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Inpixon Reports Third Quarter 2018 Financial Results and Provides Corporate Update

Conference Call to Be Held Today at 5:00 pm Eastern Time

PALO ALTO, Calif., Nov. 05, 2018 (GLOBE NEWSWIRE) -- Inpixon (INPX), a leading indoor positioning and data analytics company, today reported financial results for the third quarter ended September 30, 2018 and provided an update on corporate developments.

Third Quarter 2018 Financial Highlights:

  • 2018 Q3 revenue of $940,000
  • 2018 Q3 gross margin of 68%
  • 2018 Q3 GAAP net loss of $4.84 per share
  • 2018 Q3 Proforma Non-GAAP net loss1 of $3.61 per share
  • 2018 Q3 Non-GAAP Adjusted EBITDA1 loss of $3.4 million

“The successful spin-off of the value added reseller business during the third quarter of 2018 has immediately resulted in an increase in stockholders’ equity and gross profit and a decrease in GAAP net loss, even with the inclusion of two months of losses from the discontinued business. We anticipate that these improvements will continue through the fourth quarter, which will represent the first full quarter following the completion of the spin-off,” said Nadir Ali, CEO of Inpixon. “We are now exclusively focused on our indoor positioning analytics (“IPA”) business prepared to execute on a strategy that we believe will position Inpixon as a leader in a multi-billion dollar industry.  We have been able to increase the number of our channel partners and customers in both the federal and commercial sector resulting in a 67% increase in the number of purchase orders received in the third quarter of this year as compared to the second quarter of 2018.”

Third Quarter 2018 Financial Results

Revenue: Net revenues for the three months ended September 30, 2018 were $940,000 compared to $871,000 for the comparable period in the prior year. This $69,000 increase, or approximately 8%, is primarily associated with the increase in sales from our IPA products.

Gross Profit: Gross profit for the three months ended September 2018 was $642,000 versus $604,000 for the same period in 2017.  This increase in gross profit is due to the additional higher margin IPA sales. The gross profit margin for the three months ended September 30, 2018 was 68% compared to 69% during the three months ended September 30, 2017.

GAAP Net Loss: Net loss attributable to common stockholders of Inpixon for the three months ended September 30, 2018 was $5.2 million compared to $14.6 million for the prior year period. This decrease in loss of $9.4 million was primarily attributable to a decrease in compensation and occupancy costs due to the downsizing of staff and office locations and a $7.8 million impairment of goodwill charge included in deconsolidated operations.

Non-GAAP Net Loss1:  Proforma non-GAAP net loss per basic and diluted common share for the three months ended September 30, 2018 was ($3.61) compared to ($546.74) for the prior year period. These decreases are attributable to the changes discussed in our results of operations.

Non-GAAP adjusted EBITDA1: Adjusted EBITDA for the three months ended September 30, 2018 was a loss of $3.4 million compared to a loss of $3.1 million for the prior year period.

1 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release.  An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

Third Quarter 2018 Business Highlights and Recent Developments

  • Inpixon signs wireless specialist ROCK Networks as Indoor Positioning Analytics reseller partner.
  • Inpixon announces adding video camera data feed into indoor positioning analytics
  • Inpixon appoints retail industry veteran Adam Benson as CTO
  • Inpixon announced it has successfully completed the spin-off of its value-added reseller business, Sysorex, Inc. (“Sysorex”).  (Note: As a result, Inpixon and Sysorex are now two separate publicly traded companies.)
  • Inpixon announced NuVision Technologies has contracted to purchase Inpixon Indoor Positioning Analytics (IPA).
  • Inpixon recently provided a technology update on blockchain, voice-user interface, artificial intelligence, and Amazon Web Services.

All results summarized in this press release (including the financial statement tables) should be considered preliminary, are qualified in their entirety by the financial statement tables included in this press release and are subject to change. Please refer to Inpixon’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, which will be filed with the U.S. Securities and Exchange Commission on or about November 5, 2018.

Conference Call Information

Management will host a conference call on Monday, November 5, 2018, at 5:00pm Eastern Time to review financial results, corporate highlights and provide an update on developments. Following management’s formal remarks, there will be a question and answer session for Equity Analysts.

To listen to the conference call, interested parties within the U.S. should call 1-844-824-3831. International callers should call +1-412-317-5141. All callers should ask for the Inpixon conference call. The conference call will also be available through a live webcast, which can be accessed at https://services.choruscall.com/links/inpx181101.html or via the company’s website at http://client.irwebkit.com/inpixon/events.

