November 14, 2022 - 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 September 30, 2022

¨ 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						3,238,893
(Class)						Outstanding at November 9, 2022

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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

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Item 1.

Financial Statements

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Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity for the three and nine months ended September 30, 2022 and 2021

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

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;

•the possibility that the Business Combination (as defined in "Recent Events - Proposed Spin-Off of our Enterprise Apps Business" section under Part I, Item 2 of this Form 10-Q) of our enterprise apps business will not be consummated within the anticipated time period or at all;

•the possibility that anticipated tax treatment and benefits of the Business Combination may not be achieved;

•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, increased costs for materials and labor and other impacts resulting from COVID-19 and the Russia/Ukraine conflict;

•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 the continued listing requirements of the Nasdaq Stock Market LLC;

•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.

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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.

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.

Note Regarding Reverse Stock Split

The Company effected a reverse stock split of its authorized and issued and outstanding common stock, par value $0.001, at a ratio of 1-for-75, effective as of October 7, 2022 (the "Reverse Stock Split"). We have reflected the Reverse Stock Split retroactively herein, unless otherwise indicated.

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 September 30, 2022 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 ended December 31, 2021 and 2020 included in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2022.

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	As of September 30, 2022		As of December 31, 2021
	(Unaudited)		(Audited)
Assets

Current Assets
Cash and cash equivalents	$	63,153	$	52,480
Accounts receivable, net of allowances of $268 and $272, respectively	2,879		3,218
Other receivables	137		321
Inventory	2,702		1,976
Short-term investments	—		43,125
Note receivable	150		—
Prepaid expenses and other current assets	3,258		4,842

Total Current Assets	72,279		105,962

Property and equipment, net	1,307		1,442
Operating lease right-of-use asset, net	1,323		1,736
Software development costs, net	1,684		1,792
Investments in equity securities	1,124		1,838
Long-term investments	2,500		2,500
Intangible assets, net	28,174		33,478
Goodwill	—		7,672
Other assets	204		253

Total Assets	$	108,595	$	156,673

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 September 30, 2022		As of December 31, 2021
	(Unaudited)		(Audited)
Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	2,559	$	2,414
Accrued liabilities	4,370		10,665
Operating lease obligation, current	514		643
Deferred revenue	3,730		4,805
Short-term debt	6,179		3,490
Acquisition liability	3,376		5,114

Total Current Liabilities	20,728		27,131

Long Term Liabilities
Operating lease obligation, noncurrent	852		1,108
Other liabilities, noncurrent	28		28
Acquisition liability, noncurrent	—		220

Total Liabilities	21,608		28,487

Commitments and Contingencies	—		—

Mezzanine Equity
Series 7 Convertible Preferred Stock - 58,750 shares authorized; zero and 49,250 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.	—		44,695
Series 8 Convertible Preferred Stock- 53,197.7234 shares authorized; 53,197.7234 and zero issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. (Liquidation preference of $53,198)	53,198		—

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 September 30, 2022 and December 31, 2021	—		—
Series 5 Convertible Preferred Stock - 12,000 shares authorized; 126 issued and 126 outstanding as of September 30, 2022 and December 31, 2021	—		—
Common Stock - $0.001 par value; 26,666,667 shares authorized; 2,250,597 and 1,730,141 issued and 2,250,596 and 1,730,140 outstanding as of September 30, 2022 and December 31, 2021, respectively.	2		2
Additional paid-in capital	331,487		332,761
Treasury stock, at cost, 1 share	(695)		(695)
Accumulated other comprehensive income	1,496		44
Accumulated deficit	(299,123)		(250,309)

Stockholders’ Equity Attributable to Inpixon	33,167		81,803

Non-controlling Interest	622		1,688

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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



Total Stockholders’ Equity	33,789		83,491

Total Liabilities, Mezzanine Equity and Stockholders’ Equity	$	108,595	$	156,673

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 September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
	(Unaudited)
Revenues	$	4,177	$	4,450	$	14,133	$	10,857

