined below), a secured promissory note (the "Related
Party Note") for up to an aggregate principal amount of 3,000,000 (the
"Principal Amount"), including any amounts advanced through the date of the
Related Party Note (the "Prior Advances"), to be borrowed and disbursed in
increments (such borrowed amount, together with the Prior Advances, collectively
referred to as the "Loan Amount"), with interest to accrue at a rate of ten
percent (10%) per annum on all such Loan Amounts, beginning as of the date of
disbursement with respect to any portion of such Loan Amount. In addition, the
Company agreed to pay $20,000 to Inpixon to cover Inpixon' legal fees,
accounting costs, due diligence, monitoring and other transaction costs incurred
in connection with the purchase and sale of the Related Party Note (the
"Transaction Expense Amount"), all of which amount is included in the Principal
Amount. The initial Loan Amount, therefore, includes any amounts disbursed to
the Company and the Transaction Expense Amount.
The Company may borrow under the Related Party Note, as needed, for a total outstanding balance, exclusive of any unpaid accrued interest, not to exceed the Principal Amount at any one time.
All sums advanced by Inpixon to the maturity date pursuant to the terms of the Note Purchase Agreement will become part of the aggregate Loan Amount underlying the Related Party Note. All outstanding principal amounts and accrued unpaid interest owing under the Related Party Note shall become immediately due and payable on the earlier to occur of (i)December 31, 2020 (the "Maturity Date"), (ii) at such date when declared due and payable by Inpixon upon the occurrence of an Event of Default (as defined in the Related Party Note), or (iii) at any such earlier date as set forth in the Related Party Note. All accrued unpaid interest shall be payable in cash. Pursuant to the terms of the Related Party Note, the Company granted Inpixon, subject to any and all Payplant Liens (as defined in the Related Party Note) and Permitted Liens (as defined in the Related Party Note), a continuing first priority security interest in all assets of the Company whether owned as of the date of the Related Party Note or subsequently acquired, including all proceeds therefrom (collectively, the "Collateral") to secure the payment of the Related Party Note and all other loans and advances (including all renewals, modifications and extensions thereof) and all obligations of any and every kind and nature of the Company to Inpixon, whether arising prior to, under or after the Related Party Note, however incurred or evidenced, plus all interest, reasonable costs, reasonable expenses and reasonable attorneys' fees, which may be made or incurred by Inpixon in the disbursement, administration, and collection of such amounts, and in the protection, maintenance, and liquidation of the Collateral. OnFebruary 4, 2019 , the Related Party Note was amended to increase the maximum principal amount that may be outstanding at any time under theRelated Party Note from$3,000,000 to$5,000,000 . OnApril 15, 2019 , the Related Party Note was amended to increase the maximum principal amount that may be outstanding at any time under the Related Party Note from$5,000,000 to$8,000,000 .
On
OnMarch 1, 2020 , the Related Party Note was amended to extend the maturity date fromDecember 31, 2020 toDecember 31, 2022 , to increase the default interest rate from 18% to 21% or the maximum rate allowable by law and to require a cash payment by the Company to Inpixon against the loan amount in an amount equal to no less than 6% of the aggregate gross proceeds raised following the completion of any financing, or series of related financings, in which the Company raises aggregate gross proceeds of at least$5 million . 34 OnJune 30, 2020 , the "Company entered into a Promissory Note Assignment and Assumption Agreement (the "Assignment Agreement"), an Intercreditor Agreement (the "Intercreditor Agreement"), a form of partitioned Secured Promissory Note (the "Form of Partitioned Note"), and other related transaction documents with Inpixon, andSystat Software, Inc. (the "Assignment Documents"). Pursuant to the Assignment Documents, Inpixon agreed to assign toSystat Software, Inc. , and the Company has acknowledged and consented to the assignment of, certain partitioned promissory notes, and in connection therewithSystat Software, Inc. was granted a security interest in the assets of the Company. Inpixon is the holder of a secured promissory note, datedDecember 31, 2018 , issued by the Company to Inpixon, as amended, (the "Original Note") in the aggregate principal amount of$10,000,000 (together with all accrued unpaid interest thereon, the "Outstanding Balance"). Inpixon andSystat Software, Inc. entered into an Exclusive Software License and Distribution Agreement with Cranes Software International Ltd. Inpixon agreed to partition the Original Note into four new secured promissory notes in the Form of Partitioned Note, with the first Partitioned Note in the original principal amount of$3,000,000 , the second Partitioned Note in the original principal amount of$1,300,000 , the third Partitioned Note in the original principal amount of$1,000,000 and the fourth Partitioned Note to be in the original principal amount of$1,000,000 plus all accrued unpaid interest under the Original Note included in the Outstanding Balance, and assigned and delivered toSystat Software, Inc. the Closing Note on the closing date of the License Agreement (the "Closing Date"), the Initial Installment Note on the three month anniversary of the Closing Date the Second Installment Note on the six month anniversary of the Closing Date, and the Third Installment Note on the nine month anniversary of the Closing Date.Nadir Ali , a member of the Company's board of directors, is also Inpixon's Chief Executive Officer and a member of its board of directors. The transactions disclosed herein were approved by all of the disinterested members of the Company's board of directors. See Note 7 -Long-Term Debt for further discussion on the Promissory Note Assignment.