A replay of the call will be available approximately one hour after the end of the call through December 1, 2018. The replay can be accessed via Inpixon’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10125897.

About Inpixon

Inpixon (INPX) is a leader in Indoor Positioning Analytics (IPA). Inpixon IPA Sensors are designed to find all accessible cellular, Wi-Fi, and Bluetooth devices anonymously. Paired with a high-performance data analytics platform, this technology delivers visibility, security, and business intelligence on any commercial or government location worldwide. Inpixon’s products and professional services group help customers take advantage of mobile, big data, analytics, and the Internet of Things (IoT) to uncover the untold stories of the indoors. For the latest insight on IPA, follow Inpixon on LinkedIn, @InpixonHQ on Twitter, and visit inpixon.com.

Safe Harbor Statement

All statements in this release that are not based on historical fact are “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, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward-looking statements included in this release on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of the control of Inpixon and its subsidiaries, which could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not limited to, the fluctuation of global economic conditions, the performance of management and employees, ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic and current reports available for review at sec.gov. Furthermore, we operate in a highly competitive and rapidly changing environment where new and unanticipated risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise forward-looking statements.

Non-GAAP Financial Measures

Management believes that certain financial measures not in accordance with generally accepted accounting principles in the United States (“GAAP””) are useful measures of operations. EBIDTA, Adjusted EBITDA and pro forma net loss per share are non-GAAP measures. Inpixon defines “EBITDA” as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Management uses Adjusted EBITDA as the matrix in which it manages the business and Inpixon defines “Adjusted EBITDA” as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation. Inpixon defines “pro forma net loss per share” as GAAP net loss per share adjusted for non-cash items including stock-based compensation, amortization of intangibles and one time charges including gain/loss on the settlement of obligations, severance costs, change in the fair value of derivative liability, acquisition costs and the costs associated with public offerings.

Management provides Adjusted EBITDA and pro forma net loss per share measures so that investors will have the same financial information that management uses, which may assist investors in assessing Inpixon’s performance on a period-over-period basis. Adjusted EBITDA or pro forma net loss per share is not a measure of financial performance under GAAP, and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA and pro forma net loss per share have limitations as analytical tools and should not be considered either in isolation or as a substitute for analysis of Inpixon’s results as reported under GAAP.

Contacts

Inpixon Investor Relations:
CORE IR
Scott Arnold, +1-516-222-2560
Managing Director
www.coreir.com

 
INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except number of shares and par value data)
             
    As of September 30,   As of December 31, 
    2018    2017 
       
             
    (Unaudited)   (Audited)
ASSETS        
Current Assets            
Cash and cash equivalents   $ 1,461     $ 119  
Accounts receivable, net     878       429  
Notes and other receivables     64       13  
Inventory     810       783  
Assets held for sale       --       23  
Related party receivable       750         --  
Current assets of deconsolidted operations       --       6,983  
Prepaid assets and other current assets     923       859  
Total Current Assets     4,886       9,209  
             
Property and equipment, net       219       348  
Software development costs, net       1,680       2,017  
Intangible assets, net       5,321       7,566  
Goodwill       636       636  
Non-current assets of deconsolidted operations       --       7,558  
Other assets     249       357  
Total Assets   $ 12,991     $ 27,691  
             
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY            
Current Liabilities            
Accounts payable   $ 777     $ 1,562  
Accrued liabilities     1,149       2,206  
Deferred revenue     52       58  
Short-term debt     1,815       3,058  
Derivative liabilities       --         48  
Current liabilities of deconsolidated operations       --         33,040  
Liabilities held for sale       --       2,059  
Total Current Liabilities     3,793       42,031  
             
Long Term Liabilities            
Long-term debt       142       767  
Other liabilities       29       73  
Non-current liabilities of deconsolidated operations       --       3,673  
Total Liabilities     3,964       46,544  
             
Commitments and Contingencies            
             
Stockholders’ (Deficit) Equity:            
Preferred Stock - $0.001 par value; 5,000,000 shares authorized, 0 issued and outstanding as of September 30, 2018 and December 31, 2017       --         --  
Series 4 Convertible Preferred Stock - $1,000 stated value; 10,185 shares authorized;            
7 and 0 issued and 7 and 0 outstanding at September 30, 2018 and December 31, 2017.            
Liquidation preference of $0 at September 30, 2018 and December 31, 2017.       --         --  
Common Stock - $0.001 par value; 250,000,000 shares authorized;            
1,281,126 and 24,055 issued and 1,281,113 and 24,042 outstanding at September 30, 2018 and December 31, 2017, respectively.     51       1  
Additional paid-in capital     120,124       78,302  
Treasury stock, at cost, 13 shares     (695 )     (695 )
Accumulated other comprehensive income     16       31  
Accumulated deficit     (110,482 )     (94,486 )
Stockholders’ (Deficit) Equity Attributable to Inpixon     9,014       (16,847 )
             
