Inpixon, Inc. — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; this is an annual report, not a standalone fourth-quarter filing. The filing identifies the registrant as Inpixon (Nasdaq: INPX), not XTI Aerospace, Inc. Amounts below are in U.S. dollars.
Business context
Inpixon sells indoor positioning, mapping and analytics products and services to business and government customers. Its platform combines sensor data, indoor maps and analytics for security, wayfinding, asset tracking and visitor insights. In 2019, the company acquired Locality Systems, certain GPS assets from GTX Corp, and indoor mapping provider Jibestream. The 2018 spin-off of its infrastructure business makes comparisons with earlier periods less directly comparable.
Financial performance and liquidity
| Metric | FY2019 | FY2018 |
|---|---|---|
| Revenue | $6.3 million | $3.8 million |
| Gross profit / gross margin | $4.7 million / 74% | $2.7 million / 71% |
| Operating expenses | $25.5 million | $21.1 million |
| Operating loss | $20.8 million | $18.4 million |
| Net loss | $34.0 million | $24.6 million |
| Adjusted EBITDA loss | $11.1 million | $15.0 million |
| Cash used in operating activities | $10.7 million | $26.8 million |
Revenue increased 68%, driven by higher indoor-intelligence sales, approximately $750,000 of mapping revenue, acquisitions and a new customer that generated about 42% of 2019 revenue. Gross margin improved with product and service mix. Higher operating expenses included acquisition costs, Jibestream expenses and increased stock-based compensation.
Net loss widened, primarily reflecting a $10.6 million valuation allowance on the Sysorex related-party note, alongside higher operating and interest expenses. The company reported $4.8 million of cash and a $7.0 million working-capital deficit at year-end, versus $1.0 million of cash and a $3.9 million deficit at year-end 2018. Total assets were $21.2 million and total liabilities were $15.2 million.
Current debt was $7.3 million at year-end, principally notes payable; the Payplant secured revolving facility had $150,000 outstanding. Separately, the filing reports approximately $5.7 million outstanding under notes held by affiliated investors as of February 16, 2020, with maturities from March through May 2020. Operating cash burn was funded substantially by equity offerings and debt financing. Cash increased by $3.7 million during 2019, primarily due to financing proceeds.
Changes, outlook and key risks
- Management expected indoor-intelligence revenue to continue growing in 2020 and anticipated sales cycles could improve as customers move beyond early adoption. These are expectations, not assured results; the filing gives no quantified revenue or earnings guidance.
- Management said year-end cash, available facility capacity and projected revenue would not fund planned operations for the next 12 months. The auditor highlighted substantial doubt about the company’s ability to continue as a going concern.
- The Sysorex note reached approximately $10.6 million, was classified as held for sale and received a full valuation allowance based on estimated fair value. Collectability depends on Sysorex’s performance; the company has a continuing related-party relationship, including a shared director/CEO.
- Customer concentration increased: the top three customers represented about 66% of gross revenue, versus 49% in 2018; one customer alone generated 42%. Acquisition integration, competition, long sales cycles, privacy regulation, cybersecurity, financing needs, dilution and Nasdaq listing compliance are material risks.
- Management identified ineffective disclosure controls and a material weakness in internal control over financial reporting related to inadequate support for projections used in valuing the Sysorex note. The company said it planned to enhance technical accounting resources and use outside advisers; remediation was not yet established as complete.
- Unusual and subsequent items include repeated equity issuance and debt-for-equity exchanges, a 1-for-45 reverse split effective January 7, 2020, and a March 2020 equity distribution agreement allowing up to $50 million of stock sales. The March 2020 Sysorex loan amendment extended maturity to December 2022. The filing also warned that COVID-19-related component sourcing delays could raise costs or affect orders.
Most important facts to verify
- Whether the company obtained adequate additional financing and met obligations on the near-term notes after the filing date.
- Subsequent Sysorex note collections, valuation changes and any implications of the related-party arrangement.
- Progress toward remediating the material weakness and improving disclosure and financial reporting controls.
- Revenue quality and sustainability, including customer concentration, recurring SaaS revenue, acquisition contributions and sales-cycle conversion.
- Actual dilution from equity offerings, debt conversions, warrants, stock plans and the March 2020 ATM agreement, alongside ongoing Nasdaq listing compliance.