The proceeds received and interest and legal costs accrued, in accordance with
the Related Party Note as of
Short Term Debt
Chicago Venture Convertible Note Payable
OnDecember 31, 2018 , the Company issued a$625,000 principal face amount convertible promissory note (the "Convertible Note") toChicago Venture Partners, L.P. ("CVP"), which yielded net proceeds of$500,000 to the Company pursuant to a Securities Purchase Agreement, dated as ofDecember 31, 2018 , by and between the Company and CVP. The Convertible Note bears interest at the rate of 10% per year and is due and payable 10 months after the date of issuance. The Convertible Note carries an original issue discount of$105,000 and the Company agrees to pay$20,000 to the CVP to cover its transaction costs incurred with the purchase and sale of the Convertible Note. The agreement states that CVP has the right to convert all or part of the outstanding balance into fully paid and non-assessable common stock. The conversion formula is as follows: The number of shares will equal the amount of the outstanding note balance being converted divided by$5.00 per share. The Company determined since the value of the underlying equity on the commitment date was$2.29 per share, was less than conversion price$5.00 , the Company determined there was no beneficial conversion feature. The Lender Conversion Price is subject to certain adjustment such as down-round features whereby the agreement notes that if the Company were to sell, issue or grant any common stock, option to purchase common stock, right to reprice, preferred shares convertible into common stock, or debt, warrants, options or other securities which are convertible, exercisable, or exchangeable for shares of common stock at a price per share less than the conversion price, then the conversion price shall be reduced to equal the new lower price, subject to a floor of$1.00 per share. When and if there is an adjustment under the down-round provision, the Company will analyze the accounting treatment of
the adjustment. Redemption
Redemptions may occur at any time after the 6-month anniversary of the date of issuance of the Convertible Note with a minimum redemption price equal to the Conversion Price. If the conversion rate is less than the market price, then the redemptions must be made in cash.
On
OnOctober 15, 2019 , the Company and CVP entered into a waiver agreement (the "Waiver Agreement") in connection with CVP delivery of a redemption notice for$7,600 (the "Redemption Amount") in accordance with that certain Securities Purchase Agreement, dated as ofDecember 31, 2018 , and that certain Convertible Promissory Note issued to the Lender by the Company onDecember 31, 2018 (the "Note"). Pursuant to the Waiver Agreement, the Lender agreed to waive certain Equity Conditions Failures (as defined in the Note) in order to receive shares of common stock of the Company instead of cash to satisfy the Redemption Amount. In addition, the Company and the Lender agreed to issue such shares below the minimum redemption conversion price of$1.00 at a modified redemption conversion price equal to$0.210140 , which is equal to 70% multiplied by the lowest closing bid price during the twenty (20) trading days immediately preceding this redemption. Accordingly, the Company issued the Lender 36,166 shares of common stock to satisfy the Redemption Amount. Short-Term Note Extension OnJuly 7, 2020 , the Company entered into a note extension (the "Extension") withChicago Venture Partners, L.P. ("CVP"), pursuant to which the maturity date of that certain Convertible Promissory Note, issued by the Company to CVP onDecember 31, 2018 (the "Note"), was extended toDecember 31, 2020 .
