August 16, 2021 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 001-36404

INPIXON

(Exact name of registrant as specified in its charter)


Nevada						88-0434915
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2479 E. Bayshore Road

Suite 195

Palo Alto, CA 94303

(Address of principal executive offices)

(Zip Code)

(408) 702-2167

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on
which each is registered

Common Stock, par value $0.001

INPX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, Par Value $0.001						117,331,219
(Class)						Outstanding at August 11, 2021

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INPIXON

TABLE OF CONTENTS

Page No.

Special Note Regarding Forward-Looking Statements and Other Information Contained in this Report

PART I - FINANCIAL INFORMATION

ITEM 1.

Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2021 and 2020

Condensed Consolidated Statements of Changes in Stockholders' Equity for the six months ended June 30, 2021 and 2020

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

CONTAINED IN THIS REPORT

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•our history of losses;

•our ability to achieve profitability;

•our limited operating history with recent acquisitions;

•risks related to our recent acquisitions;

•our ability to successfully integrate companies or technologies we acquire;

•emerging competition and rapidly advancing technology in our industry that may outpace our technology;

•customer demand for the products and services we develop;

•the impact of competitive or alternative products, technologies and pricing;

•our ability to manufacture any products we develop;

•general economic conditions and events and the impact they may have on us and our potential customers, including, but not limited to supply chain challenges and other impacts resulting from COVID-19;

•our ability to obtain adequate financing in the future;

•our ability to consummate strategic transactions which may include acquisitions, mergers, dispositions or investments;

•our ability to maintain compliance with other continued listing requirements;

•lawsuits and other claims by third parties or investigations by various regulatory agencies that we are and may be become subject to and are required to report, including but not limited to, the U.S. Securities and Exchange Commission;

•our success at managing the risks involved in the foregoing items; and

•other factors discussed in this Form 10-Q.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or collaborations or strategic partnerships we may enter into.

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You should read this Form 10-Q and the documents that we have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Unless otherwise stated or the context otherwise requires, the terms “Inpixon” “we,” “us,” “our” and the “Company” refer collectively to Inpixon and, where appropriate, its subsidiaries.

Unless indicated otherwise in this Form 10-Q, all references to “$” refer to United States dollars, the lawful currency of the United States of America. References to “CAD” refer to Canadian dollars, the lawful currency of Canada. References to “INR” refer to Indian rupees, the lawful currency of India. References to “EUR” refer to euros, the single currency of Participating Member States of the European Union. References to “GBP” refer to the British pound, the lawful currency of the United Kingdom.

iii

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PART I — FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information which are the accounting principles that are generally accepted in the United States of America and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

The results for the period ended June 30, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our audited consolidated financial statements for the fiscal years December 31, 2020 and 2019 included in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2021.

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares and par value data)


	As of June 30, 2021		As of December 31, 2020
	(Unaudited)		(Audited)
Assets

Current Assets
Cash and cash equivalents	$	24,912	$	17,996
Accounts receivable, net of allowances of $234 and $235, respectively	2,694		1,739
Notes and other receivables	272		152
Inventory, net of reserve of $138 and $138, respectively	1,919		1,243
Short-term investments	45,303		7,998
Prepaid expenses and other current assets	1,381		1,197

Total Current Assets	76,481		30,325

Property and equipment, net	1,499		1,445
Operating lease right-of-use asset, net	1,775		2,077
Software development costs, net	1,658		1,721
Investments in equity securities	29,940		—
Long-term investments	2,500		2,500
Intangible assets, net	36,530		14,203
Goodwill	23,890		6,588
Other assets	141		152

Total Assets	$	174,414	$	59,011

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except number of shares and par value data)


	As of June 30, 2021		As of December 31, 2020
	(Unaudited)		(Audited)
Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	1,726	$	908
Accrued liabilities	5,717		2,739
Income tax liabilities	6,750		—
Operating lease obligation, current	602		647
Deferred revenue	2,780		1,922
Short-term debt	4,251		5,401
Acquisition liability	440		500

