Inpixon(INPX) - 2020 Q4 - Annual Report

Market Growth and Trends - The global market for Indoor Positioning and Indoor Navigation (IPIN) is projected to grow from USD 2.8 billion in 2020 to USD 56.6 billion by 2027, at a CAGR of 53.3%[28] - The global indoor location market is expected to increase from USD 6.1 billion in 2020 to USD 17.0 billion by 2025, with a CAGR of 22.5%[31] - The real-time location systems (RTLS) market is anticipated to grow from USD 3.4 billion in 2020 to USD 10.3 billion by 2025, reflecting a CAGR of 24.8%[31] - The smart buildings software market is projected to grow from USD 6.4 billion in 2021 to USD 8.5 billion by 2025, indicating a growth trajectory of 7% CAGR[31] Company Strategy and Acquisitions - Inpixon has pursued multiple acquisitions to enhance its technology portfolio, including Locality Systems, GTX Corp, and Jibestream, expanding its capabilities in wireless device positioning and indoor mapping[26] - The company aims to explore strategic transactions that provide operational synergies and enhance shareholder value, including minority investments and joint ventures[25] - The company completed several strategic acquisitions since 2014, including Locality Systems, Inc. and Jibestream, enhancing its product offerings in indoor positioning and analytics[85] - In 2020, the company acquired Nanotron, expanding its asset tracking and RTLS business with wireless location awareness technology[77] - The company acquired an exclusive license for the SYSTAT and SigmaPlot software suite, enhancing its analytics capabilities[75] - The company has expanded its technology portfolio with the acquisition of GPS technologies and IP, including a smart school safety network solution[73] Financial Performance and Challenges - The company incurred net losses of approximately $29.2 million and $34.0 million for the fiscal years ended December 31, 2020 and 2019, respectively[101] - Revenues increased by 48% compared to the same period in 2019, but are still insufficient to fund operations and cover operating losses[102] - The company has a history of operating losses and working capital deficiency, raising concerns about achieving profitability and securing additional financing[101] - The company anticipates needing additional cash financing to support growth and respond to market demands[145] - The company may need additional capital to support operations, which could involve dilutive equity offerings[95] Product and Technology Development - Inpixon's Indoor Intelligence platform utilizes sensor technology to provide positioning information with accuracy ranging from several meters to approximately thirty centimeters, depending on conditions and product deployment[22] - Inpixon's analytics capabilities integrate existing video surveillance feeds with location data, enhancing security and customer relations[23] - The company plans to expand its use of artificial intelligence and machine learning to improve positioning accuracy and enhance device capture algorithms, aiming for better predictive analytics[44] - Inpixon's mapping solution integrates business data with geospatially accurate indoor maps, facilitating various use cases such as facility management and asset tracking[39] - The company is investing in augmented reality technologies to enhance its mapping platform, allowing for new navigation use cases and optimization in various environments[46] Customer Dependency and Market Risks - The company's top three customers accounted for approximately 43% and 66% of gross revenue during the years ended December 31, 2020 and 2019, respectively, highlighting a reliance on a few key clients[52] - The company relies on increasing sales to existing customers and acquiring new customers to enhance financial performance[130] - The newspaper publishing industry is facing challenges, which may negatively impact sales of the company's Shoom products[131] - The company faces significant price competition, which may force it to reduce prices and impact profitability[136] - The market acceptance of the company's products is critical, and failure to meet customer demands could adversely affect financial results[148] Legal and Regulatory Compliance - The company is subject to numerous legal and regulatory requirements, and violations could result in significant fines, criminal sanctions, and damage to its reputation[125] - The company has not registered copyrights on its proprietary software, which may hinder its ability to protect its intellectual property and could adversely affect its operations and financial condition[126] - The company may face claims related to the wrongful use or disclosure of trade secrets, which could result in substantial costs and distract management[116] - The company is subject to various risks from currency fluctuations and trade barriers that could impact overall business operations and financial results[164] Operational and Management Challenges - The company has faced challenges in integrating acquired businesses, which may disrupt ongoing operations and affect financial performance[86] - The integration of new personnel from acquisitions may disrupt ongoing operations and requires effective management to avoid negative impacts[97] - The company may face challenges in maintaining effective internal controls, which could harm its ability to report financial results accurately and prevent fraud[198] - The company may incur additional indebtedness in the future, intensifying existing risks associated with its current debt levels[113] Stock and Market Performance - The closing market price for the company's common stock has varied between a high of $2.84 and a low of $1.00 in the twelve-month period ended February 11, 2021[203] - The market price of the company's common stock is likely to continue to be volatile, with fluctuations influenced by market, industry, and other factors[204] - The company has a shelf registration statement allowing it to issue up to $300 million in various securities until June 2021, which could impact the trading price of its common stock[208] - The company must comply with Nasdaq's continued listing standards, including a minimum bid price requirement of $1.00 per share and a minimum stockholders' equity of $2.5 million[212]