See Financial Statement Note-12 Subsequent Events, regarding extension of the
promissory note maturity date to
35
OnMay 7, 2020 ,Sysorex, Inc. was granted a loan (the "Loan") fromWells Fargo, N.A. in the principal amount of$349,693 , pursuant to the Paycheck Protection Program (the "PPP") under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted onMarch 27, 2020 . The Loan, which was in the form of a Note datedMay 3, 2020 issued by the Company (the "Note"), matures onMay 3, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing onNovember 1, 2020 . The Note may be prepaid by the Company at any time prior to maturity without payment of any premium. Funds from the Loan may only be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. Revolving Credit Facility OnAugust 31, 2018 , the Company entered in an agreement withPayplant Alternatives Funds LLC , pursuant to which Payplant may purchase from the Borrowers, in Payplant's sole and absolute discretion, Eligible Receivables, as that term is defined in the agreement, in exchange for cash advances, subject to the terms and conditions in the agreement. OnSeptember 21, 2018 , the Company entered into the Payplant Loan and Security Agreement (the "Loan Agreement") withPayplant LLC as agent forPayplant Alternatives Fund LLC ("Payplant"). Pursuant to the Loan Agreement and the terms set forth in the form of promissory note attached as Exhibit A to the Loan Agreement, (the "Note"), Payplant, in its sole and absolute discretion, may loan money to the Borrowers on the basis of purchase orders or invoices issued by the Borrowers to customers for goods and services provided. The term of any loan made to the Borrowers may not exceed 360 days. The principal amount of any loan will accrue interest at a 30-day rate of 2%, calculated per day. Upon the occurrence and during the continuance of an Event of Default, as defined in the Loan Agreement, interest will accrue at a rate equal to the interest rate plus 0.42% per 30 days. In no event will interest, when combined with all fees that may be characterized as interest, exceed the Maximum Rate, as defined in the Loan Agreement. All computations of interest will be made on the basis of a 360-day year. The Borrowers will have the right to prepay any loan upon the payment of a premium of at least 30 days of interest. As security for the repayment of any loans and the performance of the Borrowers' Obligations, as defined in the Loan Agreement, the Borrowers granted to Payplant a security interest in the Collateral, as defined in the Loan Agreement. As ofMay 22, 2020 the Company terminated its services withPayplant Alternatives Funds LLC .
Non-Recourse Factoring and Security Agreement
Effective asJune 19, 2020 (the "Effective Date"), the Company andSouthStar Financial, LLC ("SouthStar") entered into a Non-Recourse Factoring and Security Agreement (the "Agreement") pursuant to which SouthStar may purchase receivables from the Company (the "Purchased Receivables") for a price not to exceed 85% of the face value of the Purchased Receivables or a lesser percentage agreed upon between the Company and SouthStar. In consideration of SouthStar's purchase of the Purchased Receivables, the Company will pay to SouthStar an amount equal to 0.8% of the face amount of the Purchased Receivables for the first 10-day period after payment for the Purchased Receivables is transmitted to SouthStar plus 0.9% for each additional 10-day period or part thereof, calculated from the date of purchase until payments received by SouthStar in collected funds on the Purchased Receivables equals the purchase price of the Purchased Receivables plus all charges due SouthStar from the Company at the time. An additional 1.0% per 10-day period will be charged for invoices exceeding 60 days from invoice date.
As of
Systat Promissory Note Payable
OnJune 30, 2020 , the Company entered into a Promissory Note Assignment and Assumption Agreement (the "Assignment Agreement"), an Intercreditor Agreement (the "Intercreditor Agreement"), a form of partitioned Secured Promissory Note (the "Form of Partitioned Note"), and other related transaction documents with Inpixon, andSystat Software, Inc. (the "Assignment Documents"). Pursuant to the Assignment Documents, Inpixon agrees to assign toSystat Software, Inc. , and the Company has acknowledged and consented to the assignment of, certain partitioned promissory notes, and in connection therewithSystat Software, Inc. will be granted a security interest in the assets of the Company. 36 Inpixon is the holder of a secured promissory note, datedDecember 31, 2018 , issued by the Company to Inpixon, as amended, (the "Original Note") in the aggregate principal amount of$10,000,000 (together with all accrued unpaid interest thereon, the "Outstanding Balance"). Inpixon andSystat Software, Inc. are entering into an Exclusive Software License and Distribution Agreement with Cranes Software International Ltd. (the "License Agreement"). Inpixon has agreed to partition the Original Note into four new secured promissory notes in the Form of Partitioned Note (each a "Partitioned Note" and collectively, the "Partitioned Notes"), with the first Partitioned Note to be in the original principal amount of$3,000,000 , the second Partitioned Note to be in the original principal amount of$1,300,000 , the third Partitioned Note to be in the original principal amount of$1,000,000 and the fourth Partitioned Note to be in the original principal amount of$1,000,000 plus all accrued unpaid interest under the Original Note included in the Outstanding Balance, and to assign and deliver toSystat Software, Inc. the Closing Note on the closing date of the License Agreement, the Initial Installment Note on the three month anniversary of the Closing Date the Second Installment Note on the six month anniversary of the Closing Date, and the Third Installment Note on the nine month anniversary of the Closing Date.