Cost of Revenues	1,255		1,186		4,037		2,966

Gross Profit	2,922		3,264		10,096		7,891

Operating Expenses
Research and development	4,644		3,254		13,642		9,185
Sales and marketing	2,157		2,407		6,757		6,119
General and administrative	5,146		8,571		18,148		26,570
Acquisition-related costs	2		93		270		1,098
Impairment of goodwill	—		—		7,570		—
Amortization of intangibles	1,366		1,395		4,056		3,088

Total Operating Expenses	13,315		15,720		50,443		46,060

Loss from Operations	$	(10,393)	(12,456)		(40,347)		$	(38,169)

Other Income (Expense)
Interest income (expense), net	(240)		(15)		(62)		1,191
Loss on exchange of debt for equity	—		—		—		(30)
Recovery of valuation allowance on related party loan - held for sale	—		—		—		7,345
Other (expense)/income, net	(1,506)		(47)		(2,277)		464
Gain on related party loan - held for sale	—		—		—		49,817
Unrealized gain/(loss) on equity securities	(5,854)		(22,285)		(7,110)		(51,250)
Total Other Income (Expense)	(7,600)		(22,347)		(9,449)		7,537

Net Loss, before tax	(17,993)		(34,803)		(49,796)		(30,632)
Income tax benefit/(provision)	—		854		(84)		(1,350)
Net Loss	$	(17,993)	(33,949)		(49,880)		$	(31,982)

Net Loss Attributable to Non-controlling Interest	(402)		(309)		(1,206)		(544)

Net Loss Attributable to Stockholders of Inpixon	(17,591)		(33,640)		(48,674)		(31,438)
Accretion of Series 7 Preferred Stock	—		(2,962)		(4,555)		(2,962)
Accretion of Series 8 Preferred Stock	(6,305)		—		(13,089)		—
Deemed dividend for the modification related to Series 8 Preferred Stock	—		—		(2,627)		—
Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock	—		—		1,469		—
Amortization premium- modification related to Series 8 Preferred Stock	1,265		—		2,626		—
Net Loss Attributable to Common Stockholders	$	(22,631)	$	(36,602)	$	(64,850)	$	(34,400)

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



Net Loss Per Share - Basic and Diluted	$	(10.21)	$	(22.31)	$	(31.08)	$	(23.95)


Weighted Average Shares Outstanding
Basic and Diluted	2,216,544		1,640,971		2,086,633		1,436,093

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 September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
	(Unaudited)
Net Loss	$	(17,993)	$	(33,949)	$	(49,880)	$	(31,982)
Unrealized foreign exchange (loss) income from cumulative translation adjustments	898		(404)		1,452		(1,012)

Comprehensive Loss	$	(17,095)	$	(34,353)	$	(48,428)	$	(32,994)

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share data)


