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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 9, 2023
INPIXON
(Exact name of registrant as specified in its charter)
| Nevada |
|
001-36404 |
|
88-0434915 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(I.R.S. Employer
Identification No.) |
2479 E. Bayshore Road, Suite 195
Palo Alto, CA |
|
94303 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (408) 702-2167
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ☒ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
| Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
| Common Stock |
|
INPX |
|
The Nasdaq Capital Market |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 14, 2023, Inpixon
(the “Company”) issued a press release regarding its financial results for the quarter ended September 30, 2023 and announced
that it will provide a business update as well as a presentation by the management of Damon Motors Inc. (“Damon”) following
the recently announced planned spin-off of the Company’s newly formed subsidiary Grafiti Holding Inc. (“Grafiti”), which
will hold the Company’s UK SAVES business, and the proposed subsequent business combination of Grafiti and Damon.
The press release is included
as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein, and the description of the press release is
qualified in its entirety by reference to such Exhibit.
The information furnished
with this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly
set forth by specific reference in such a filing.
The Company is making reference
to non-GAAP financial information in both the press release and the conference call. A reconciliation of GAAP to non-GAAP results is provided
in the attached Exhibit 99.1 press release.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued
Listing Rule or Standard; Transfer of Listing.
As
previously disclosed, on April 14, 2023, the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”)
notified the Company that for the last 30 consecutive business days, the bid price for the Company’s common stock had closed below
the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2)
(the “Bid Price Rule”). Therefore, in accordance with Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days,
or until October 11, 2023, to regain compliance with the Bid Price Rule. The Company’s common stock did not regain compliance with
the minimum $1 bid price per share requirement by October 11, 2023. However, on October 12, 2023, Nasdaq notified the Company that it
was eligible for an additional 180 calendar day period or until April 8, 2024, to regain compliance.
On November 9, 2023, the Company
received notice (the “November 9 Letter”) from Nasdaq that Nasdaq had determined that as of November 8, 2023, the Company’s
securities had a closing bid price of $0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(c)(3)(A)(iii)
which states in part: if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price
of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under
Rule 5810 with respect to that security (the “Low Priced Stocks Rule”). As a result, the Staff has issued a letter notifying
the Company of its determination to delist the Company’s securities from Nasdaq effective as of the opening of business on November
20, 2023, unless the Company requests an appeal of the Staff’s determination on or prior to November 16, 2023, pursuant to the procedures
set forth in the Nasdaq Listing Rule 5800 Series.
The Company intends to request
a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the determination described in the November 9 Letter and
to address compliance with the Low-Priced Stocks Rule no later than November 16, 2023. The Company may cure the bid price deficiency to
regain compliance with the Low Priced Stock Rule by effecting a reverse stock split to increase the price per share of its common stock.
A reverse stock split also would be expected to allow the Company to regain compliance with the Bid Price Rule. At a special meeting of
stockholders held on September 29, 2023, the Company obtained the necessary stockholder approval of an amendment to the Company’s
articles of incorporation to effect a reverse stock split of the Company’s outstanding common stock, at a ratio between 1-for-2
and 1-for-50 (the “Reverse Split Ratio”), to be determined at the discretion of the Company’s board of directors. The
Company also intends to seek an increase in the Reverse Split Ratio for the purpose of satisfying the bid price requirements applicable
for initial listing applications in connection with the closing of the previously disclosed proposed transaction between the Company and
XTI Aircraft Company (“XTI”). The proposed transaction between the Company and XTI is anticipated to close prior to the end
of this year and as a result, the Company expects that it will be able to cure the bid price deficiencies in connection with the closing
of the XTI transaction.
Assuming the Company appeals
the delisting determination as indicated above, the November 9 Letter has no immediate effect on the listing of the Company’s common
stock and its common stock will continue to be listed on the Nasdaq Capital Market under the symbol “INPX”. While the appeal
process is pending, the suspension of trading of the Company’s common stock would be stayed and the Company’s common stock
would continue to trade on The Nasdaq Capital Market until the hearing process concludes and the Panel issues a written decision. The
Company has been informed that hearings are typically scheduled to occur approximately 30 to 45 days after the date of the hearing request.
