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Item 1.03.
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Bankruptcy or Receivership.
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On November 8, 2007, InPhonic,
Inc., a Delaware corporation (the “Company”), filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”). In connection with the bankruptcy filing, the Company entered into a $25 million debtor-in-possession financing facility with Versa Capital Management, a private equity investment firm (“Versa”).
The Bankruptcy Court assumed jurisdiction over the assets of the Company as of the date of the filing of the bankruptcy petition. The Company remains in possession of
its assets, and continues to manage and operate its business and properties, as debtor-in-possession, subject to the provisions of the Bankruptcy Code and the supervision and orders of the Bankruptcy Court. Subject to Court approval, the Company
will use the cash flow from operations and the debtor-in-possession financing to meet its capital needs during the reorganization process.
On
November 8, 2007, the Company signed an asset purchase agreement with Versa to effect the sale of substantially all of the Company’s assets under Section 363 of the Bankruptcy Code. As part of the asset purchase agreement, the Company
has filed motions for orders granting authority to sell its assets to Versa pursuant to Section 363 of the Bankruptcy Code, establishing bidding procedures and setting a hearing date on the sale of the assets.
The Company believes that its currently outstanding common stock has no value.
There can be no assurance that the Company can remain in possession of its assets and control of its business as a debtor-in-possession and that a trustee will not be appointed to operate the business of the Company. The Company’s
current business relationships and arrangements, and the Company’s ability to negotiate future business arrangements may be adversely affected by the filing of the bankruptcy petition.
In addition to historical information, this Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could cause the Company’s actual results to differ materially from the future results expressed or implied by the
forward-looking statements. All statements other than statements of historical facts included in this Current Report on Form 8-K, including statements regarding the Company’s future financial position and results, are forward-looking
statements. Factors that might cause such a difference in results include, but are not limited to: the effects of the chapter 11 filing; the ability to maintain adequate liquidity; the ability to obtain and maintain normal terms with customers,
suppliers and service providers; the ability to continue as a going concern; the ability to operate pursuant to the terms of our credit agreement; the ability to obtain Bankruptcy Court approval and any other required approvals with respect to
motions in the chapter 11 case prosecuted by us from time to time; the ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the chapter 11 case; risks associated with third parties seeking and
obtaining Bankruptcy Court approval to either terminate or shorten the exclusivity period that we have to propose and confirm one or more plans of reorganization; risks associated with third parties seeking and obtaining Bankruptcy Court approval to
appoint a chapter 11 trustee; risks associated with third parties seeking and obtaining Bankruptcy Court approval to convert the chapter 11 filing to a chapter 7 filing; the ability to maintain contracts that are critical to our operation; the
ability to conclude our exploration of strategic alternatives; risks associated with the timely development, production and acceptance of new products and services; increased competition; dependence on third party partners and suppliers; the failure
to achieve expected product mix and revenue levels; failure to manage costs and generate improved operating results and cash flows; failure to maintain compliance with debt covenants; and failure to maintain adequate cash resources for the operation
of the business. Additionally, due to material uncertainties, it is not possible to predict the length of time we will operate under chapter 11 protection, the outcome of the proceeding in general, whether we will continue to operate under our
current organizational structure, or the effect of the proceeding on our businesses and the interests of various creditors and security holders.
These
statements speak only as of the date of this Current Report on Form 8-K, and we disclaim any intention or
obligation to update or revise any forward-looking statements to reflect new information, future events or developments or otherwise, except as required by
law. We have provided additional information in our filings with the Securities and Exchange Commission, which readers are encouraged to review, concerning other factors that could cause actual results to differ materially from those indicated in