Total Current Liabilities	22,266		12,117

Long Term Liabilities
Operating lease obligation, noncurrent	1,202		1,457
Other liabilities, noncurrent	35		7
Acquisition liability, noncurrent	5,425		750

Total Liabilities	28,928		14,331

Commitments and Contingencies

Stockholders’ Equity
Preferred Stock -$0.001 par value; 5,000,000 shares authorized
Series 4 Convertible Preferred Stock - 10,415 shares authorized; 1 issued, and 1 outstanding as of June 30, 2021 and December 31, 2020, respectively	—		—
Series 5 Convertible Preferred Stock - 12,000 shares authorized; 126 issued, and 126 outstanding as of June 30, 2021 and December 31, 2020, respectively.	—		—
Common Stock - $0.001 par value; 250,000,000 shares authorized; 116,454,028 and 53,178,462 issued and 116,454,027 and 53,178,461 outstanding as of June 30, 2021 and December 31, 2020, respectively.	116		53
Additional paid-in capital	322,196		225,613
Treasury stock, at cost, 1 share	(695)		(695)
Accumulated other comprehensive income	52		660
Accumulated deficit	(178,931)		(180,992)

Stockholders’ Equity Attributable to Inpixon	142,738		44,639

Non-controlling Interest	2,748		41

Total Stockholders’ Equity	145,486		44,680

Total Liabilities and Stockholders’ Equity	$	174,414	$	59,011

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(Unaudited)
Revenues	$	3,453	1,076		6,407		$	2,880

Cost of Revenues	896		305		1,780		814

Gross Profit	2,557		771		4,627		2,066

Operating Expenses
Research and development	3,223		1,278		5,931		2,612
Sales and marketing	2,073		1,468		3,712		2,159
General and administrative	8,828		2,476		17,999		6,268
Acquisition-related costs	535		169		1,005		196
Amortization of intangibles	1,191		508		1,693		1,524

Total Operating Expenses	15,850		5,899		30,340		12,759

Loss from Operations	$	(13,293)	(5,128)		(25,713)		$	(10,693)

Other Income (Expense)
Interest income (expense), net	1,555		(777)		1,206		(1,397)
Loss on exchange of debt for equity	—		(47)		(30)		(132)
Benefit (provision) for valuation allowance on related party loan - held for sale	7,462		(835)		7,345		(835)
Other income (expense)	125		(517)		511		(499)
Gain on related party loan - held for sale	49,817		—		49,817		—
Unrealized loss on equity securities	(28,965)		—		(28,965)		—
Total Other Income (Expense)	29,994		(2,176)		29,884		(2,863)

Net Income (Loss), before tax	16,701		(7,304)		4,171		(13,556)
Income tax (provision) benefit	(2,195)		—		(2,204)		87
Net Income (Loss)	$	14,506	(7,304)		1,967		$	(13,469)

Net (Loss) Income Attributable to Non-controlling Interest	(253)		19		(235)		9

Net Income (Loss) Attributable to Stockholders of Inpixon	$	14,759	$	(7,323)	2,202		$	(13,478)

Net Income (Loss) Per Share - Basic	$	0.13	$	(0.32)	$	0.02	$	(0.97)
Net Income (Loss) Per Share - Diluted	$	0.13	$	(0.32)	$	0.02	$	(0.97)

Weighted Average Shares Outstanding
Basic	110,040,532		22,823,976		94,577,520		13,931,245
Diluted	110,041,378		22,823,976		94,591,619		13,931,245

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	Unaudited
Net Income (Loss)	$	14,506	$	(7,304)	$	1,967	$	(13,469)
Unrealized foreign exchange (loss) gain from cumulative translation adjustments	$	52	$	318	$	(619)	$	(295)

Comprehensive Income (Loss)	$	14,558	$	(6,986)	$	1,348	$	(13,764)

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

(In thousands, except per share data)