Cautionary Statement
Regarding Forward-Looking Statements
This
Current Report on Form 8-K contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform
Act of 1995, including, without limitation, statements related to (i) the Company’s ability to regain or maintain compliance with
the Bid Price Rule, the Low-Priced Stocks Rule or any other Nasdaq continued listing requirement and (ii) the Company’s intention
to effect a reverse stock split. The words “intend,” “may,” “should,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential”
or “continue” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words. While the Company believes its plans, intentions and expectations
reflected in those forward-looking statements are reasonable, these plans, intentions or expectations may not be achieved. In that regard,
there are no assurances that a hearing would be granted, that a favorable decision would be obtained from the Panel if a hearing is held
or that the undertaking of a reverse stock split or the effectiveness of a reverse stock split will enable the Company to maintain the
listing of its common stock on The Nasdaq Capital Market. The Company’s actual results, performance or achievements could differ
materially from those contemplated, expressed or implied by the forward-looking statements. For information about the factors that could
cause such differences, please refer to the Company’s filings with the U.S. Securities and Exchange Commission. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update any forward-looking
statement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
INPIXON |
| |
|
| Date: November 14, 2023 |
By: |
/s/ Nadir Ali |
| |
Name: |
Nadir Ali |
| |
Title: |
Chief Executive Officer |
Exhibit 99.1
News Release
Inpixon Reports Third Quarter 2023 Financial
Results
and Provides Business Update
Entered into a Definitive Merger Agreement with
XTI Aircraft;
Transaction Expected to be Completed during the Fourth Quarter of 2023
Entered into a Definitive Agreement to Spin-off
and Merge
Inpixon’s SAVES UK Business with Damon Motors Inc.
Inpixon to Host a Conference Call at 4:30 p.m.
Eastern Time Today to Provide a
Business Update and Presentation by Damon Motors Management
PALO ALTO, Calif., November 14, 2023/PRNewswire/ -- Inpixon® (Nasdaq:
INPX) today provided a business update and reported financial results for the third quarter ended September 30, 2023.
“Over the last year we have been focused on identifying and executing
on strategic opportunities that we believe will drive value for our shareholders,” commented Nadir Ali, CEO of Inpixon. “In
this regard, we made significant progress during the third quarter and over recent weeks. Specifically, we have entered into two definitive
agreements with innovative transportation companies, both of which we believe are disruptors within their respective industries. We believe
these transactions will be transformational for Inpixon and our shareholders, providing the opportunity to be stockholders in two separate,
publicly traded companies, each of which we believe can provide a meaningful opportunity to maximize shareholder value over time.
“Our proposed merger with XTI Aircraft
Company (“XTI Aircraft”), an innovative aviation company, is progressing as anticipated. XTI Aircraft is developing the TriFan
600, a fixed-wing, vertical lift crossover airplane (VLCA), which has the potential to revolutionize point-to-point air travel by combining
the comfort, speed, and range of a conventional business aircraft with the flexibility, convenience, and pinpoint landing ability of
a helicopter. XTI Aircraft currently has over 700 conditional pre-orders1, representing the potential for gross revenues of
more than $7.0 billion2. Upon completion of the merger, Inpixon is anticipated to be renamed XTI Aerospace, will trade under
the new ticker symbol XTIA, and will be led by a new senior management team and board of directors. The S-4 registration statement filed
in connection with the XTI transaction was declared effective by the SEC yesterday, and the related shareholder meeting has been scheduled
for December 8th, 2023. We anticipate closing this transaction during the fourth quarter of 2023 and will continue to provide updates
as material developments unfold.