The Promissory Note balance outstanding as of
Future Receivables Agreement OnJanuary 21, 2020 ,SGS and GCF Resources LLC ("GCF") entered into a Future Receivables Agreement pursuant to which GCF agreed to purchase receivables from SGS with a value of$497,000 for the sum of$350,000 . The terms of the agreement call for weekly installments of$20,710 , until paid in full. OnApril 27, 2020 , the Company paid off its GCF loan balance.
Liquidity and Capital Resources as of
The Company's net cash flows used in operating, investing and financing
activities for the year ended
For the Years Ended
December 31,
2020 2019
Net cash used in operating activities
-
Net cash provided by financing activities 2,467 9,386
Net increase (decrease) in cash$ 139 $ 22 As of December 31, As of December 31, 2020 2019 Cash and cash equivalents $ 167 $ 28 Working capital (deficit) $ (9,121 ) $ (9,474 )
Liquidity and Capital Resources as of
Our capital resources and operating results as of and through
1) an overall working capital deficit of $9.1 million ;
2) cash of $167,000 ;
3) we entered into an unlimited revolving credit facility of which
$323,000 was received on December 31, 2020 ;
4) net cash used in operating activities for the year of $2.3 million ;
5) net cash provided by financing activities for the year of $2.5 million .
The breakdown of our overall working capital deficit is as follows (in
thousands):
Working Capital Assets Liabilities Net
Cash $ 167 $ - $ 167 Accounts receivable, net / accounts payable 2,186 9,838 (7,652 ) Other assets/other liabilities 382 503
(121 )
Short-term debt - 1,515 (1,515 )
Total $ 2,735 $ 11,856 $ (9,121 )
37
Accounts payable and accrued liabilities exceed the accounts receivable by$7.6 million . These deficits are expected to be funded by our anticipated cash flow from operations and financing activities, over the next twelve months. The Company plans to maintain its cost stabilization and reductions in 2020 into 2021. It is expected that the necessary costs to achieve increased revenue will be incurred. The Company will continue to work with its key distributors and financing partners to address our credit limitation issues. The Company's capital resources as ofDecember 31, 2020 , availability on the unlimited SouthStar Facility to finance purchase orders and invoices, theRelated Party Note with its ability to receive revolving amounts not to exceed$10 million at any time, and its short-term borrowings, may not be sufficient to fund planned operations during the year endingDecember 31, 2021 . The Company will need to raise additional capital through the issuance of equity, equity-linked or debt securities. A further discussion below of liquidity and capital resources outlines the Company's current resources.
Going Concern and Management's Plans
As ofDecember 31, 2020 , the Company had a minimal cash balance and a working capital deficit of approximately$9.1 million . In addition, the Company has a stockholders' deficit of approximately$23.5 million . For the years endedDecember 31, 2020 and 2019, the Company incurred net losses of approximately$3.5 million and$5.4 million , respectively. 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 consolidated 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 consolidated financial statements are issued. The Company expects its capital resources as ofDecember 31, 2020 , availability on the SouthStar facility to finance purchase orders and invoices in an amount equal to 80% of the face value of purchase orders received, funds from financing from our Related Party Note and other Short Term borrowings, higher margin public sector contracts capture, reauthorization of key vendors and credit limitation improvements may not be sufficient to fund planned operations during the year endingDecember 31, 2021 . The Company will need additional funds to support its obligations for the next twelve months. The Company may raise additional capital as needed, through the issuance of equity, equity-linked or debt securities. The Company realizes that our ability to increase revenue is to have more diverse sources of IT products and therefore the Company has focused on reducing its trade debt so that distributors and vendors will resume supply of IT products to us. The Company has made significant progress towards the paying down on existing trade debt liabilities. The Company started with$23 million of trade debt as ofJanuary 1, 2018 and had a balance of$5.6 million of trade debt as ofDecember 31, 2020 . This represents a reduction of 75% over the course of 36-months endingDecember 31, 2020 . The Company's consolidated financial statements as ofDecember 31, 2020 have been prepared under the assumption that we 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 funding to secure additional resources to generate sufficient revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern. The Company's consolidated financial statements as ofDecember 31, 2020 do not include any adjustments that might result from the outcome of this uncertainty.
