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.

The CEO of Damon Motors will share specifics around the Damon story with you shortly, but first I’d like to take a moment to reflect on this transaction. So a lot of moving parts here, hopefully the slide will help you follow along with how this transaction works. We believe Damon is changing the motorcycle industry with its HyperSport electric motorcycle. The HyperSport is expected to be one of the safest, smartest and most powerful motorcycles available in the market, and Damon has already obtained over $85 million in pre-production consumer reservations for its motorcycle. Damon’s products incorporate cutting edge technology designed to solve unaddressed safety problems in motorcycling. With an impressive 200 horsepower, 200 miles per hour and 200 miles of range Damon motorcycles are at the forefront of electric two wheelers, holding the potential to displace combustion motorcycles and poised to lead the industry into a safer, more sustainable future.

Upon the completion of the merger Grafiti will be renamed to a name selected by Damon. Damon’s management team and Board of Director designees will continue to serve as the management and Board of Directors of the combined company, with one board designee appointed by Grafiti. We expect this transaction to close during the first quarter of 2024. However, it does remain subject to the satisfaction of certain closing conditions, including clearance of a registration statement with the SEC in connection with our planned spin-off of Grafiti Holding and Nasdaq listing approval for the resulting combined company. Inpixon shareholders, as of to be determined record date, will be able to participate in this spin-off. These participating shareholders will be able to continue to retain their Inpixon shares and also receive shares of Grafiti Holding and thereby having ownership in Damon.

The registration statement in connection with this spin-off was confidentially filed with the SEC yesterday. As we’ve discussed before, we believe that Inpixon isn’t being adequately valued in the market. As a result, we’ve taken steps to execute strategic alternatives this year that we believe will aid in maximizing value for our shareholders over time. Please keep in mind these are two separate independent transactions we are pursuing, which we believe provide upside potential for Inpixon shareholders as they have the ability to become part of two separate publicly traded companies. Now, let’s get into the Damon story. I’m so pleased to introduce Jay Giraud, CEO and Co-Founder of Damon. Jay?

Jay Giraud: Perfect. Thanks, Nadir. So, hello, everybody. My name is Jay Giraud and I’m the Founder and CEO at Damon Motors. For the last handful of years, we’ve been hard at work defining and designing what we believe will become the future of motorcycling. The company idea really began in the summer of 2016, when I spent several days riding a motorcycle in downtown Jakarta, Indonesia. I was there for my best friend’s wedding and in the crowd of about 10 million people, many riding a motorcycle every day. In cities like Jakarta, like many people there, I had a little motorcycle accident. But thankfully, I wasn’t injured. Not too much, just my ego, mainly. And I spent the next several days of my trip in Jakarta thinking very differently about the everyday citizens of that city.

As I rode around every day on a motorbike, as everyone does there, I realized how strange it was to me that the car companies that make millions of safe cars also make millions of unsafe motorcycles and that the technology used to make those cars safer has not really trickled down in any way into the motorcycle industry at large. So into my research then I started to learn that 1.5 billion people every single day depend on a powered motorcycle to get from A to B in these cities that are so congested in many ways, they really have no other alternative and how to get around. So how do we make motorcycling safer, and how do we improve air quality for this group of commuters that exist in these big cities that generally have a pretty poor air quality?

I learned quickly on that motorcycles then outsell cars two to one every single year, annually. In fact, they’re the second largest emitter of greenhouse gas emissions in the world, right behind heavy duty trucks. So all of that really led me to realize it was time to set a new standard in motorcycling. So I set a goal for Damon to become the world leader for safer, smarter motorcycles. Now, I know that what you’re looking at on the screen doesn’t exactly look like the average motorcycle for someone living in Jakarta or Mexico City. So it’s important here to understand that just like the many EV companies before Tesla, there have been many EV motorbike companies before Damon that failed to take flight. And that could be for many reasons.

But I’ll argue it’s for one simple reason alone, and that’s because nobody wants to trade down in life. Tesla was the first car company to make an EV that was better than whatever car you already have in your driveway. They made EVs aspirational. And by developing an entirely new powertrain system, and by solving real world problems inherent in motorcycling today, we believe we’ve done the same thing. So because of the high cost of developing new technology that requires us to start at the top of the market, like Tesla did, making us the highly aspirational player in the space as well. And so, very much like Tesla, we’re taking the approach where we can revolutionize motorcycling by first developing the fastest, most powerful and longest range and safest motorcycle we can that is intended to meet the needs of every day western enthusiasts.

