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Inpixon(INPX) - 2024 Q2 - Quarterly Report
INPXInpixon(INPX)2024-08-14 21:05

Financial Performance - Revenue for the three months ended June 30, 2024, was 1.0million,anincreaseofapproximately1.0 million, an increase of approximately 1.0 million compared to 0.0millioninthesameperiodof2023[236].−OperatingexpensesforthethreemonthsendedJune30,2024,were0.0 million in the same period of 2023[236]. - Operating expenses for the three months ended June 30, 2024, were 14.6 million, an increase of approximately 10.5millionfrom10.5 million from 4.0 million in the same period of 2023, primarily due to nonrecurring transaction bonus expenses and increased legal and accounting fees[239]. - Net loss for the three months ended June 30, 2024, was 14.7million,comparedtoanetlossof14.7 million, compared to a net loss of 4.6 million in the same period of 2023, representing an increase of 10.1million[234].−RevenueforthesixmonthsendedJune30,2024,was10.1 million[234]. - Revenue for the six months ended June 30, 2024, was 1.3 million, compared to 0.0millionforthesameperiodin2023,reflectingtheresultsoftheIndustrialIoTsegmentpost−merger[245].−OperatingexpensesforthesixmonthsendedJune30,2024,were0.0 million for the same period in 2023, reflecting the results of the Industrial IoT segment post-merger[245]. - Operating expenses for the six months ended June 30, 2024, were 23.6 million, an increase of approximately 18.3millionfrom18.3 million from 5.3 million in the same period of 2023[243]. - Gross profit for the three months ended June 30, 2024, was 0.7million,comparedto0.7 million, compared to 0.0 million in the same period of 2023[238]. - Gross profit for the six months ended June 30, 2024, was 0.8million,comparedto0.8 million, compared to 0.0 million for the same period in 2023[247]. - Other income for the six months ended June 30, 2024, was a gain of 5.5million,comparedtoalossof5.5 million, compared to a loss of 0.9 million for the same period in 2023, reflecting a fluctuation of approximately 6.4million[250].−ForthesixmonthsendedJune30,2024,thecompanyincurredanetlossofapproximately6.4 million[250]. - For the six months ended June 30, 2024, the company incurred a net loss of approximately 17.3 million and used approximately 8.2millionincashforoperatingactivities[273].CashFlowandWorkingCapital−AsofJune30,2024,thecompanyhadaworkingcapitaldeficitofapproximately8.2 million in cash for operating activities[273]. Cash Flow and Working Capital - As of June 30, 2024, the company had a working capital deficit of approximately 7.9 million and cash and cash equivalents of approximately 5.8million[252].−Netcashusedbyoperatingactivitiesof5.8 million[252]. - Net cash used by operating activities of 8.2 million for the six months ended June 30, 2024[252]. - Net cash used in operating activities for the six months ended June 30, 2024 was approximately 8.2million,comparedto8.2 million, compared to 1.6 million for the same period in 2023[276][279]. - Net cash flows provided by investing activities during the six months ended June 30, 2024 were approximately 2.9million,comparedto2.9 million, compared to 0.0 million in 2023[281]. - Net cash flows provided by financing activities during the six months ended June 30, 2024 were 11.1million,significantlyhigherthan11.1 million, significantly higher than 1.5 million in 2023[282]. Transaction Bonuses and Liabilities - The company accrued 100% of the transaction bonuses, recognizing approximately 6.7millionoftransactionbonusexpenseforthethreeandsixmonthsendedJune30,2024[180].−AsofJune30,2024,approximately6.7 million of transaction bonus expense for the three and six months ended June 30, 2024[180]. - As of June 30, 2024, approximately 6.7 million of accrued transaction bonuses remained outstanding, included in Accrued Expenses and Other Current Liabilities[180]. - As of June 30, 2024, the company has accrued 100% of the transaction bonuses, totaling 6.7million,with6.7 million, with 0.9 million paid during Q3 2024[269]. - As of June 30, 2024, the company has liabilities of approximately 0.5millionand0.5 million and 0.1 million related to deferred compensation and retention bonuses[272]. Legal Matters - The company is involved in litigation with Xeriant, which claims damages in excess of 500millionduetoallegedbreachesandfraudulentactionsbyLegacyXTI[184].