Liquidity and Capital Resources - SouthStar
See the discussion above in the section titled "Short Term Debt" for information concerning this loan. As ofDecember 31, 2020 , the principal amount outstanding under the Loan Agreement was$323,000 .
Liquidity and Capital Resources Inpixon Note
See the discussion above in the section titled "Related Party Note" for
information concerning this loan. As of
Liquidity and Capital Resources - Systat Note
See the discussion above in the section titled "Short Term Debt" for information concerning this loan. As ofDecember 31, 2020 , the principal amount outstanding under the Loan Agreement was$5.4 million .
Liquidity and Capital Resources - Chicago Venture
See the discussion above in the section titled "Short Term Debt" for information concerning this loan. As ofDecember 31, 2020 , the principal amount outstanding under the Loan Agreement was$842,000 . 38
Operating Activities for the year ended
Net cash used in operating activities during the year endedDecember 31, 2020 was$2.8 million . Net cash used in operating activities during the year endedDecember 31, 2019 was$9.4 million . The cash flows related to the year endedDecember 31, 2020 consisted of the following (in thousands): Net loss$ (3,464 ) Non-cash income and expenses 1,283
Net change in operating assets and liabilities (147 ) Net cash used in operating activities
$ (2,328 )
The non-cash income and expense of
Depreciation and amortization expenses (including amortization of
$ 440 intangibles)
702 Gain on settlement of liabilities
(6 ) Accrued issuable equity
147 Amortization of debt discount
$ 1,283 Total non-cash expenses
The net use of cash in the change in operating assets and liabilities aggregated
(354 ) Increase in prepaid expenses and other current assets
(2,432 ) Decrease in accounts payable
2,219 Increase in accrued liabilities and other liabilities
367 Increase in deferred revenue
Operating Activities for the year ended
Net cash used in operating activities during the year endedDecember 31, 2019 was$9.4 million . The cash flows related to the year endedDecember 31, 2019 consisted of the following (in thousands): Net loss$ (5,415 ) Non-cash income and expenses 1,578
Net change in operating assets and liabilities (5,527 ) Net cash used in operating activities
$ (9,364 )
The non-cash income and expense of
Depreciation and amortization expenses (including amortization of
$ 1,676 intangibles)
(62 ) Gain on settlement of liabilities
(62 ) Gain on earnout
(64 ) Accrued issuable equity
105 Amortization of debt discount
(15 ) Other
$ 1,578 Total non-cash expenses
39
The net use of cash in the change in operating assets and liabilities aggregated
15 Decrease in prepaid licenses and maintenance contracts
37 Decrease other assets and other liabilities
(3,643 ) Decrease in accounts payable
(55 ) Decrease in accrued liabilities and other liabilities
(147 ) Decrease in deferred revenue
Cash Flows from Investing Activities as of
There were no investing activities in 2020.
Cash Flows from Financing Activities as of
Net cash flows provided by financing activities during the year endedDecember 31, 2020 was 2.5 million. The net cash provided by financing activities during the year endedDecember 31, 2020 was primarily comprised of net advances from Inpixon on a related party note from Inpixon of$2.7 million , proceeds from financing, proceeds from theWells Fargo N.A. SBA -Payroll Protection Program SBA, offset by payments made to pay-off the future receivables note and the revolving line of credit. Net cash flows provided by financing activities during the year endedDecember 31, 2019 was$9.4 million . During the year endedDecember 31, 2019 , the Company received$9.3 million from a related party note and$73,000 from its Payplant facility.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts.
Recently Issued Accounting Standards
For a discussion of recently issued accounting pronouncements, please see Note 2 to our financial statements, which are included in this report beginning on page F-1.
© Edgar Online, source