We’ve also built an exciting brand that we believe can cause a transformation from the west out to the east, and eventually around the world. So I’m going to present to you the Damon HyperSport, our flagship product that’s capable of outperforming really any of the kind of motorcycles we’ve seen in the world today. [Video Presentation] Hopefully, this video is playing for you guys. [Video Presentation] All right. So that’s the demo video of our flagship product, the Damon HyperSport. The bike has been designed from the ground up. Almost every inch of this thing has been engineered to deliver some of the highest performance ever achieved of any motorcycle in the world. The Damon HyperSport delivers 200 horsepower, 200 Newton-metres of torque and maintains over 200 miles of combined city highway range per charge.

It also has DC fast charge capability built in and will also be compatible with Tesla Superchargers. In 2023, WIRED Magazine became the first media outlet to ride it on the track back to back against the best BMW superbike you can buy. And they said the Damon effectively screams at full acceleration, a high pitched shriek from the HyperDrive’s electric motor and internal gear set, it sounds like nothing more or less than the future, and you can read that article on WIRED Magazine from the July issue of 2023 goes on with lots of detail about how great the bike is. So it’s these points on the left of the slide here that have made the company really special. Our bike is 100% electric and is capable of meeting or exceeding the performance of the best Ducati’s, BMW’s, and Honda superbikes you can buy.

We’ve also developed CoPilot, one of the world’s first collision warning systems for motorcycles. The team and I have been working on it to a level of production readiness, having tested it with over 100 local riders, with the Chief of the Police of LAPD, and 12 of their officers in downtown LA traffic, and with chief engineers from Kawasaki, Honda, Suzuki have all tested our CoPilot system, and it really makes a difference. We’ll talk about more of that in a little bit. We’ve also so far received over $85 million in consumer credit card backed reservations for the HyperSport that you see on the screen here. We’ve generated and raised over $70 million to date, and we have 34 patents or patents pending across 13 jurisdictions around the world.

And we’ve won 14 major awards. Awards like the Best of the Best of Automotive Innovation by CES, CNET, Robb Report, Fast Company, Popular Science, The Thomas Edison Award for Innovation, and so on. And we have a pretty fantastic group of people on our team that I’m very lucky to be surrounded by. A little bit about myself. I’ve been in the automotive industry now for 15 years. In 2003, I decided that I wanted to spend the rest of my life helping to get the world off oil. So in 2008, I figured the best way to do that was to build electric vehicles, and I founded a company called REV Technologies. We made high performance electric SUVs and pickup trucks on Ford chassis. Some of our major customers included U.S. and Canadian municipalities, utility companies.

We also won several DOB contracts funded by TARDEC in partnership with major military contractors such as SAIC and Honeywell Aerospace. Then in 2012, I founded a company called Mojio, making internet connected hardware and software platform that grew to become one of the largest platforms for consumers in the automotive industry today. Mojio now has millions of subscribers in nine countries around the world in partnership with seven wireless carriers like Deutsche Telekom, T-Mobile, MetroPCS, Telus, Rogers and Bell, and has taken significant investment from quite a few strategic investors like TELUS Ventures, T-Mobile, Deutsche Telekom, Bosch, and many others. To my right is Derek Dorresteyn. He’s our CTO and a champion motorcycle racer. He has decades of experience designing and developing high voltage, high performance electric motorcycles and dirt bikes under the name Alta Motors.

Amber Spencer, to his right, was our fifth hire who joined Damon, also a motorcycle racer. She built all of our marketing systems that drove the order book to what it is today. And to her right is Michael Galbraith, he’s our CFO. He has decades of experience growing BlackBerry from 200 to 20,000 people as SVP Operations and Finance over a course of about 13 years. And the rest of the team, there’s 50 some odd more of us has collectively 300 years’ experience, designing, developing and manufacturing a whole line of vehicles, from electric and gas, dirt bikes to electric and gas race cars, fuel cell cars for Honda, to high performance cars like McLarens, to electric cars like Tesla, electric buses, and even vertical takeoff aircraft for Uber Elevate.