	Series 4 Convertible Preferred Stock			Series 5 Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Non-Controlling Interest		Total Stockholders’ (Deficit) Equity
	Shares	Amount		Shares	Amount		Shares	Amount				Shares	Amount
Balance - January 1, 2021	1	$	—	126	$	—	53,178,462	$	53	$	225,613	(1)	$	(695)	$	660	$	(180,992)	$	41	$	44,680

Common shares issued for registered direct offering	—	—		—	—		15,800,000	16		74,058		—	—		—		—		—		74,074
Common shares issued for extinguishment of debt	—	—		—	—		893,921	1		1,499		—	—		—		—		—		1,500
Common shares issued for cashless stock options exercised	—	—		—	—		4,977	—		—		—	—		—		—		—		—
Common shares issued for net proceeds from warrants exercised	—	—		—	—		31,505,088	32		3,747		—	—		—		—		—		3,779
Stock options granted to employees and consultants for services	—	—		—	—		—	—		5,096		—	—		—		—		—		5,096
Cumulative translation adjustment	—	—		—	—		—	—		—		—	—		(671)		—		—		(671)
Net loss	—	—		—	—		—	—		—		—	—		—		(12,557)		18		(12,539)

Balance - March 31, 2021	1	$	—	126	$	—	101,382,448	$	101	$	310,013	(1)	$	(695)	$	(11)	$	(193,549)	$	59	$	115,919

Stock options and restricted stock awards granted to employees for services	—	—		—	—		—	—		2,053		—	—		—		—		—		2,053
Common shares issued for Game Your Game acquisition	—	—		—	—		1,179,077	1		1,402		—	—		—		—		2,811		4,214
Common shares issued for Visualix acquisition	—	—		—	—		369,563	—		429		—	—		—		—		—		429
Common shares issued for the CXApp	—	—		—	—		8,849,538	9		9,991		—	—		—		—		—		10,000
Common shares for cashless stock options exercised	—	—		—	—		414	—		—		—	—		—		—		—		—
Common shares issued for restricted stock grants	—	—		—	—		4,672,988	5		(5)		—	—		—		—		—		—
Taxes paid on stock based compensation	—	—		—	—		—	—		(1,687)		—	—		—		—		—		(1,687)
Cumulative translation adjustment	—	—		—	—		—	—		—		—	—		63		(141)		130		52
Net income (loss)	—	—		—	—		—	—		—		—	—		—		14,759		(253)		14,506

Balance - June 30, 2021	1	$	—	126	$	—	116,454,028	$	116	$	322,196	(1)	$	(695)	$	52	$	(178,931)	$	2,748	$	145,486

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

(In thousands, except per share data)


	Series 4 Convertible Preferred Stock			Series 5 Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Non-Controlling Interest		Total Stockholders’ (Deficit) Equity
	Shares	Amount		Shares	Amount		Shares	Amount				Shares	Amount
Balance - January 1, 2020	1	$	—	126	$	—	4,234,923	$	4	$	158,383	(1)	$	(695)	$	96	$	(151,762)	$	26	$	6,052
Stock options granted to employees and consultants for services	—	—		—	—		—	—		399		—	—		—		—		—		399
Common Shares issued for net cash proceeds of a public offering	—	—		—	—		937,010	1		1,251		—	—		—		—		—		1,252
Common shares issued for extinguishment of debt	—	—		—	—		1,896,557	2		4,192		—	—		—		—		—		4,194
Cumulative translation adjustment	—	—		—	—		—	—		—		—	—		(613)		—		(1)		(614)
Net income (loss)	—	—		—	—		—	—		—		—	—		—		(6,158)		(10)		(6,168)

Balance - March 31, 2020	1	$	—	126	$	—	7,068,490	$	7	$	164,225	(1)	$	(695)	$	(517)	$	(157,920)	$	15	$	5,115