Non-controlling interest     13       (2,006 )
             
Total Stockholders' (Deficit) Equity     9,027       (18,853 )
             
Total Liabilities and Stockholders’ (Deficit) Equity   $ 12,991     $ 27,691  
             

 

 
INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
 
    For the Three Months Ended   For the Nine Months Ended
    September 30,   September 30,
    2018    2017    2018    2017 
    (Unaudited)   (Unaudited)
Revenues                        
Products   $ 271     $ 52     $ 554     $ 476  
Services     669       819       2,073       2,531  
Total Revenues     940       871       2,627       3,007  
                         
Cost of Revenues                        
Products     107       94       259       410  
Services     191       173       559       580  
Total Cost of Revenues     298       267       818       990  
                         
Gross Profit     642       604       1,809       2,017  
                         
Operating Expenses                        
Research and development     296       224       820       713  
Sales and marketing     447       441       1,259       1,917  
General and administrative     2,326       3,239       8,796       8,325  
Acquisition related costs     78       --       94       5  
Impairment of goodwill     --       587       --       587  
Amortization of intangibles     812       808       2,419       2,536  
Total Operating Expenses     3,959       5,299       13,388       14,083  
                         
Loss from Operations     (3,317 )     (4,695 )     (11,579 )     (12,066 )
                         
Other Income (Expense)                        
Interest expense     (78 )     (252 )     (981 )     (1,317 )
Change in fair value of derivative liability     --       46       48       254  
Gain on the sale of Sysorex Arabia     --       --       23       --  
Other income/(expense)     --       14       (11 )     (54 )
Total Other Income (Expense)     (78 )     (192 )     (921 )     (1,117 )
                         
Net Loss from Continuing Operations     (3,395 )     (4,887 )     (12,500 )     (13,183 )
                         
Loss from Discontinued Operations, Net of Tax     (1,785 )     (9,754 )     (4,778 )     (13,946 )
                         
Net Loss     (5,180 )     (14,641 )     (17,278 )     (27,129 )
                         
Net Loss Attributable to Non-controlling Interest     4       (4 )     6       (13 )
                         
Net Loss Attributable to Stockholders of Inpixon   $ (5,184 )   $ (14,637 )   $ (17,284 )   $ (27,116 )
                         
Deemed dividend to preferred stockholders     --       --       (11,235 )     --  
                         
Net Loss Attributable to Common Stockholders   $ (5,184 )   $ (14,637 )   $ (28,519 )   $ (27,116 )
                         
Net Loss Per Basic and Diluted Common Share                        
Loss from continuing operations   $   (3.17 )   $ (620.65 )   $ (45.97 )   $   (3,372.47 )
Loss from discontinued operations       (1.67 )     (1,238.76 )     (9.25 )       (3,567.66 )
Net Loss Per Share - Basic and Diluted   $ (4.84 )   $ (1,858.90 )   $ (55.24 )   $ (6,936.81 )
                         
Weighted Average Shares Outstanding                        
Basic and Diluted     1,071,310       7,874       516,302       3,909  
                         
                         
Comprehensive Loss                        
Net Loss   $ (5,180 )   $ (14,641 )     (17,278 )     (27,129 )
Unrealized foreign exchange gain/(loss) from cumulative translation adjustments     (10 )     (5 )     (15 )     (15 )
Comprehensive Loss   $ (5,190 )   $ (14,646 )   $ (17,293 )   $ (27,144 )
                         

 

 

 
INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
    For the Nine Months Ended
    September 30,
    2018     2017  
 (Unaudited)   
Cash Flows from Operating Activities            
Net loss   $ (17,278 )   $ (27,129 )
Adjustment to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     1,334       1,324  
Amortization of intangible assets       3,804         4,094  
Impairment of goodwill       --         8,392  
Stock based compensation       979         1,282  
Amortization of technology       50         50  
Change in fair value of derivative liability       (48 )       (254 )
Amortization of debt discount       417         1,545  
Amortization of deferred financing costs       --         167  
Provision for doubtful accounts       221         773  
Gain on the settlement of liabilities       (307 )       --  
Gain on the sale of Sysorex Arabia       (23 )       --  
Other       (37 )       129  
Changes in operating assets and liabilities:            
Accounts receivable and other receivables       207         5,223  
Inventory       (19 )       270  
Other current assets       54         455  
Prepaid licenses and maintenance contracts       (5 )       9,787  
Other assets       34         46  
Accounts payable       (8,797 )       4,751  
Accrued liabilities       (3,057 )       455  
Deferred revenue       64         (10,704 )
Other liabilities       (978 )       (438 )
Total Adjustments       (6,107 )       27,347  
             
