Inpixon, Inc. — Form 10-Q for Q1 2020
Entity note: The filing identifies the registrant as Inpixon, Inc. (Nasdaq: INPX), not XTI Aerospace, Inc. The period ended March 31, 2020; the financial statements are unaudited. Amounts below are in U.S. dollars unless stated otherwise.
Business context and reporting period
Inpixon describes itself as an indoor-intelligence company offering positioning, mapping, analytics and related software and services, including digital publishing solutions. The quarter included revenue from the 2019 Jibestream acquisition. On January 7, 2020, the company effected a 1-for-45 reverse stock split; comparative share and per-share data reflect the split.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $1.804 million | $1.363 million; up 32% |
| Gross profit / margin | $1.294 million / 72% | $1.026 million / 75% |
| Operating expenses | $6.860 million | $5.889 million |
| Operating loss | $5.566 million | $4.863 million |
| Net loss | $6.168 million | $5.150 million |
| Net loss attributable to Inpixon stockholders | $6.158 million | $5.145 million |
| Basic and diluted loss per share | $1.22 | $64.01 |
| Adjusted EBITDA loss (non-GAAP) | $3.885 million | $2.608 million |
| Net cash used in operating activities | $4.535 million | $3.493 million |
| Cash and cash equivalents at quarter-end | $6.111 million | $4.777 million at Dec. 31, 2019 |
| Working capital | Deficit of $6.173 million | Deficit of $6.975 million at Dec. 31, 2019 |
| Short-term debt | $9.028 million | $7.304 million at Dec. 31, 2019 |
Investing activities used $0.209 million; financing activities provided $6.104 million, including $5.0 million of promissory-note proceeds and approximately $1.3 million net ATM proceeds. Cash, cash equivalents and restricted cash totaled $6.182 million at quarter-end. The filing reports no outstanding balance on the Payplant revolving facility.
Material changes versus the prior comparable period
- Revenue grew primarily from mapping services, which contributed $532,000 in Q1 2020 following the Jibestream acquisition; the filing reports no mapping revenue in Q1 2019. IPA revenue was $757,000 versus $814,000, and digital tear-sheet revenue was $515,000 versus $549,000.
- Gross margin declined from 75% to 72%, which management attributed to lower margins on mapping services.
- Operating expenses rose by approximately $1.0 million, primarily from Jibestream-related costs and higher professional fees. Interest expense and debt-discount amortization also contributed to higher other expense.
- Operating cash use increased by approximately $1.0 million year over year. The company raised $5.0 million in cash through a March note and issued shares through its ATM, while also exchanging debt for common stock.
- The 2020 loss-per-share comparison is affected by the reverse split and a substantial change in weighted-average shares; the company reported 5.04 million weighted-average shares in Q1 2020 versus 99,903 in Q1 2019.
Outlook, risks and unusual items
- Going concern and liquidity: Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing recurring losses and a $6.2 million working-capital deficit. Management said financing, ATM access, Payplant availability and revenue might fund planned operations for 12 months from issuance of the statements, but this depends on additional capital, spending reductions and revenue generation; there is no assurance the plan will succeed.
- COVID-19: The company said it continued operating remotely and had not seen significant demand impacts for certain SaaS and subscription products, but some onsite projects and customer requests were delayed. It reported increased interest in workplace-readiness solutions, with no assurance that adoption would offset any revenue loss.
- Financing and dilution: The $50 million ATM facility produced approximately $1.3 million net proceeds in Q1. After quarter-end, the company issued 9,551,636 additional shares for approximately $10.6 million net proceeds. Q1 debt exchanges issued 1,896,557 shares to extinguish approximately $4.2 million of note balances. These transactions materially affect share count and potential dilution.
- Debt: Short-term debt was $9.028 million at March 31. The March 2020 note had a $6.465 million initial principal amount, against $5.0 million cash proceeds, bears 10% interest and includes potential cash redemptions, a 10% monitoring fee if still outstanding after six months, and default interest provisions. Some other notes also include redemption, default and financing-related terms.
- Sysorex receivable: The company reported approximately $10.6 million of principal and accrued interest owed by related party Sysorex, classified as held for sale, with a full valuation allowance. The receivable’s value and collectability depend on Sysorex’s performance.
- Listing and controls: Nasdaq allowed continued listing subject to a monitoring period through February 5, 2021. Management concluded disclosure controls were ineffective at quarter-end and reported a material weakness related to support for projections used in valuing the Sysorex note. Remediation was expected by June 30, 2020 but was not yet considered complete.
- Other: The filing reports no material pending legal proceedings beyond ordinary routine litigation. No formal financial guidance is provided.
Important facts for investors to verify
- Confirm the issuer identity and ticker: this filing is for Inpixon (INPX), despite the XTI Aerospace metadata.
- Assess actual post-quarter ATM proceeds, share issuance and resulting dilution, along with liquidity and cash runway.
- Review outstanding debt balances, maturity dates, redemption rights, default terms and subsequent note exchanges.
- Evaluate the collectability and valuation of the Sysorex related-party note and the basis for its full valuation allowance.
- Check progress on the disclosed material-weakness remediation and compliance with Nasdaq listing requirements.
- Monitor COVID-19 effects on delayed projects, customer spending and adoption of workplace-readiness products.