Inpixon

Kurta Law is investigating broker recommendations of Inpixon, one of more than 180 stocks underwritten by Aegis Capital Corp. that may have been excessively risky for investors. Under regulations like FINRA Rule 2111 and Regulation Best Interest, brokers have a duty to recommend investments that are suitable for each investor’s risk profile.

Investors are usually required to pursue FINRA arbitration rather than suing in a civil court. A securities attorney can help evaluate your case and take on the arbitration process. Consider reaching out to us at (877) 600-0098 or email info@kurtalawfirm.com to speak to one of our securities attorneys for free today.

What is Inpixon?

The prospectus states that Inpixon (previously, INPX; currently XTIA) was a company developing Indoor Position Analytics technology that anonymously detects cellular, Wi-Fi, Bluetooth, and RFID signals. It used this technology and the data it gathers to provide businesses and government agencies with improved security and insights into customer journeys. Its commercial applications included retail stores, hotels and resorts, airports, and office buildings.

According to its prospectus, Inpixon also provided the following products and services:

• LightMiner Analytics Platform: Cloud-based Big Data analytics platform.
• Data Science and Advanced Analytics Consulting Services: Consulting on analyzing and acting on insights from Big Data sets.
• AirPatrol for Security (formerly ZoneDefense): Mobile device that detects devices in a limited area, determines their compliance with the area’s network security policies, and can trigger the device’s apps or features to achieve compliance
• AirPatrol for Retail (formerly ZoneAware): Product that delivers “location and/or context-based marketing services and information delivery” to mobile devices in a defined space.
• Shoom Products (eTearsheets, eInvoice, AdDelivery, ePaper): Cloud-based applications and data analytics geared toward the media and publishing industry.
• Enterprise Infrastructure Solutions and Services: Products and services that assist clients in determining the best technological solutions for their business.
• IT Services: Services including cybersecurity, project design, systems integration, and more.

Merger with XTI Aircraft Company

On March 13, 2024, Inpixon merged with XTI Aircraft Company, becoming XTI Aerospace, Inc. (XTIA). This company is focused on aircraft development and continues to offer some of Inpixon’s previous location analytics technology.

Inpixon’s United Kingdom-based subsidiary, also offering analytics and data visualization products, was spun off as Grafiti Holdings and purchased by Damon Motors Inc.

What were the Risks Associated with Inpixon?

In its prospectus, Inpixon disclosed major risks related to its stock. Some of the most significant risks involve the company’s business fundamentals.

Ongoing Losses and Doubt as a Going Concern

As of March 31, 2017, Inpixon had less than half of the cash and cash equivalents that it held on the same date in 2016, totaling only $738,000. The company had a history of multimillion dollar operating losses, and a capital deficit of approximately $25.3 million as of March 31, 2017. These conditions raised doubt about the company’s ability to continue as a going concern.

Risks Related to Acquisitions

Inpixon states that it completed five acquisitions between March 2013 and November 2016. Some risks associated with these rapid acquisitions include:

• Integrating new acquisitions’ existing policies and procedures, operations, and cultures with Inpixon
• Ensuring acquired technology platforms meet the company’s standards for financial reporting and compliance with securities laws and regulations
• Reconciling different financial reporting systems
• Potential loss of customers

The prospectus also states that a “significant portion of the purchase price” for these acquisitions consists of goodwill and intangible assets. General examples of goodwill and intangible assets include brands and intellectual property, which do not exist physically but do have value to a company.

Many factors can influence the value of a company’s goodwill and intangible assets, and a decline in value could have a strong negative impact on a company’s financial situation.

Reliance on Government Contracts

Inpixon notes that a “substantial portion” of its U.S. revenues depend on “sales and services rendered directly or indirectly to the U.S. government.” It lists the Department of Defense, FBI, Bureau of Prisons, and NASA as government agencies it contracts with.

The company’s reliance on government contracts depends on government defense spending, which is not guaranteed, as well as on its ability to compete for contracts against larger companies. It must also comply with the requirements and regulations set by the government for contractors, and failure to do so can result in termination of the contract, prohibition from contracting with the government again, and other sanctions and penalties.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Do You Have Concerns Related to Your Shares of Inpixon?

If you believe Inpixon was overly risky for your risk profile, consider reaching out to a Kurta Law securities attorney for a consultation. Our securities attorneys regularly take on cases of unsuitable investment recommendations and can help you get a fair settlement through FINRA arbitration. Call (877) 600-0098 or email info@kurtalawfirm.com.