Stock options granted to employees for services	—	—		—	—		—	—		286		—	—		—		—		—		286
Common and preferred shares issued for net cash proceeds from a public offering	—	—		—	—		29,033,036	29		40,490		—	—		—		—		—		40,519
Common shares issued for extinguishment of debt	—	—		—	—		3,889,990	4		4,588		—	—		—		—		—		4,592
Common shares issued for extinguishment of liability	—	—		—	—		183,486			200		—	—		—		—				200
Cumulative translation adjustment	—	—		—	—		—	—		—		—	—		318		—		—		318
Net income (loss)	—	—		—	—		—	—		—		—	—		—		(7,322)		19		(7,303)

Balance - June 30, 2020	1	$	—	126	$	—	40,175,002	$	40	$	209,789	(1)	$	(695)	$	(199)	$	(165,242)	$	34	$	43,727

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	For the Six Months Ended June 30,
	2021		2020
Cash Flows Used in Operating Activities	(Unaudited)

Net income (loss)	$	1,967	$	(13,469)
Adjustment to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	625		384
Amortization of intangible assets	2,007		1,524
Amortization of right of use asset	370		356
Stock based compensation	7,149		685
Loss on exchange of debt for equity	30		132
Amortization of debt discount	224		1,909
Accrued interest income, related party	(1,627)		(32)
Unrealized gain on note	(490)		—
(Recovery) provision for valuation allowance for held for sale loan	(7,345)		835
Provision for valuation allowance for related party receivable	—		648
Gain on settlement of related party promissory note and loan related party receivable	(49,817)		—
Deferred income tax	(4,507)		(87)
Unrealized loss on equity securities	28,965		—
Other	57		21

Changes in operating assets and liabilities:
Accounts receivable and other receivables	532		(107)
Inventory	(555)		22
Prepaid expenses and other current assets	(319)		(905)
Other assets	203		(13)
Accounts payable	(331)		(1,539)
Accrued liabilities	2,494		(593)
Income tax liabilities	6,711		—
Deferred revenue	(238)		105
Operating lease obligation	(364)		(362)
Other liabilities	96		117

Net Cash Used in Operating Activities	(14,163)		(10,369)

Cash Flows Used in Investing Activities
Purchase of property and equipment	(149)		(39)
Purchases of capitalized software	(373)		(433)
Purchases of other short term investments	(2,000)		—
Purchases of treasury bills	(63,362)		—
Sales of treasury bills	28,000		—
Purchase of Systat licensing agreement	(900)		—
Acquisition of Game Your Game	184		—
Acquisition of CXApp	(15,186)		—
Acquisition of Visualix	(61)		—
Net Cash Used in Investing Activities	$	(53,847)	(472)

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)



Cash From Financing Activities
Net repayments to bank facility	—		(150)
Net proceeds from issuance of common stock and warrants	77,853		41,771
Taxes paid related to net share settlement of restricted stock units	(1,687)		—
Net proceeds from notes payable	—		1
Loans to related party	(117)		(1,035)
Repayments from related party	—		200
Net proceeds from promissory notes	—		5,000
Repayment of CXApp acquisition liability	(137)		—
Repayment of acquisition liability to Nanotron shareholders	(467)		—
Repayment of acquisition liability to Locality shareholders	(500)		(250)
Net Cash Provided By Financing Activities	74,945		45,537

Effect of Foreign Exchange Rate on Changes on Cash	(19)		(15)

Net Increase in Cash, Cash Equivalents and Restricted Cash	6,916		34,681

Cash, Cash Equivalents and Restricted Cash - Beginning of period	17,996		4,849

Cash, Cash Equivalents and Restricted Cash - End of period (Note 3)	$	24,912	$	39,530

Supplemental Disclosure of cash flow information:
Cash paid for:
Interest	$	1	$	2
Income Taxes	$	—	$	—

Non-cash investing and financing activities
Common shares issued for extinguishment of liability	$	—	$	200
Common shares issued for extinguishment of debt	$	1,500	$	8,786
Right of use asset obtained in exchange for lease liability	$	—	$

Form: 10-Q

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