Disclosures

Inpixon Corp.

We, Josh Nichols and Mike Crawford , certify that this report reflects our personal beliefs about this company and that no portion of our compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC, or any of its affiliates, does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This analyst, or a member of this analyst's household who is financially dependent on this analyst or vice versa, holds a long stock position in the security covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Ratings Distribution as of August 21, 2017
Rating Number of Companies Percent of Total
Buy 145 74.4%
Neutral 49 25.1%
Sell 1 0.5%
Total 195 100%
% with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 23 88.5%
Neutral 3 11.5%
Sell 0 0.0%
Total 26 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect “Buy” rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy the securities at the current valuation.
  • Neutral: We generally believe “Neutral” rated stocks will have an average risk-adjusted total return over the next 12 months.
  • Sell: We generally expect “Sell” rated stocks to have a below-average risk-adjusted total return over the next 12 months. We recommend that investors reduce their positions until the valuation or fundamentals become more compelling.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Acquisition/Integration - The Company recently completed acquisition(s). If the Company fails to successfully integrate the acquisition, the deal may lead to disappointing returns.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Distribution/Sales Dependency - The Company relies heavily on its indirect sales channel for much of its sales. A loss of a major distributor or changes in a distributor's payment practices could prove to be detrimental to future sales growth.
  • Execution - Management may not execute well on its restructuring efforts as it allocates capital and human resources towards acquisitions and related integration, possibly resulting in lower margins and cash flow.
  • Financial Results - Due to the Company's relatively small revenue base and fixed operating cost structure, the loss or delay of one large license deal or services contract could significantly impact the bottom line.
  • Financial Results - The Company has a history of operating losses. Although the Company is focused on achieving profitability, there are no assurances that the Company will meet its goals or be able to sustain profitability in future periods.
  • Financial Results - The Company has raised money via public offerings several times in the past and may need to do so again if it can not sustain positive cash flow.
  • Financial Results - The Company's business is affected by the general IT spending environment especially as customers delay purchases of IT equipment.
  • Financial Results - Unpredictable timing of customer orders.
  • Government Funding - Historically, the Company has generated significant revenues from various departments of the U.S. Government. Should funding to these departments be reduced, programs in which the Company participates in may be scaled down or cut, thereby hurting the Company's financial results.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • Industry Change - The industry is subject to rapid technological change.
  • Insider Ownership - Directors and executive officers collectively own a significant percentage of the Company. While this may align interest with other shareholders, investors might view a future sale by any director or officer negatively.
  • International Operations - The Company derives a significant portion of its revenues from outside the United States. The Company is subject to foreign exchange risk and the risks inherent in managing a global Company.
  • Liquidity and Solvency - The Company has a significant debt load and interest expense, which may hamper its ability to invest in the business. Also, the Company may need to raise additional capital in the future and access to such capital is difficult to predict.
  • Litigation - The Company is at risk of patent lawsuits, although we believe its patent portfolio provides adequate protection.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • Manufacturer/Supplier Dependency - The Company relies on a few key manufacturers/suppliers. This lack of diversification could create interruptions in the Company's supply of products and a corresponding loss of revenues.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Recruitment and Retention - The Company depends on its consultants to generate business. Should the Company experience difficulties in recruiting new talent or retaining current employees, the Company's operating results may suffer.
  • Sector Rotation - Despite the decline in valuations for small- and mid-cap bank stocks relative to a year ago, pricing multiples for small-cap banks remain high compared to the S&P 500. Accordingly, the trading price of the Company's common stock may be vulnerable to any sector rotation that might occur.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Sales Cycle - The Company's sales cycle could lengthen beyond what is normal.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • The business could be adversely affected by the loss of certain vendor partner relationships and the availability of their products.
    • The company has entered, and expect to continue to enter, into joint venture, teaming and other arrangements, and these activities involve risks and uncertainties.
    • Decreases, or slow growth, in the newspaper publishing industry may negatively impact results from operation as it relates to Cloud based applications and analytics for media and publishing.
    • The loss of any key manufacturer or distributor relationships, or related industry certifications, could have an adverse effect on the business.
    • The business relys on inventory financing and vendor credit arrangements for daily working capital and certain operational functions, the loss of which could have a material adverse effect on future results.
    • If the company cannot collect receivables or if payment is delayed, the business may be adversely affected by our inability to generate cash flow, provide working capital or continue business operations.
    • Failure to protect the company's intellectual property rights could adversely affect financial condition, operating results and growth prospects.
    • Sysorex Arabia is currently without contracts and is unable to repay its indebtedness, which could have an adverse impact on the financial condition.
    • The company's international business exposes us to geo-political and economic factors, regulatory requirements and other risks associated with doing business in foreign countries.
    • The company is eligible to be treated as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the common stock less attractive to investors.
    • Some provisions of the company's articles of incorporation and bylaws may deter takeover attempts.
    • The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar.