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Inpixon(INPX) - 2024 Q1 - Quarterly Report
INPXInpixon(INPX)2024-05-20 21:12

Commercial Aviation Development - The company has not generated revenue from the Commercial Aviation segment as it is still in the design, development, and certification phase for the TriFan 600 aircraft [277]. - The company completed its preliminary design review (PDR) for the TriFan 600 in 2022, which set the stage for further design development [266]. - The current development design review (DDR) phase includes interactions with suppliers to mature major structures and systems of the TriFan 600, with ongoing communication with the FAA to ensure compliance [267]. - The company plans to seek FAA certification for the TriFan 600, with critical design review (CDR) and preliminary testing of a full-scale flight test aircraft as the next milestones [265]. - The company is pursuing multiple funding alternatives to complete the development of the TriFan 600 and its test aircraft [261]. Industrial IoT Segment - The Industrial IoT segment generates revenue through a "location as a service" (LaaS) model, which typically involves 3-5 year contracts and includes maintenance and hardware upgrades, creating a recurring revenue stream [278]. - The company believes it has positioned its Industrial IoT business as a market leader with a comprehensive suite of products and solutions [264]. - The company faces significant competition in both the Commercial Aviation and Industrial IoT markets, with larger competitors having better financial resources [270][271]. Financial Performance - Revenues for the three months ended March 31, 2024 were 0.2million,asignificantincreasefrom0.2 million, a significant increase from 0.0 million in the same period of 2023, marking a change of approximately 0.2million[291].−Operatingexpensesforthesameperiodincreasedto0.2 million [291]. - Operating expenses for the same period increased to 9.0 million from 1.3million,representingasubstantialincreaseofapproximately1.3 million, representing a substantial increase of approximately 7.7 million or 602% [294]. - Net loss for the three months ended March 31, 2024 was 2.6million,comparedtoanetlossof2.6 million, compared to a net loss of 1.6 million in the prior year, reflecting an increase of 66% [289]. - Other income for the three months ended March 31, 2024 was a gain of 6.3million,comparedtoalossof6.3 million, compared to a loss of 0.3 million in the same period last year, an increase of approximately 6.6million[295].−Thecompanyreportedaworkingcapitaldeficitofapproximately6.6 million [295]. - The company reported a working capital deficit of approximately 5.1 million as of March 31, 2024 [299]. - Cash and cash equivalents as of March 31, 2024 were approximately 1.8million[299].−CustomerdepositsreceivedasofMarch31,2024amountedtoapproximately1.8 million [299]. - Customer deposits received as of March 31, 2024 amounted to approximately 1.4 million, which will not be recognized as revenue until aircraft orders are delivered [301]. - The company incurred inducement losses on debt conversions of approximately 6.7millionduringthethreemonthsendedMarch31,2024[295].−Theincreaseinoperatingexpenseswasprimarilyduetoariseinnon−cashstock−basedcompensationexpenseofapproximately6.7 million during the three months ended March 31, 2024 [295]. - The increase in operating expenses was primarily due to a rise in non-cash stock-based compensation expense of approximately 5.7 million [294]. - The company recognized an income gain of approximately 12.9millionrelatedtotheremeasurementofconvertiblenotesatfairvalueduringthethreemonthsendedMarch31,2024[295].−ForthethreemonthsendedMarch31,2024,thecompanyhadanetlossofapproximately12.9 million related to the remeasurement of convertible notes at fair value during the three months ended March 31, 2024 [295]. - For the three months ended March 31, 2024, the company had a net loss of approximately 2.6 million and used approximately 2.6millionofcashforoperatingactivities[327].−NetcashusedinoperatingactivitiesduringthethreemonthsendedMarch31,2024wasapproximately2.6 million of cash for operating activities [327]. - Net cash used in operating activities during the three months ended March 31, 2024 was approximately 2.6 million, with non-cash expenses totaling approximately 0.7million[332].