“In addition, we recently announced the
planned spin-off of our newly formed subsidiary Grafiti Holding, which will hold our UK SAVES business, and the proposed subsequent business
combination of Grafiti and Damon Motors Inc. (“Damon”), a British Columbia company, and the maker of the acclaimed HyperSport
electric motorcycle. The Damon HyperSport is expected to be one of the safest, smartest, and most powerful motorcycles available in the
market, and Damon has already obtained approximately $85 million in pre-production consumer reservations for its motorcycles. These advanced
reservation orders demonstrate the high demand for an innovative motorcycle that combines performance, safety and sustainability. Upon
completion of the merger, Grafiti will be renamed to a name selected by Damon and 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. The registration statement in connection with the spinoff was confidentially filed with the SEC yesterday. We expect this
transaction to close during the first quarter of 2024.
“During the third quarter, we also continued transforming our
real-time location system (RTLS) business from one-time sales to recurring, higher-margin subscription sales, which resulted in improved
gross margin for the quarter. In turn, this should help drive improved operating results going forward. We incurred meaningful transaction-related
costs associated with the two transactions, however, we remain focused on carefully managing expenses. We ended the quarter with over
$13.5 million in cash and cash equivalents as of September 30, 2023. Overall, we are proud of the progress made to date and encourage
all investors and interested parties to participate in the business update presentation this afternoon, which will include a recap of
Inpixon’s developments as well as an overview of Damon, provided by its management team,” concluded Mr. Ali.
Footnotes:
| 1 | Conditional pre-orders refers to a combination of aircraft
purchase agreements, non-binding reservation deposit agreements, options and letters of intent from potential purchasers. |
| 2 | Based on XTI’s current list price of $10 million per
aircraft and assuming XTI is able to execute on the development program for the TriFan 600, secure FAA certification, and deliver the
aircraft. |
Financial Results
Revenues for the three and nine months ended September 30, 2023, were
$2.0 million and $7.2 million, respectively, compared to $2.4 million and $7.7 million, respectively, for the comparable periods in the
prior year. This decrease is primarily attributable to the decrease in Indoor Intelligence sales due to longer sales cycles. Gross profit
for the three and nine months ended September 30, 2023, was $1.6 million and $5.5 million, respectively, compared to $1.7 million and
$5.3 million for the 2022 respective periods. The gross profit margin for the three and nine months ended September 30, 2023, was 78%
and 77%, compared to 69% and 69% for the three and nine months ended September 30, 2022, respectively. This increase in gross profit margin
was primarily due to the lower cost of revenues on the SAVES and indoor intelligence product lines.
Operating expenses for the three months ended September 30, 2023 were
$10.6 million and $7.1 million for the comparable period ended September 30, 2022. This increase of approximately $3.5 million is primarily
attributable to the acquisition and transaction costs incurred in the three months ended September 30, 2023. Operating expenses for the
nine months ended September 30, 2023 were $29.5 million and $25.8 million for the comparable period ended September 30, 2022. This increase
of $3.7 million is primarily attributable to the acquisition costs and transaction costs in the nine months ended September 30, 2023 offset
by the $2.0 million of goodwill impairment in the nine months ended September 30, 2022.
Net loss from continuing operations for the three months ended September
30, 2023 was $10.8 million compared to $10.9 million for the comparable period in the prior year. Net loss from continuing operations
for the nine months ended September 30, 2023, was $30.5 million compared to $27.1 million for the comparable period in the prior year.
Non-GAAP Adjusted EBITDA for the three and nine months ended September 30, 2023 was a loss of $4.1 million and $14.0 million, respectively,
compared to a loss of $1.4 million and $9.4 million for the prior year periods, respectively. Non-GAAP Adjusted EBITDA is defined as net
income or loss before interest, provision for income taxes, depreciation and amortization plus adjustments for other income or expense
items, non-recurring items and non-cash items including stock-based compensation.
Proforma non-GAAP net loss per basic and diluted common share for the
three and nine months ended September 30, 2023 was a loss of $0.08 and $0.60, respectively, compared to a loss of $0.84 and $4.78 for
the prior year periods. Non-GAAP net loss per share is defined as net loss per basic and diluted share adjusted for non-cash items including
stock-based compensation, amortization of intangibles and one-time charges and other adjustments including impairment of goodwill, unrealized
and realized gains and losses on equity securities, and acquisition costs.
Conference Call and Presentation Information
Inpixon will host a conference call presentation today at 4:30 p.m.