−Therearenomaterialpendinglegalproceedingsinvolvingthecompany,otherthanordinaryroutinelitigation[288].−Noadverselegalinterestsinvolvingdirectors,officers,orsignificantshareholderswerereported[288].MergersandAcquisitions−TheXTIMergerwascompletedonMarch12,2024,withLegacyInpixonasthelegalacquirerandLegacyXTIastheaccountingacquirerunderGAAP[285].−ThehistoricalfinancialstatementsofLegacyXTIwillbeconsideredthefinancialstatementsofthecombinedentity[285].−TheTransactionValuefortheXTIMergerwasassessedat500 million due to alleged breaches and fraudulent actions by Legacy XTI[184]. - There are no material pending legal proceedings involving the company, other than ordinary routine litigation[288]. - No adverse legal interests involving directors, officers, or significant shareholders were reported[288]. Mergers and Acquisitions - The XTI Merger was completed on March 12, 2024, with Legacy Inpixon as the legal acquirer and Legacy XTI as the accounting acquirer under GAAP[285]. - The historical financial statements of Legacy XTI will be considered the financial statements of the combined entity[285]. - The Transaction Value for the XTI Merger was assessed at 225 million, based on the enterprise value of Legacy XTI[260]. - The company issued 385,359 registered shares of XTI Aerospace common stock as part of the financial advisory fees in connection with the XTI Merger[255]. Development and Engineering - The company is developing the TriFan 600, a vertical takeoff and landing aircraft, and is currently in the pre-revenue stage for the Commercial Aviation segment[193][196]. - The company is focused on securing FAA certification for the TriFan 600, which is critical for generating revenues in the commercial aviation segment[200]. - The company completed its preliminary design review (PDR) for the TriFan 600 in 2022, setting the stage for further design development[203]. - The company has established a core engineering organization and retained consulting firms to enhance its engineering capabilities for the TriFan 600[202]. - The company aims to enhance its sales and marketing capabilities to increase awareness and customer orders for the TriFan 600[199]. - The company is pursuing multiple funding alternatives to complete the development of the series of Test Aircraft[199]. - Research and development expenses are expected to increase significantly as the company expands staffing to support aircraft engineering and software development[229]. Market Position and Products - The company’s Industrial IoT business is positioned as a market leader with a comprehensive suite of products aimed at enhancing workplace environments[201]. - The company’s RTLS Indoor Intelligence products compete with major players like Aruba and Cisco, but it believes its offerings are more comprehensive and accurate[208]. - The company is committed to ongoing research and development to maintain a competitive position in the rapidly changing technology landscape[206]. - The TriFan 600 is expected to offer lower direct operating costs and the ability to fly almost twice as many missions compared to competing helicopters[207]. Internal Controls and Governance - As of June 30, 2024, the company's disclosure controls and procedures were deemed ineffective by the Chief Executive Officer and Chief Financial Officer[285]. - The company began integrating Legacy XTI into its disclosure controls and procedures during the second quarter of 2024[285]. - A third-party consulting firm is being engaged to assist in evaluating and remediating internal controls over financial reporting for the combined entity[285]. - No changes in internal control over financial reporting were identified during the quarter ended June 30, 2024, that materially affected internal controls[286]. - Anticipated changes to the internal control environment are expected in the third quarter of 2024 due to integration efforts[286]. - The company acknowledges that no control system can provide absolute assurance that all control issues have been detected[286]. Future Outlook - The company expects revenues for the third and fourth quarters of 2024 to remain consistent with the second quarter of 2024[236]. - The company’s financial statements are prepared under the assumption of continuing as a going concern for the next twelve months, dependent on obtaining additional financing and improving operational efficiency[274].