−ThecompanyassessedtheTransactionValueapplicabletotheXTIMergerat0.7 million [332]. - The company assessed the Transaction Value applicable to the XTI Merger at 225 million, based on the enterprise value of Legacy XTI [312]. Merger and Compensation - The company completed its merger with XTI Aircraft Company on March 12, 2024, which was structured as a reverse triangular merger [272]. - The company plans to pay Mr. Ali a total of 1.5millionthreemonthsfollowingtheclosingoftheXTIMerger,plus1.5 million three months following the closing of the XTI Merger, plus 4.5 million in 12 equal monthly installments of 375,000each[319].−AsofMarch31,2024,liabilityamountsofapproximately375,000 each [319]. - As of March 31, 2024, liability amounts of approximately 0.7 million and 0.1millionareincludedinAccruedExpensesandOtherCurrentLiabilitiesandRelatedPartyPayables,respectively,relatedtodeferredcompensationandretentionbonuses[325].−ThecompanyrestoredthesalariesofallemployeestotheoriginalamounteffectiveMarch31,2023,followingadditionalfinancingreceivedinthefirstquarterof2023[326].−ThecompanyhasimplementedacostsavingsplaneffectiveJuly1,2022,whichincludesacompensationreductiondirectiveandretentionbonusprogram[323].CashFlowandGoingConcern−Thecompany’scondensedconsolidatedfinancialstatementsforthethreemonthsendedMarch31,2024,havebeenpreparedundertheassumptionofcontinuingasagoingconcernforthenexttwelvemonths[329].−NetcashusedinoperatingactivitiesforthethreemonthsendedMarch31,2023wasapproximately0.1 million are included in Accrued Expenses and Other Current Liabilities and Related Party Payables, respectively, related to deferred compensation and retention bonuses [325]. - The company restored the salaries of all employees to the original amount effective March 31, 2023, following additional financing received in the first quarter of 2023 [326]. - The company has implemented a cost savings plan effective July 1, 2022, which includes a compensation reduction directive and retention bonus program [323]. Cash Flow and Going Concern - The company’s condensed consolidated financial statements for the three months ended March 31, 2024, have been prepared under the assumption of continuing as a going concern for the next twelve months [329]. - Net cash used in operating activities for the three months ended March 31, 2023 was approximately 0.5 million, with a net loss of 1.565million[333].−Non−cashexpensestotaledapproximately1.565 million [333]. - Non-cash expenses totaled approximately 0.315 million, primarily due to stock-based compensation expense of 0.141million[333].−NetcashflowsusedininvestingactivitiesforthethreemonthsendedMarch31,2024wasapproximately0.141 million [333]. - Net cash flows used in investing activities for the three months ended March 31, 2024 was approximately 3.0 million, compared to 0.0millioninthesameperiodof2023[334].−NetcashflowsprovidedbyfinancingactivitiesforthethreemonthsendedMarch31,2024was0.0 million in the same period of 2023 [334]. - Net cash flows provided by financing activities for the three months ended March 31, 2024 was 1.4 million, including 1.0millionfromanexistingpromissorynotearrangement[335].−InthethreemonthsendedMarch31,2023,netcashflowsprovidedbyfinancingactivitieswas1.0 million from an existing promissory note arrangement [335]. - In the three months ended March 31, 2023, net cash flows provided by financing activities was 0.7 million, with 0.3millionfromtheissuanceofaconvertiblenote[336].−ThenetchangeinoperatingassetsandliabilitiesforthethreemonthsendedMarch31,2023resultedinacashuseofapproximately0.3 million from the issuance of a convertible note [336]. - The net change in operating assets and liabilities for the three months ended March 31, 2023 resulted in a cash use of approximately 0.793 million, primarily due to an increase in accounts payable of $0.496 million [333]. - The company does not have any off-balance sheet guarantees or trading activities involving non-exchange traded contracts [337]. - There were no applicable quantitative and qualitative disclosures about market risk [339].