Eastern Time to provide a business update as well as a presentation by the management of Damon Motors following the recently announced
spin-off and merger agreement between Inpixon’s wholly owned subsidiary, Grafiti Holding, Inc. and Damon.
Interested parties may access the conference call presentation at https://www.webcaster4.com/Webcast/Page/2235/49432 or
at the link on Inpixon’s Investor Relations section of the website, ir.inpixon.com/ir-news-events/ir-calendar. A webcast replay
will be available on Inpixon’s Investor Relations section of the website (ir.inpixon.com/ir-news-events/ir-calendar).
Shareholders and other interested parties are invited to submit questions
to Inpixon management via email to inpx@crescendo-ir.com.
About Inpixon
Inpixon® (Nasdaq: INPX) is the innovator of Indoor Intelligence®,
delivering actionable insights for people, places and things. Combining the power of mapping, positioning and analytics, Inpixon helps
to create smarter, safer, and more secure environments. The company’s Indoor Intelligence and industrial real-time location system
(RTLS) solutions are leveraged by a multitude of industries to optimize operations, increase productivity, and enhance safety. Inpixon
customers can take advantage of industry leading location awareness, analytics, sensor fusion, IIoT and the IoT to create exceptional
experiences and to do good with indoor data. For the latest insights, follow Inpixon on LinkedIn, and X, and visit inpixon.com.
About XTI
XTI Aircraft Company is an aviation business based near Denver, Colorado.
XTI is guided by a leadership team with decades of experience, deep expertise, and success bringing new aircraft to market, including
more than 40 FAA-certified new aircraft configurations. XTI is founded on a culture of customer-focused problem solving to meet the evolving
needs of modern travelers. For information and updates about XTI Aircraft Company and the TriFan 600, visit xtiaircraft.com. For
information on reserving a priority position for the TriFan under the company’s pre-sales program, contact Mr. Saleem Zaheer at +1-720-900-6928
or szaheer@xtiaircraft.com.
About Damon Motors
Damon Motors is a global technology leader disrupting urban mobility,
led by entrepreneurs and executives from world-class EV and technology companies. With its offices in San Rafael, California and
headquartered in Vancouver, Canada, Damon is on a mission to cause a paradigm shift for safer, smarter motorcycling. Anchored by its proprietary
electric powertrain, HyperDrive™, Damon has captured the attention of the motorcycling world by delivering 200 hp, a top speed of
200 mph, 200 miles of range, innovative design, and new safety features, including CoPilot™ and Shift™, which are attracting
an entirely new generation of motorcycle riders. With strong consumer interest in the US and abroad, Damon aims to set a new standard
for motorcycle safety and sustainability worldwide. For more information on how Damon technology is defining the new industry standard,
please visit damon.com.
Non-GAAP Financial Measures
Management believes that certain financial measures not in accordance
with generally accepted accounting principles in the United States (“GAAP”) are useful measures of operations. EBIDTA, Adjusted
EBITDA and pro forma net loss per share are non-GAAP measures. Inpixon defines “EBITDA” as net income (loss) before interest,
provision for (benefit from) income taxes, and depreciation and amortization. Management uses Adjusted EBITDA as a metric for which it
manages the business, and Inpixon defines “Adjusted EBITDA” as EBITDA plus adjustments for other income or expense items, non-recurring
items and non-cash items. Inpixon defines “pro forma net loss per share” as GAAP net loss per share adjusted for stock-based
compensation, amortization of intangibles and one-time charges including impairment of goodwill and gain or loss on equity securities.
Management provides Adjusted EBITDA and pro forma net loss per share
measures so that investors will have the same financial information that management uses, which may assist investors in assessing Inpixon’s
performance on a period-over-period basis. Adjusted EBITDA or pro forma net loss per share is not a measure of financial performance under
GAAP and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows
from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA and pro
forma net loss per share have limitations as analytical tools and should not be considered either in isolation or as a substitute for
analysis of Inpixon’s results as reported under GAAP.
For more information on our non-GAAP financial measures and a reconciliation
of GAAP to non-GAAP measures, please see the “Reconciliation of Non-GAAP Financial Measures” table accompanying this press release.