So really a diverse set of combustion, hydrogen fuel cell and electric vehicle design development and manufacturing experience, even setting up automotive factories and manufacturing plants around the world. So all of that know-how really lends itself to some pretty successful innovations that we’ll talk about shortly. Now, on the Board, we have myself, of course, and then Alex Spiro to my right, who’s been on the Board now for about two years. Mr. Spiro is Elon Musk’s personal lawyer. And we have Greg Capelli and Jack Clariond, who have decades of family office and public equity and private equity experience, as well as decades of experience running public companies. Howie Wu joined the company during our Series A. He has decades of consumer electronic experience with companies at Aquantia, Sony Ericsson, and startups of his own.

Now, below that, some of our more notable financial investors include Franklin Templeton, who was an early investor in Tesla, the Ford Motor cars family office Fontinalis, and two prolific Canadian VCs, Round13 and House of Lithium. Some of our strategic investors include Indika, which is the power utility for Indonesia. They signed on to become the national distributor for Damon Motorcycles in Indonesia, which is the third largest motorcycle market in the world. Now, Auteco is the largest manufacturer of motorcycles in Latin America, and they too have signed on to become a distributor for Damon in five countries of Latin America. SINBON is one of our component manufacturers in Taiwan. And the Deeley Group is the family office that owned Harley-Davidson Canada for 100 years.

So some pretty significant strategic experience and support to help the company become successful. Now, you can probably appreciate, as many of you are probably thinking, that motorcycling is a huge market, and it certainly is. There’s about 180 million motorcycles sold annually. That’s nearly twice the volume of cars. But as you would expect, many of those motorcycles are pretty low cost commodity vehicles. And that’s not a market that Damon wants to play in. We’re going to stay in a highway capable motorcycle market, which is in the $3,000 price point and up. And so for us, that’s about a $43 billion market, which we believe is absolutely primed for disruption, totally underserved in terms of really showing off an electric vehicle leader that we expect to become.

So we’re going to serve that market with two platforms based upon this design. These are the core pillars that this system we call HyperDrive. HyperDrive is novel in quite a few ways. It’s a 500 volts liquid cooled structural battery. So the battery itself acts as the frame of the bike, and it’s engineered in the shape of a motorcycle. Everything you see between the tires, this reverse C-shape is filled with over 1,000 lithium-ion batteries that we get from a world class supplier. And they’re liquid cooled and wrapped in this aluminum shell. So you don’t see a motorcycle frame because the battery is the frame. All of this results in higher power, less weight and lower cost. The proprietary 150 kilowatt motor in the middle spins up to 18,000 RPM, generating over 200 horse power.

And it’s bolted right into the middle as you can see. We’ve wrapped the shape of the pack around the motor for optimal weight balancing and performance. The result of this is astounding. HyperSport delivers 3.5x the power to weight ratio of a Tesla Model 3 performance. And it handles like a MotoGP superbike. Now, the charger sits right on top, and the high power inverter sits in the front for easy service and repair. Key features of this is that we’ve written all of our own code. So all of the onboard software, the firmware, even the Cloud Damon work together as one seamless intelligent system. That means we can update all of our bikes over the air and fix any software issues before they become a problem. So, as a single platform HyperDrive is completely modular, so the HyperDrive on the left here.

We can rapidly enter more and more market segments in a lower price point simply by changing the body work, by reducing the number of cells in the pack, by reducing the power with software, and by changing the way it looks and feels with different suspension and plastic, all at a fraction of the cost of building HyperDrive itself. So none of this is possible in the combustion motorcycle industry today, where typically they have to build new frames, new transmissions, and new engines that have to be rebuilt and retooled to make different size motorbikes. So that makes, for Damon, a much more capital efficient way of testing and developing a whole new range of motorcycles and allowing us to rapidly take over more market share in many motorcycle segments.

HyperDrive is going to serve the $19,000 to $40,000 price points, with the average price so far being around $28,000, which is on par with the top of the line Ducati. And now that we’re readying this design for production, we’re working on the early design for HyperLite over on the right to serve the world segments. This is the system that Indika and Auteco were final assemble in their domestic regions to serve the world markets under the Damon name. Again, wrapping HyperLite in different size and styles of bikes so that we can penetrate those markets very quickly as well. Now, as I mentioned earlier, Damon really stands apart in the motorcycle industry by having focused on making motorcycling safer. So, CoPilot is really special. CoPilot is a novel array of collision warning sensors and proprietary software.

