Inpixon(US:INPX)2024-05-20 21:12Commercial 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 $0.2 million, a significant increase from $0.0 million in the same period of 2023, marking a change of approximately $0.2 million [291]. - Operating expenses for the same period increased to $9.0 million from $1.3 million, representing a substantial increase of approximately $7.7 million or 602% [294]. - Net loss for the three months ended March 31, 2024 was $2.6 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 $6.3 million, compared to a loss of $0.3 million in the same period last year, an increase of approximately $6.6 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 $1.8 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 $6.7 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 $12.9 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 $2.6 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 $0.7 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 $1.5 million three months following the closing of the XTI Merger, plus $4.5 million in 12 equal monthly installments of $375,000 each [319]. - As of March 31, 2024, liability amounts of approximately $0.7 million and $0.1 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 $1.565 million [333]. - Non-cash expenses totaled approximately $0.315 million, primarily due to stock-based compensation expense of $0.141 million [333]. - Net cash flows used in investing activities for the three months ended March 31, 2024 was approximately $3.0 million, compared to $0.0 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 $1.0 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 $0.3 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].