Important Information About the Proposed Damon Transaction and Where
to Find It
In connection with the spin-off, Grafiti will file with the SEC a registration
statement, registering Grafiti common shares. Grafiti will also file a preliminary and final non-offering prospectus with the British
Columbia Securities Commission relating to the business combination with Damon. This press release does not contain all the information
that should be considered concerning the spin-off and the business combination with Damon (the “Proposed Damon Transaction”)
and is not a substitute for any other documents that Inpixon or Grafiti may file with the SEC, or that Damon may send to stockholders
in connection with the business combination. It is not intended to form the basis of any investment decision or any other decision in
respect to the Proposed Damon Transaction. Damon’s stockholders and Inpixon’s stockholders and other interested persons are
advised to read, when available, the registration statement of Grafiti together with its exhibits, as these materials will contain important
information about Inpixon, Grafiti, Damon, the Proposed Damon Transaction.
The registration statement and other documents to be filed by Grafiti
with the SEC will also be available free of charge, at the SEC’s website at www.sec.gov, or by directing a request to: Grafiti Holding
Inc., 2479 E. Bayshore Road, Suite 195, Palo Alto, CA 94303.
Forward-Looking Statements Regarding the Proposed Damon Transaction
This press release contains certain “forward-looking statements”
within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section
21E of the Exchange Act. All statements other than statements of historical fact contained in this press release, including statements
regarding the benefits of the Proposed Damon Transaction, the anticipated timing of the completion of the Proposed Damon Transaction,
the products under development by Damon and the markets in which it plans to operate, the advantages of Damon’s technology, Damon’s
competitive landscape and positioning, and Damon’s growth plans and strategies, are forward-looking statements. Some of these forward-looking
statements can be identified by the use of forward-looking words, including “may,” “should,” “expect,”
“intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,”
“plan,” “targets,” “projects,” “could,” “would,” “continue,” “forecast”
or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties,
and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
All forward-looking statements are based upon estimates, forecasts, and assumptions that, while considered reasonable by Inpixon and its
management, and Damon and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to
differ materially from current expectations which include, but are not limited to:
| ● | the risk that the Proposed Damon Transaction may not be completed in a timely manner or at all, which may adversely affect the price
of Inpixon’s securities; |
| ● | the risk that the public market valuation of the combined company following the consummation of the business combination may differ
from the valuation range ascertained by the parties to the business combination and their respective financial advisors, and that the
valuation to be ascertained by an independent financial advisor to Damon in connection with the business combination may differ from the
valuation ascertained by Inpixon’s independent financial advisor; |
| ● | the failure to satisfy the conditions to the consummation of the Proposed Damon Transaction, including receiving the necessary approvals
from the Damon securityholders and the Supreme Court of British Columbia with respect to the Plan of Arrangement; |
| ● | the occurrence of any event, change or other circumstance that could give rise to the termination of the Proposed Damon Transaction; |
| ● | the effect of the announcement or pendency of the Proposed Damon Transaction on Inpixon, Grafiti and Damon’s business relationships,
performance, and business generally; |
| ● | risks that the Proposed Damon Transaction disrupts current plans of Inpixon, Grafiti and Damon and potential difficulties in their
employee retention as a result of the Proposed Damon Transaction; |
| ● | the outcome of any legal proceedings that may be instituted against Damon, Grafiti or Inpixon related to the Proposed Damon Transaction; |
| ● | failure to realize the anticipated benefits of the Proposed Damon Transaction; |
| ● | the inability to satisfy the initial listing criteria of Nasdaq or obtain Nasdaq approval of the initial listing of the combined company
on Nasdaq; |
| ● | the risk that the price of the securities of the combined company may be volatile due to a variety of factors, including changes in
the highly competitive industries in which Grafiti and Damon operate, variations in performance across competitors, changes in laws, regulations,
technologies that may impose additional costs and compliance burdens on Grafiti and Damon’s operations, global supply chain disruptions
and shortages, and macro-economic and social environments affecting Grafiti and Damon’s business and changes in the combined capital