We have a radar and a camera in the front of the bike, and we have a radar and a camera on the back that are seamlessly integrated into the motorbike. Now, motorcycles don’t move anything like a car, which is the main reason why we’ve never seen collision warning systems on motorbikes before. Unlike cars, motorcycles lean to a very steep degree as they pass through turns, and they float between the white lines of a lane because they’re so narrow, and they can also pitch forward during hard braking. So these collision warning sensors on a motorbike are often pointed at the ground or pointed at the sky. So our CoPilot software is designed to adjust to what these sensors are seeing in real-time, which allows them to keep a level of field around the bike, regardless of what the bike is doing.

So if you can imagine, this gray SUV in the picture here is braking hard while you’re looking over your shoulder at the white car climbing a lane change, what you’re going to get is a forward collision warning delivered to the rider with a haptic vibration in the handlebar and a red LED light at the top of the 7-inch display that you see below, giving you that one extra second you need to react. This warning alerts the rider to react, and with more time to react, the rider has more time to brake or swerve to avoid danger. Now, we’ve collected over 40,000 miles of this data, and as I said before, we’ve had dozens of people from the LAPD and over 100 local riders test this system, and it just works. It’s really effective. So in addition to the vibrating helmet bars, a red LED light illuminates and augments the haptic forward collision warning.

Now, CoPilot also delivers blind spot warnings on the right and left of the 7-inch proprietary display, and it can show you everything behind you while you ride as well using the rear facing camera. CoPilot also has built-in GPS, LTE, Bluetooth and Wi-Fi so we can ingest and store up to 500 gigabytes of data on board and transmit it to the Damon Cloud to build a safer and deliver safer and smarter algorithms back to all Damon bikes over the air. This means the more you ride a Damon motorcycle, the safer and smarter all Damon riders become. In the future, we’ll also have pay per month features that we’re really excited to launch. So it’s really game changing and nothing like this has been developed for motorcycles before as far as we know.

The other thing that you motorcyclists out there will appreciate is that we all know that motorcycling gets pretty uncomfortable after a while. So Damon bikes adjust in real-time to the traffic conditions at the push of a button. So while you’re riding the bike, you could be at highway speed, bent over, going fast, leaning and having lots of fun. And then as you get into heavy dense traffic, you can push a button and your handlebars will electronically lift up and your feet – foot pegs will drop, putting you in a more upright junior riding position. So for riders, this is like having two bikes in one, and it really just changes the game. It’s tremendously exciting when you experience an adjustable motorcycle for the first time, especially for those riders out there who are constantly uncomfortable on a bike.

Now, all of these novel features, including our AI cloud, our CoPilot system, our adjustable ergonomics, will all be available on a whole line of motorcycles, ranging from the sport bike category that we plan to enter into first, and then into the largest segment, the commuter category, finally into the fastest growing segment, which is the adventure bike category. Our bikes will be priced between $19,000 and $40,000, as I said, with the average price point of our reservations being at $28,000. Now, it’s important to note that the cost of building electric motorbikes is a small fraction of the cost of building a car. But we’re generating price points similar to that of a car company. For example, these Ducati’s and BMWs that you see below are priced between $20,000 and $45,000.

BMW, for example, sells more than 40,000 units a year of some of these bikes. It’s also worth noting that the capital intensity of building a bike is many times more capital efficient than the capital intensity of building a car company. It isn’t burdened by the heavy cost of crash testing or building out a half mile of robots that car manufacturing requires. Also, unlike car manufacturing, motorcycle DOT certification is a self-certification process. So we have a very streamlined path towards production in front of us now. Waiting for these slides. Here we go. So now, about 73% of our order books is generated out of the U.S. – sorry, in the U.S., I should say mainly in California, Florida and Texas. Over the course of 2025 – 2024 to 2025, we expect to be doing most of our shipments into California first.

We also have signed agreements with Vanwall, Auteco and Indika that could generate potentially another $250 million in revenue in the coming years. And then we do have orders outside of the U.S., as you can see in Canada, Europe, the UK and the rest of the world. But we’re really going to focus our priority shipments into the U.S. first. Now, this is the most important slide, if you ask me. Surveys of our reservation holders show that the people ordering Damon bikes are on average 20 years younger than the American average motorcyclist, which means all of our competitors, from Yamaha to Ducati, Honda, et cetera, are still selling to people in their 40s, 50s and 60s, whereas we’re selling to people in their 20s, 30s and 40s. People who are entering motorcycling today, many don’t learn how to change gears in a car.

