Inpixon (NASDAQ:INPX) Q3 2023 Earnings Call Transcript

Inpixon (NASDAQ:INPX) Q3 2023 Earnings Call Transcript November 14, 2023

Operator: Good afternoon and welcome to Inpixon’s Business Update Presentation. Participants are advised that this presentation is being broadcast live over the internet and is also being recorded for playback purposes. A webcast will be available on the company’s Investor Relations page of its website after the end of this call. I would now like to turn the call over to Alexandra Schilt, Vice President of Crescendo Communications, LLC, Inpixon’s investor relations firm. Please go ahead.

Alexandra Schilt: Thank you. Good afternoon, everyone. Thank you for joining Inpixon’s third quarter business update presentation, where management intends to discuss business developments during the quarter, as well as provide an update on the recently announced planned spin-off of Inpixon’s UK SAVES business, operated through Inpixon Limited and the proposed business combination of its newly formed wholly-owned subsidiary Grafiti Holding and Damon Motors. With us today are Nadir Ali, Inpixon’s Chief Executive Officer; and Jay Giraud, Chief Executive Officer and Co-Founder of Damon Motors. Today, Inpixon released financial results for its 2023 third quarter ended September 30, 2023. If you have not received Inpixon’s earnings release, please visit Inpixon’s Investor Relations page at ir.inpixon.com.

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During the course of this conference call, the company will be making forward-looking statements regarding expectations for future performance and business prospects. Forward-looking information involves risks and uncertainties and the stated expectations could differ materially from actual results or performance. The company advises you to read and contemplate the information and disclaimer comments within our news release and presented on the slides, which include details about forward-looking statements, risk factors, and where to find more information about the proposed transaction. In addition, the subject matter discussed in the following message is addressed in preliminary proxy statement and prospectus that has been filed and a definitive proxy statement and prospectus that will be filed with the SEC.

Shareholders and other interested persons are advised to read the preliminary proxy statement and prospectus and the amendments thereto, and the definitive proxy statement and prospectus and documents incorporated by reference when filed in connection with the proposed transaction, as these materials will contain important information about Inpixon, XTI Aircraft Company and the proposed transaction. Information regarding those persons who may under rules of the SEC be deemed to be participants in the solicitation of proxies from the shareholders of Inpixon in connection with the proposed transaction will be included in the proxy statement/prospectus for the proposed transaction and be available at www.sec.gov or at Inpixon’s website at www.inpixon.com.

I will now turn the call over to Nadir Ali, Inpixon’s CEO. Nadir, please go ahead.

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Q&A Session

Nadir Ali: Thank you, Alexandra. Hello everyone and thank you for joining our business update presentation. We believe this is a transformational year for Inpixon and I’m excited to be here with you today to discuss the future of Inpixon and our efforts to maximize shareholder value. While we will spend the majority of our time today introducing you to Damon Motors, I would like to start by providing a quick overview of our progress on the two recently announced transactions, which follow on our earlier strategic transaction with CXApp and KINS, which closed in March of this year. So specifically, we’ve entered into two independent definitive merger agreements with transportation innovators, XTI Aircraft and Damon Motors.

As announced on July 25, we entered into a definitive merger agreement with XTI Aircraft. In connection with this transaction, which is subject to certain closing conditions, Inpixon will be renamed XTI Aerospace and will trade under the new ticker symbol XTIA. XTI is developing the TriFan 600 fixed-wing vertical lift crossover plane or VLCA. The combined company will be focused on continuing the development of the TriFan 600 and will also continue offering Inpixon’s real time location system products. Independent of the proposed XTI merger, we also announced the planned distribution or spinoff to our security holders of 100% of the outstanding shares of our newly formed subsidiary Grafiti Holding and a definitive agreement with Damon Motors.

Under the terms of these proposed transactions, all of the outstanding shares of our subsidiary Inpixon Limited, which operates our UK SAVES business, will be transferred to Grafiti and after the completion of the spin-off, Grafiti and Damon Motors will complete a business combination transaction. Following the closing of the proposed transactions, the combined company, Grafiti and Damon will operate as a new independent public company and is expected to be listed on Nasdaq. We believe this transaction will further Damon’s initiatives in transforming the motorcycled industry with an electric motorcycle containing innovative safety and technology features as well as best-in-class performance. Now let me touch on each transaction and why we believe they are so transformative for the company.

So first, upon completion of the XTI merger, Inpixon will be renamed XTI Aerospace and will continue to trade on Nasdaq under the new ticker symbol XTIA, as I mentioned. And it’ll also be led by a new senior management team and a new Board of Directors. XTI Aerospace will primarily be focused on continuing the development of the TriFan 600, a potential disruptor within the aviation industry, while also continuing to offer our existing RTLS technologies to support a wide array of industries, including aviation. We believe the TriFan 600, when commercially developed, can bridge a gap in the aviation market, combining the speed, comfort and range of a fixed-wing airplane with the point to point convenience of a helicopter. In addition, the TriFan can utilize existing airport runways or helipads as well as non-traditional landing areas due to its crossover takeoff and landing capabilities.

We believe this dual takeoff and landing capability will drive uptake and rapid market penetration. XTI has obtained over 700 conditional pre-orders and expressions of interest under a combination of aircraft purchase agreements, non-binding reservation deposit agreements, options and letters of intent for its aircraft. Collectively, these pre-orders represent potential gross revenues of more than $7 billion, based on its current list price of $10 million per aircraft. Assuming the company is of course able to execute on the development program for the TriFan, secure FAA certification and deliver these aircraft. We believe this demonstrates a pent up demand in the market for a crossover aircraft that has the potential to revolutionize its segment of the aircraft industry.

We did discuss XTI in great detail during our presentation, which we hosted on August 14, and I’d encourage investors to view the presentation again for more information. But overall, we believe that this merger can maximize value for our shareholders over time. We expect this transaction to close during the current quarter, assuming that we are able to satisfy the requisite conditions before year end, which of course include approval by our stockholders and Nasdaq listing approval. I’m pleased to share that the S-4 filed in connection with the XTI transaction was declared effective by the SEC yesterday and the related shareholder meeting has been scheduled for December 8, 2023. Now I’d like to turn my focus to the planned spin-off of our newly formed subsidiary Grafiti Holding, which will hold our UK SAVES business and its proposed subsequent business combination with Damon Motors.