XTI Aerospace, Inc. Q4 FY2022 earnings call

• Completed the business combination of CXApp Holding Corp. with KINS Technology Group, selling the CXApp workplace experience business line.
• Implemented initiatives to reduce operating expenses, expecting at least a 50% reduction in operating expenses over the coming quarters.
• Focused on accelerating the growth of the RTLS product line, with new contracts secured with major companies, a supplier partnership with an electric vehicle manufacturer, a collaboration agreement in the mining market, and being part of SAP's partner program.
• Recognized for the fifth consecutive year in the 2023 Gartner Magic Quadrant for indoor location services, named a leader for the second consecutive year.

For the year ended December 31, 2022, revenues were $19.4 million, an increase of approximately 21% compared to $16 million in the prior year. This increase was primarily due to an increase in Indoor Intelligence sales, including $2.6 million from the smart office app and $900,000 from real-time location-based technologies. Gross profit for the year was $13.9 million compared to $11.6 million in the prior year, with a gross profit margin of 72% in 2022 versus 73% in 2021.

• Expect at least a 50% reduction in operating expenses over the next several quarters due to the sale of the CXApp business and cost-cutting measures.
• Actively engaged in due diligence and negotiation for a second transaction with the goal of exceeding the value of the KINS transaction to maximize shareholder value.

• Risks described in the press release and SEC filings, including risks related to forward-looking statements, market challenges for the RTLS product line such as complex technology and significant investment requirements, and uncertainties around future transactions.

Q: Why did new shareholders that bought Inpixon a few weeks ago have the same dividend right as the long-time investors?

A: For the transaction agreement, shareholders as of the March 6 record date were entitled to the share distribution for the CXApp transaction. It's impractical to assess length of ownership for each individual shareholder daily, so the normal practice of a specific record date was followed.

Q: Investors have been waiting on an update on the letter of intent. When do you expect to provide further updates?

A: Working aggressively on the second transaction, though had to allocate more time to closing the CXApp transaction. Will share updates as soon as possible once progress is made.

Q: Given the sale of CXApp, can you comment on what you would expect for a normalized level of operating expenses going forward?

A: Expect at least a 50% reduction in operating expenses going forward over the next several quarters with the sale of the CXApp business and cost-cutting measures implemented.

Q: What actions are the company taking to restore shareholder confidence on their investment? And why is the company not fighting against the shorting of the stock and liquidity?

A: Working on various opportunities to create shareholder value, including the CXApp transaction and the second LOI. Regarding shorting, reached out to counsel and advisers to understand how to address it, noting limited options to combat illegal and naked shorting.

Q: Do any senior management team members intend to resign as a result of the transaction?

A: Core senior management is essential for successful execution of transactions, so don't expect all senior management to resign, but details may change if definitive terms of a second transaction are reached.