That’s just gone with the past, making it much more intimidating to think about getting a motorbike and having to learn how to change cheap gears on one of those. An electric motorbike with no gears that’s safer, that has a collision warning system, that doesn’t generate emissions, that’s cheaper to operate, is all really exciting, which is why we’re seeing such demand in our reservations. Now, in the bottom left here, 39% of people ordering a Damon bike are pretty serious riders. They own two or more bikes. Interestingly, though, a quarter of them don’t own a bike at all and some of them don’t even have a license. So we are obviously filling a gap in the market that’s never been filled before and that’s really a big deal.

Secondly, we see that 55% of people ordering our bikes are coming up from much cheaper commuter bikes. So we’re drawing customers up from lower cost segments in order to get what you can’t find anywhere else in the industry right now. This has happened once before in the auto industry, and that’s with Tesla, what’s been called the Tesla Effect, which is thoroughly talked about and studied on the internet, showing that the most commonly traded in – the car most commonly traded in for a $55,000 Tesla Model Y is a Toyota that’s worth $20,000 to such an extent that the Model Y dethroned the Corolla as the best-selling car in the world. Now, when you look at the kind of bikes our customers own, over in the pie on the right, the top nine out of 10 of them are combustion engine motorcycle brands.

So we’re really excited about the opportunity to take real market share away from the legacy players like Yamaha, Ducati, Honda and so on. So our design is done and the major technological risks are behind us now. The next stage is production. As part of this financing use of funds, we’re going to kick off the tools purchasing for production start initially in San Rafael, California. We’re setting it up as our new product introduction center, where we plan to build-out the first 1,000 motorcycles before duplicating that manufacturing process into a higher volume assembly plant in 2025. So, as we’ve discussed earlier and summarized here, we believe our performance, safety features, reservations, patents and thought leadership all position us really strongly for the future.

And beyond WIRED Magazine’s test ride, we plan to be running major test ride events and customer test ride events next year as well as part of our process for generating more reservations and converting them. This isn’t all of our awards. This is just some of them. We kind of didn’t want to crush too many onto the screen here, but you can check out some of our notable awards that we’re pretty excited to have won. And we’re really excited about the potential to become publicly traded. Motorcyclists are intensely passionate about riding. It’s like a religion for them. And for as long as motorcycles have existed, riders have dreamed of owning a piece of motorcycle history. But besides Harley-Davidson and Livewire, there really aren’t any publicly traded motorcycle companies to compare us to.

As a company so focused on building out the industry’s future, we think the dream of being part of our growth and success has finally arrived. By becoming a publicly traded company, we’re giving millions of people access, a chance to own a part of the future of motorcycling, and allowing their passion to have a voice that gets heard. So together, we get to make motorcycle history as we make two-wheel mobility cleaner, smarter, and safer for the world. And I’m really looking forward to sharing this journey with all of you as well. And with that, I’ll turn it back to Nadir. Thank you.

Nadir Ali: All right. Thanks, Jay. That was a great presentation, and I’m sure it’s very helpful for our shareholders to understand Damon’s vision and business plan. And now that you’ve seen and heard Jay and Damon’s incredible story and how real and impressive it is, you can see why we’re doing this transaction. Given the market cap challenges Inpixon has been facing, we needed to do something. We had to think outside the box, and that’s why we pursued this strategy of strategic transactions. Our goal with both the XTI and Damon transactions is to transform Inpixon and maximize shareholder value over time, which we believe these can achieve. So with that, I’ll hand it back to Alexandra to lead us through the Q&A discussion.

A – Alexandra Schilt: Thanks, Nadir. Like last quarter in our conference call announcement press release, we suggested interested parties submit their questions in advance. We’d like to address those questions for you now. Some questions were duplicative, so we did our best to reconcile those where possible. If you have any further questions after the call, please feel free to follow-up with investor relations, and we’ll be sure to respond as quickly as possible. Let’s start with some transaction related questions for Nadir. Nadir, why is Inpixon pursuing these transactions?

Nadir Ali: Yes. So I just touched on that. As I’ve mentioned on several occasions in the past, we don’t believe Inpixon is being properly reflected in the stock price or market cap and share that frustration with our shareholders. So we’ve expressed a goal of pursuing strategic transactions that we believe will maximize its value for our shareholders. In furtherance of this objective, earlier this year, we completed the spin-off of our enterprise apps business with KINS, and we believe these two additional transactions with XTI and Damon are meaningful for the company by allowing us to enter new markets with upside potential for two separate public companies that can impact our shareholders.

