Business Context and Reporting Period
Filing identity: The supplied filing is Inpixon’s Form 10-Q, not a filing identified as XTI Aerospace, Inc. It covers the quarter and nine months ended September 30, 2022. Inpixon described itself as an Indoor Intelligence company, with Indoor Intelligence, SAVES and Shoom reporting segments.
Inpixon proposed separating its enterprise apps business into CXApp and combining CXApp with KINS Technology Group in a transaction valued at $69 million. The transaction remained subject to closing conditions. The financial statements are unaudited and interim results are not necessarily indicative of full-year results.
Financial Results and Key Metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $4.2m | $4.5m | $14.1m | $10.9m |
| Gross profit / margin | $2.9m / 70% | $3.3m / 73% | $10.1m / 71% | $7.9m / 73% |
| Operating loss | $10.4m | $12.5m | $40.3m | $38.2m |
| Net loss | $18.0m | $33.9m | $49.9m | $32.0m |
| Net loss attributable to Inpixon common stockholders | $22.6m | $36.6m | $64.9m | $34.4m |
| Operating cash flow | Not presented separately | Not presented separately | $(26.9)m | $(24.0)m |
At September 30, 2022, cash and cash equivalents were $63.2 million, working capital surplus was $51.6 million, total assets were $108.6 million and total liabilities were $21.6 million. Short-term debt was $6.2 million; Series 8 preferred stock classified as mezzanine equity was $53.2 million. No long-term borrowing balance was reported. Cash increased by $10.7 million during the nine-month period, principally reflecting sales of Treasury bills and financing activity.
Q3 revenue fell 6% year over year, primarily due to lower Indoor Intelligence sales, delayed IIoT shipments and weaker SAVES sales. Nine-month revenue rose 30%, mainly from Indoor Intelligence growth, including acquired CXApp and IIoT businesses. Gross margin declined in both comparisons, which management attributed to sales mix. For the nine months, Indoor Intelligence revenue was $10.5 million, SAVES $2.1 million and Shoom $1.5 million.
Adjusted EBITDA, a non-GAAP measure, was a loss of $8.2 million in Q3 2022 versus a loss of $6.7 million a year earlier, and a loss of $26.9 million for the first nine months versus $18.5 million. GAAP diluted loss per share was $10.21 for Q3 and $31.08 for the nine-month period; per-share figures reflect the filing’s retrospective treatment of the subsequent 1-for-75 reverse split.
Material Changes, Outlook and Risks
- Significant unusual items: The company recorded $7.6 million of goodwill impairment in the first half of 2022, leaving no goodwill at September 30. Other expense included $7.1 million of nine-month unrealized losses on equity securities. The prior-year comparison included a $49.8 million gain and $7.5 million valuation-allowance recovery related to a Sysorex settlement, making year-over-year net results less comparable.
- Liquidity after quarter-end: In October, holders submitted redemption notices for $45.8 million of Series 8 preferred stock. Inpixon also raised $14.2 million net from an October registered offering. The filing reported another $7.4 million of potential Series 8 redemption amount remaining, potentially $8.2 million upon specified defaults, plus other amounts due. These events materially affect liquidity versus the September 30 balance sheet.
- Financing and dilution: In July, Inpixon received $5.0 million cash for a note with $6.5 million initial principal, 10% interest, and holder redemption rights beginning six months after issuance; the note also has default provisions and a right of first refusal over certain financings. The company had an unused ATM facility of up to $25 million at September 30. It also exchanged debt for shares during the quarter and issued shares under financing arrangements.
- Cost actions: In September, the company reduced global headcount by approximately 20%. It recorded about $0.6 million of restructuring costs and anticipated a further $0.2 million of contingent costs.
- Management outlook: Despite recurring losses and operating cash use, management said cash, financing facilities and budgeted cash needs were expected to support operations for at least 12 months from issuance of the financial statements. It cautioned that access to capital and operating results remain exposed to economic conditions.
- Key risks and contingencies: Risks include ongoing losses and need for external financing; supply-chain constraints, inflation and customer delays; volatile equity investment values; potential Nasdaq listing issues; and whether the CXApp transaction closes and receives intended tax treatment. The company said it regained Nasdaq’s minimum bid-price compliance on November 1, 2022 after the October reverse split. It reported no material pending legal proceedings beyond routine matters.
Important Facts for Investors to Verify
- Confirm the issuer: the document is an Inpixon filing, notwithstanding the request metadata naming XTI Aerospace.
- Review cash and liquidity after the $45.8 million Series 8 redemption, the October $14.2 million offering, and the remaining potential preferred redemption obligation.
- Examine the terms, maturity, cash redemption rights and default provisions of the Streeterville note and other short-term debt.
- Check the status, consideration allocation, closing conditions and tax consequences of the proposed CXApp/KINS transaction.
- Assess recurring operating cash burn, losses, margin pressure, goodwill impairment and exposure to unrealized investment-value changes.
- Consider the potential dilution from preferred stock, warrants, debt-for-equity exchanges, the October offering and any future ATM sales.