Net Cash (Used in) Provided by Operating Activities       (23,385 )       218  
             
Cash Flows Used in Investing Activities            
Purchase of property and equipment       (39 )       (91 )
Investment in capitalized software       (661 )       (1,063 )
Investment in technology       (175 )       --  
Cash spun off a result of de-consolidation       (362 )       --  
             
Net Cash Flows Used in Investing Activities       (1,237 )       (1,154 )
             
Cash Flows from Financing Activities            
Repayments to bank facility       (1,141 )       (3,348 )
Net proceeds from issuance of common stock, preferred stock and warrants       27,961         6,117  
Repayment of notes payable       (113 )       (20 )
Advances to related party       (774 )       --  
Repayments from related party       24         --  
Repayment of debenture       --         (2,850 )
Net proceeds from convertible promissory notes       --         2,000  
Repayment of convertible promissory notes       --         (2,662 )
             
Net Cash Flows Provided by (Used in) Financing Activities       25,957         (763 )
             
Effect of Foreign Exchange Rate on Changes on Cash       (15 )       (15 )
             
Net Increase (Decrease) in Cash and Cash Equivalents       1,320         (1,714 )
             
Cash and Cash Equivalents - Beginning of Period       141         1,821  
             
Cash and Cash Equivalents - End of Period   $   1,461      $    107  
 

  


 

 

  

 
Reconciliation of Non-GAAP Financial Measures: 
 
(In thousands)   Three Months Ended   Nine Months Ended
September 30,   September 30,
    2018     2017     2018     2017  
Net loss attributable to common stockholders   $ (5,184 )   $ (14,637 )   $ (17,284 )   $ (27,116 )
Adjustments:                        
Non-recurring one-time charges:                        
Acquisition transaction/financing costs     78       --       94       5  
Costs associated with public offering     4       159       85       159  
Impairment of goodwill     --       8,392       --       8,392  
Gain on the settlement of obligations     (45 )     --       (307 )     --  
Gain on earnout     --       (561 )     (934 )     (561 )
Gain on the sale of Sysorex Arabia     --       --       (23 )     --  
Gain on the sale of contracts     --       --       (601 )     --  
Change in the fair value of derivative liability     --       (46 )     (48 )     (254 )
Provison for doubtful accounts     --       773       221       773  
Severance     --       --       15       27  
Stock based compensation - acquisition costs     --       --       --       7  
Stock-based compensation – compensation and related benefits     122       288       979       1,275  
Interest expense     146       694       1,785       2,721  
Depreciation and amortization     1,452       1,817       5,137       5,418  
Adjusted EBITDA   $ (3,427 )   $ (3,121 )   $ (10,881 )   $ (9,154 )
                         


                         
(In thousands, except share data)   Three Months Ended   Nine Months Ended
September 30,   September 30,
    2018    2017    2018   2017
Net loss attributable to common stockholders   $   (5,184 )   $   (14,637 )   $   (17,284 )    $   (27,116 )
Adjustments:                        
Non-recurring one-time charges:                        
Acquisition transaction/financing costs       78         --         94         5  
Costs associated with public offering       4         159         85         159  
Impairment of goodwill       --         8,392         --         8,392  
Gain on the settlement of obligations       (45 )       --         (307 )       --  
Gain on earnout       --         (561 )       (934 )       (561 )
Gain on the sale of Sysorex Arabia       --         --         (23 )       --  
Gain on the sale of contracts       --         --         (601 )       --  
Change in the fair value of derivative liability       --         (46 )       (48 )       (254 )
Provison for doubtful accounts       --         773         221         773  
Severance       --         --         15         27  
Stock based compensation - acquisition costs       --         --         --         7  
Stock-based compensation – compensation and related benefits       122         288         979         1,275  
Amortization of intangibles       1,158         1,327         3,804         4,094  
Proforma non-GAAP net loss     $   (3,867 )   $     (4,305 )     $   (13,999 )   $     (13,199 )
Proforma non-GAAP net loss per basic and diluted common share     $   (3.61 )   $   (546.74 )     $   (27.11 )   $   (3,376.57 )
Weighted average basic and diluted common shares outstanding       1,071,310         7,874         516,302         3,909