structure; |
| ● | the inability to implement business plans, forecasts, and other expectations after the completion of the Proposed Damon Transaction,
and identify and realize additional opportunities; |
| ● | the risk that Damon has a limited operating history, has not achieved sufficient sales and production capacity at a mass-production
facility, and Damon and its current and future collaborators may be unable to successfully develop and market Damon’s motorcycles
or solutions, or may experience significant delays in doing so; |
| ● | the risk that the combined company may never achieve or sustain profitability; |
| ● | the risk that Damon and the combined company may be unable to raise additional capital on acceptable terms to finance its operations
and remain a going concern; |
| ● | the risk that the combined company experiences difficulties in managing its growth and expanding operations; |
| ● | the risk that Damon’s $85 million of non-binding reservations are canceled, modified, delayed or not placed and that Damon must
return the refundable deposits and such reservations are not converted to sales; |
| ● | the risks relating to Damon’s ability to satisfy the conditions and deliver on the orders and reservations, its ability to maintain
quality control of its motorcycles, and Damon’s dependence on third parties for supplying components and manufacturing the motorcycles; |
| ● | the risk that other motorcycle manufacturers develop competitive electric motorcycles or other competitive motorcycles that adversely
affect Damon’s market position; |
| ● | the risk that Damon’s patent applications may not be approved or may take longer than expected, and Damon may incur substantial
costs in enforcing and protecting its intellectual property; |
| ● | the risk that Damon’s estimates of market demand may be inaccurate; and |
| ● | other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements” in Inpixon’s Annual Report on Form 10-K for the year ended December, 31, 2022, which was filed with the SEC on
April 17, 2023, and Quarterly Report on Form 10-Q for the quarterly period thereafter, as such factors may be updated from time to time
in Inpixon’s filings with the SEC, and the registration statement to be filed by Grafiti in connection with the Spin-off. These
filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from
those contained in the forward-looking statements. |
Nothing in this press release should be regarded as a representation
by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking
statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are
made. Neither Inpixon nor Damon gives any assurance that either Inpixon or Damon or the combined company will achieve its expected results.
Neither Inpixon nor Damon undertakes any duty to update these forward-looking statements, except as otherwise required by law.
Important Information About the Proposed XTI Transaction and Where
to Find It
This press release, in part, relates to the previously announced proposed
transaction between XTI Aircraft, Inc. (“XTI”) and Inpixon pursuant to the agreement and plan of merger, dated as of July
24, 2023, by and among Inpixon, Superfly Merger Sub Inc. and XTI (the “Proposed XTI Transaction”). Inpixon filed a registration
statement on Form S-4 with the U.S. Securities and Exchange Commission on August 14, 2023, as amended by Amendment No. 1 on October 6,
2023 and Amendment No. 2 on November 7, 2023, which included a preliminary prospectus and proxy statement of Inpixon in connection with
the Proposed XTI Transaction, referred to as a proxy statement/prospectus. The registration statement on Form S-4 became effective as
of November 13, 2023. A proxy statement/prospectus will be delivered to all Inpixon stockholders as of the applicable record date established
for voting on the transaction and to the stockholders of XTI. Inpixon also will file other documents regarding the Proposed XTI Transaction
with the SEC.
Before making any voting decision, investors and security holders are
urged to read the registration statement, the proxy statement/prospectus, any amendments thereto, and all other relevant documents filed
or that will be filed with the SEC in connection with the Proposed XTI Transaction as they become available because they will contain
important information about Inpixon, XTI and the Proposed XTI Transaction.
Investors and securityholders will be able to obtain free copies of
the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by
Inpixon through the website maintained by the SEC at www.sec.gov.
The documents filed by Inpixon with the SEC also may be obtained free
of charge at Inpixon’s website at www.inpixon.com or upon written request to: Inpixon, 2479 E. Bayshore Road, Suite 195, Palo Alto,
CA 94303.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED
OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS COMMUNICATION, PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION OR RELATED TRANSACTIONS
OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS COMMUNICATION. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL
OFFENSE.