	Series 7 Preferred Stock			Series 8 Preferred Stock			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		Shares	Amount					Shares	Amount
Balance - January 1, 2022	49,250	$	44,695	—	$	—	1	$	—	126	$	—	1,730,140	$	2	$	332,761		(1)	$	(695)	$	44	$	(250,309)	$	1,688	$	83,491
Common shares issued for extinguishment of debt	—	—		—	—		—	—		—	—		57,472	—		1,500			—	—		—		—		—		$	1,500
Stock options and restricted stock awards granted to employees for services	—	—		—	—		—	—		—	—		—	—		1,533			—	—		—		—		—		$	1,533
Series 7 Preferred redeemed for cash	(49,250)	(49,250)		—	—		—	—		—	—		—	—		—		1	—	—		—		—		—		$	—
Series 8 Preferred stock issued for cash	—	—		53,197.7234	41,577		—	—		—	—		—	—		5,329			—	—		—		—		—		$	5,329
Accretion Discount- Series 7 Preferred Shares	—	4,555		—	—		—	—		—	—		—	—		(4,555)			—	—		—		—		—		$	(4,555)
Accretion Discount- Series 8 Preferred Shares	—	—		—	548		—	—		—	—		—	—		(548)			—	—		—		—		—		$	(548)
Deemed dividend for the modification related to Series 8 Preferred Stock	—	—		—	2,627		—	—		—	—		—	—		(2,627)			—	—		—		—		—		$	(2,627)
Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock	—	—		—	(1,469)		—	—		—	—		—	—		1,469			—	—		—		—		—		$	1,469
Amortization Premium- modification related to Series 8 Preferred Stock	—	—		—	(110)		—	—		—	—		—	—		110			—	—		—		—		—		$	110
Restricted stock grants withheld for taxes	—	—		—	—		—	—		—	—		(12,802)	—		(336)			—	—		—		—		—		$	(336)
Common shares issued for CXApp earnout	—	—		—	—		—	—		—	—		144,986	—		3,697			—	—		—		—		—		$	3,697
Common shares issued for exchange of warrants	—	—		—	—		—	—		—	—		184,153	—		—			—	—		—		—		—		$	—
Cumulative translation adjustment	—	—		—	—		—	—		—	—		—	—		—			—	—		(102)		(15)		15		$	(102)
Net loss	—	—		—	—		—	—		—	—		—	—		—			—	—		—		(11,211)		(346)		$	(11,557)
Balance - March 31, 2022	—	—		53,197.7234	43,173		1	—		126	—		2,103,949	2		338,333			(1)	(695)		(58)		(261,535)		1,357		$	77,404

Stock options and restricted stock awards granted to employees for services	—	—		—	—		—	—		—	—		—	—		741			—	—		—		—		—		$	741
Common shares issued for extinguishment of debt	—	—		—	—		—	—		—	—		35,062	—		500			—	—		—		—		—		$	500

Accretion Discount- Series 8 Preferred Shares	—	—		—	6,236		—	—		—	—		—	—		(6,236)			—	—		—		—		—		$	(6,236)
Amortization Premium- modification related to Series 8 Preferred Stock	—	—		—	(1,251)		—	—		—	—		—	—		1,251			—	—		—		—		—		$	1,251


Cumulative translation adjustment	—	—		—	—		—	—		—	—		—	—		—			—	—		656		(56)		57		$	657
Net loss	—	—		—	—		—	—		—	—		—	—		—			—	—		—		(19,872)		(458)		$	(20,330)

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Balance - June 30, 2022	—	—	53,197.7234	48,158	1	—	126	—	2,139,011	2		334,589		(1)	(695)		598		(281,463)		956		$	53,987

Stock options granted to employees and consultants for services	—	—	—	—	—	—	—	—	—	—		688		—	—		—		—		—		688
Common shares issued for extinguishment of debt	—	—	—	—	—	—	—	—	111,585	—		1,250		—	—		—		—		—		1,250
Accrete discount - preferred series 8 shares	—	—	—	6,305	—	—	—	—	—	—		(6,305)		—	—		—		—		—		(6,305)
Amortization Premium- modification related to Series 8 Preferred Stock	—	—	—	(1,265)	—	—	—	—	—	—		1,265		—	—		—		—		—		1,265
Cumulative translation adjustment	—	—	—	—	—	—	—	—	—	—		—		—	—		898		(69)		68		897
Net loss	—	—	—	—	—	—	—	—	—	—		—		—	—		—		(17,591)		(402)		(17,993)
Balance - September 30, 2022	—	—	53,197.7234	53,198	1	—	126	—	2,250,596	$	2	$	331,487	(1)	$	(695)	$	1,496	$	(299,123)	$	622	$	33,789

The accompanying notes are an integral part of these financial statements

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INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share data)

Series 7 Preferred Stock

Series 4 Convertible Preferred Stock

Series 5 Convertible Preferred Stock

Common Stock

Form: 10-Q

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