Business context and reporting period
The supplied filing is Inpixon’s unaudited Form 10-Q for the quarter and six months ended June 30, 2022—not a filing identified as XTI Aerospace, Inc. The filing describes Inpixon’s Indoor Intelligence business and its Shoom and SAVES software businesses. Investors should confirm the company and filing match their intended review.
Financial performance and liquidity
| Metric | Q2 2022 | Six months 2022 |
|---|---|---|
| Revenue | $4.7 million, up 37% year over year | $10.0 million, up 55% |
| Gross profit and margin | $3.3 million; 70% (74% in Q2 2021) | $7.2 million; 72% (unchanged) |
| Operating expenses | $23.2 million | $37.1 million |
| Operating loss | $19.9 million | $30.0 million |
| Net income (loss) | $(20.3) million | $(31.9) million |
| Adjusted EBITDA loss | $(9.9) million | $(18.7) million |
| Operating cash flow | Not separately stated for the quarter | $(19.5) million |
For the six months, Indoor Intelligence revenue increased to $7.5 million from $3.9 million; SAVES revenue was $1.5 million versus $1.5 million, and Shoom was $1.0 million versus $1.0 million. Management attributed growth principally to Indoor Intelligence sales, including acquired product lines. Q2 gross margin declined mainly due to sales mix.
At June 30, cash was $65.8 million and working capital surplus was $65.2 million, down from $78.8 million at December 31, 2021. Current assets were $79.8 million and current liabilities $14.7 million. Short-term debt was $1.9 million; total liabilities were $15.7 million. The company reported total assets of $117.8 million and stockholders’ equity of $54.0 million, alongside $48.2 million of Series 8 preferred stock classified as mezzanine equity.
Material changes and unusual items
- Q2 operating expenses included a $7.6 million goodwill impairment; this charge fully impaired the remaining goodwill. The impairment followed a sustained decline in the company’s share price.
- The prior-year comparison is affected by a large, nonrecurring Sysorex settlement gain and related valuation-allowance recovery and interest. In Q2 2021, reported net income was $14.5 million; in Q2 2022, the company recorded a net loss of $20.3 million. The filing reports a $49.8 million settlement gain and $7.5 million valuation-allowance recovery in the 2021 comparison period.
- In March 2022, the company raised $46.9 million net through Series 8 preferred stock and warrants and used $49.3 million to redeem Series 7 preferred stock. Series 8 holders may require cash redemption beginning October 1, 2022; the stated aggregate redemption amount was $53.2 million, potentially $58.5 million following certain defaults, plus applicable amounts.
- Cash increased by $13.3 million during the first half, mainly reflecting $43.0 million of Treasury-bill sales and the preferred financing, offset by operating cash use and the Series 7 redemption.
- Common shares outstanding were 155.1 million at June 30 and 162.0 million at August 13. Series 8 preferred stock is convertible at $0.4717 per share, and the related offering included warrants for up to 112.8 million common shares.
Outlook, risks and contingencies
Management provided no specific revenue or earnings guidance. It said current liquidity, financing facilities and budgeted cash needs were expected to cover operations for at least 12 months from issuance of the financial statements, while acknowledging recurring losses and operating cash use. Management stated the company may need further equity or debt financing and cannot assure it will become profitable.
After quarter-end, the company borrowed $5.0 million cash through a note with $6.5 million initial principal, 10% interest, a 12-month maturity and redemption rights; it also established an at-the-market facility permitting up to $25 million of stock sales. The new note includes a 22% default rate and other financing-related rights. In July and August, the company also exchanged approximately $1.1 million of note principal and interest for common shares.
Risks highlighted include supply-chain constraints and higher material and labor costs, inflation, COVID-19 effects, the Russia-Ukraine conflict, uncertain demand, and dependence on external financing. Nasdaq had granted an extension through October 24, 2022 to regain compliance with its $1.00 minimum bid-price requirement; failure could result in delisting. The filing reported no material pending litigation and stated disclosure controls were effective as of June 30, 2022.
Most important facts for investors to verify
- Confirm the filing’s registrant is Inpixon and not XTI Aerospace, as the request metadata and filing differ.
- Review Series 8 redemption terms, timing, cash exposure and the company’s ability to meet potential redemptions.
- Assess potential dilution from preferred conversions, warrants, note exchanges, and the $25 million ATM program.
- Reconcile reported cash and working capital with the ongoing operating cash burn and post-quarter financing obligations.
- Separate recurring operating performance from the 2021 Sysorex-related gains, 2022 goodwill impairment, and preferred-stock accretion when comparing periods.
- Check subsequent Nasdaq listing status and whether the company regained minimum bid-price compliance by the stated deadline.