Inpixon(US:INPX)2024-08-14 21:05Financial Performance - Revenue for the three months ended June 30, 2024, was $1.0 million, an increase of approximately $1.0 million compared to $0.0 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 $10.5 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 $14.7 million, compared to a net loss of $4.6 million in the same period of 2023, representing an increase of $10.1 million[234]. - Revenue for the six months ended June 30, 2024, was $1.3 million, compared to $0.0 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 $18.3 million from $5.3 million in the same period of 2023[243]. - Gross profit for the three months ended June 30, 2024, was $0.7 million, compared to $0.0 million in the same period of 2023[238]. - Gross profit for the six months ended June 30, 2024, was $0.8 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 $5.5 million, compared to a loss of $0.9 million for the same period in 2023, reflecting a fluctuation of approximately $6.4 million[250]. - For the six months ended June 30, 2024, the company incurred a net loss of approximately $17.3 million and used approximately $8.2 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 $5.8 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 $8.2 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 $2.9 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 $11.1 million, significantly higher than $1.5 million in 2023[282]. Transaction Bonuses and Liabilities - The company accrued 100% of the transaction bonuses, recognizing approximately $6.7 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 $6.7 million, with $0.9 million paid during Q3 2024[269]. - As of June 30, 2024, the company has liabilities of approximately $0.5 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 $500 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].