XTI Aerospace, Inc. Q3 FY2022 earnings call

• The company implemented measures to streamline operations and reduced global headcount by approximately 20%. - Announced the signing of a definitive agreement for the spinoff and sale of the enterprise apps business to KINS Technology Group, which offers a significant premium over Inpixon's current market price. - Had success with the land-and-expand strategy in the experience app, e.g., an entertainment industry customer expanded from a pilot to multiple campuses globally. - Experienced strong traction in the industrial IoT market, with numerous purchase orders and contracts, including from large distributors, energy companies, and mining equipment manufacturers. - Industrial IoT solutions automate processes, increase efficiency, and reduce costs for industries like factories and warehouses.

Revenues for the three months ended September 30, 2022, were $4.2 million, a decrease of approximately 6% compared to the prior year period. The nine-month period ended September 30, 2022, saw revenues of $14.1 million, an increase of approximately 30% from the prior year. The Q3 decrease was primarily due to delayed shipments in the IIoT product line. Gross profit for the three months ended September 30, 2022, was $2.9 million, a decrease of approximately 10% from the prior year, while the nine-month gross profit was $10.1 million, an increase of 28% from the prior year. The gross profit margin for the three months was 70% and for the nine-month period was 71%, down from 73% in the prior year periods, primarily due to sales mix.

• Continues to evaluate strategic opportunities for the remainder of the business. - Focuses on pursuing opportunities to unlock additional value for shareholders. - No specific numerical forward-looking guidance provided beyond ongoing evaluation of strategic options.

• Risks associated with forward-looking statements, where actual results could differ materially from expectations. - Market volatility and uncertainty impacting customer spending. - Regulatory risks related to the proposed business combination with KINS Technology Group, including potential SEC or other regulatory comments.

Q: In your share consolidation press release on October 6, you state you entered into a nonbinding LOI with a third party for the remainder of the business. But can you elaborate on this?

A: Unfortunately, I cannot go into specifics at this time. But as we stated, this is a nonbinding letter of intent involving the remainder of our business. We do not have a definitive agreement in place yet. And we are still in due diligence stages. We will provide updates regarding this as soon as we are able to do so.

Q: Can you explain what number of shares Inpixon shareholders will receive of KINS in layman's terms?

A: Inpixon shareholders and certain other security holders will receive an aggregate of approximately 6.9 million shares of KINS Class A and Class C common stock, allocated 10% and 90%, respectively, and subject to adjustment in accordance with the terms of the merger agreement. The record date will be announced later following resolution of regulatory comments.

Q: Why was the $15 million registered direct offering conducted?

A: As Wendy indicated, we were required to redeem a portion of our Series A preferred stock in accordance with their terms. So this offering was able to provide additional capital to support our operations.

Q: Are you considering further cost reductions or restructuring given the sale of the CXApp business line such as additional reductions in the workforce or realignment of management?

A: As we've previously announced, we reduced headcount by approximately 20% at the end of third quarter. We do also have to ensure that we have sufficient resources to continue to realize growth across our business lines. However, we will continue to critically evaluate our expenditures and cash resources to maximize efficiencies in operations.

Q: Does the investor of the $5.85 placement receive their Inpixon shares over a period of time?

A: There was a prefunded warrant issued in lieu of common stock and the investor can exercise a pre-funded warrant over time. For more specific information, please refer to the 8-K filed on October 20