Alexandra Schilt: Thanks, Nadir. And our next question, will my Inpixon shares be automatically converted into shares of the new companies.

Nadir Ali: Yes. So just to clarify, Alexandra, we’re talking about two separate transactions, right? So Inpixon shareholders at the time of the closing of the XTI transaction will essentially become shareholders of XTI Aerospace as a result of that merger transaction. Our ticker will change to XTIA, our name will change to XTI Aerospace, XTI management will become management of XTI Aerospace, and the majority of our Board of Directors will be designees of XTI. Separately for the Grafiti spin-off transaction, our shareholders, as of a record date to be determined, will participate in the Grafiti distribution. These shareholders will be able to retain their Inpixon shares and also receive shares of Grafiti Holding. The proposed transaction with Damon and Grafiti Holding is anticipated to close following that spin-off and subject to the satisfaction of certain closing conditions which we touched upon earlier.

Alexandra Schilt: Thank you, Nadir. We are now going to shift to some Damon related questions. So, Jay, our first question is, how do you plan to service the bikes?

Jay Giraud: Great question. Yes, there’s a few things about that. It’s important to kind of know that, first of all, we’ve been in the electric vehicle industry for a long time and seen that really about 90% of electric vehicle servicing is software related. In fact, Tesla had a huge recall, and before the media even put up the notice, I think 500,000 cars got a software update. And that was all it took. And that we expect to be quite true for Damon as well. While we will expect to be servicing hardware on the bikes, in addition to doing those software updates, we have an active dialogue going with a nationwide electric vehicle servicing partner that services electric bikes, electric cars, and the like in your driveway. So we’ll be able to provide a concierge service for customers initially in those first three states, California, Florida, Texas. And then we can expand nationwide with this surface partner in the U.S. as well.

Alexandra Schilt: Thank you, Jay. Our next question, isn’t it true that the EV supply chain is challenged right now?

Jay Giraud: So, actually, there’s been a decent drop in the demand of EVs, predominantly because we’ve seen the major OEMs like Ford and Chrysler and General Motors getting pretty beat up in the markets recently related to the auto union issues. And that’s put a pretty big halt on the production and sale of electric vehicles in a lot of their dealerships. And they’re really not set up to sell electric cars the way Tesla is, which sells them online, which is exactly what Damon does. And that’s resulted in quite a surplus in the EV industry with batteries and with components and with electronics and silicon and the like. And it’s actually been really favorable for us because it’s given us quite a bit better pricing advantages.

So we’ve been getting better costs on a lot of our components. We have our supply chain in place, predominantly in Northern Europe, Taiwan and in the U.S. We have no suppliers in China. And we’re ready to start placing orders for production components with our suppliers now.

Alexandra Schilt: Thank you. Next question. Do motorcycle manufacturers have as many production and regulatory hurdles to deal with as automotive manufacturers do?

Jay Giraud: That’s a really important question. I touched on it earlier and I want to stress it. Motorcycle manufacturing, well, for us, it’s motorcycle assembly. So all of the major components, our motor, our gearbox, our inverter, our charger, our major battery components, they’re all produced by world class suppliers, as I mentioned. And they ship us these finished sub-assemblies that we assemble by hand. So it’s about 8 hours of manual labor to assemble a Damon motorbike. We don’t have to have a half mile of robots, we don’t have to crash test. We don’t have to go through rigorous emissions testing because our bikes electric. And that all results in a very streamlined process for certification, which for us is a self-certification process in the U.S. So we only self-certify the bike. And really, that means there’s no regulatory hurdles in front of us to start production.

Alexandra Schilt: All right, well, thank you, gentlemen. That does conclude the Q&A. As mentioned in the opening of this call, you are advised to read and contemplate the information regarding forward-looking statements, risk factors, and where to find more information about the proposed transaction. This information has been published on the SEC website, in our definitive merger announcement press release, and in this conference call date announcement press release. Now I’ll turn it back over to Nadir for the close.

Nadir Ali: Thanks, Alexandra, and thank you all for joining today. We hope you found this call informative and helpful. And as always, we appreciate the support of all of our shareholders and look forward to providing more updates as developments unfold. Thank you and take care, everyone.

Operator: Thank you. This concludes today’s call, and you may disconnect at this time. We thank you for your participation.