Forward-Looking Statements about the Proposed XTI Transaction
This press release contains certain “forward-looking statements”
within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section
21E of the Exchange Act. All statements other than statements of historical fact contained in this press release, including statements
regarding the benefits of the Proposed XTI Transaction and the anticipated timing of the completion of the Proposed XTI Transaction, are
forward-looking statements.
Some of these forward-looking statements can be identified by the use
of forward-looking words, including “may,” “should,” “expect,” “intend,” “will,”
“estimate,” “anticipate,” “believe,” “predict,” “plan,” “targets,”
“projects,” “could,” “would,” “continue,” “forecast” or the negatives of these
terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors
which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking
statements are based upon estimates, forecasts, and assumptions that, while considered reasonable by Inpixon and its management, and XTI
and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from
current expectations which include, but are not limited to:
| ● | the risk that the Proposed XTI Transaction may not be completed
in a timely manner or at all, which may adversely affect the price of Inpixon’s securities; |
| ● | the failure to satisfy the conditions to the consummation
of the Proposed XTI Transaction, including the adoption of the merger agreement by the shareholders of Inpixon; |
| ● | the occurrence of any event, change or other circumstance
that could give rise to the termination of the merger agreement; |
| ● | the adjustments permitted under the merger agreement to the
exchange ratio that could result in XTI shareholders or Inpixon shareholders owning less of the post-combination company than expected; |
| ● | the effect of the announcement or pendency of the Proposed
XTI Transaction on Inpixon’s and XTI’s business relationships, performance, and business generally; |
| ● | the risks that the Proposed XTI Transaction disrupts current
plans of Inpixon and XTI and potential difficulties in Inpixon’s and XTI’s employee retention because of the Proposed XTI
Transaction; |
| ● | the outcome of any legal proceedings that may be instituted
against XTI or against Inpixon related to the merger agreement or the Proposed XTI Transaction; |
| ● | failure to realize the anticipated benefits of the Proposed
XTI Transaction; |
| ● | the inability to meet and maintain the listing of Inpixon’s
securities (or the securities of the post-combination company) on Nasdaq; |
| ● | the risk that the price of Inpixon’s securities (or
the securities of the post-combination company) may be volatile due to a variety of factors, including changes in the highly competitive
industries in which Inpixon and XTI operate; |
| ● | the inability to implement business plans, forecasts, and
other expectations after the completion of the Proposed XTI Transaction, and identify and realize additional opportunities; |
| ● | variations in performance across competitors, changes in
laws, regulations, technologies that may impose additional costs and compliance burdens on Inpixon and XTI’s operations, global
supply chain disruptions and shortages; |
| ● | national security tensions, and macro-economic and social
environments affecting Inpixon and XTI’s business and changes in the combined capital structure; |
| ● | the risk that XTI has a limited operating history, has not
yet manufactured any non-prototype aircraft or delivered any aircraft to a customer, and XTI and its current and future collaborators
may be unable to successfully develop and market XTI’s aircraft or solutions, or may experience significant delays in doing so; |
| ● | the risk that XTI is subject to the uncertainties associated
with the regulatory approvals of its aircraft including the certification by the Federal Aviation Administration, which is a lengthy
and costly process; |
| ● | the risk that the post-combination company may never achieve
or sustain profitability; |
| ● | the risk that XTI, Inpixon and the post-combination company
may be unable to raise additional capital on acceptable terms to finance its operations and remain a going concern; |
| ● | the risk that the post-combination company experiences difficulties
in managing its growth and expanding operations; |
| ● | the risk that XTI’s conditional pre-orders (which include
conditional aircraft purchase agreements, non-binding reservations, and options) are canceled, modified, delayed or not placed and that
XTI must return the refundable deposits; |
| ● | the risks relating to long development and sales cycles,
XTI’s ability to satisfy the conditions and deliver on the orders and reservations, its ability to maintain quality control of
its aircraft, and XTI’s dependence on third parties for supplying components and potentially manufacturing the aircraft; |
| ● | the risk that other aircraft manufacturers develop competitive
VTOL aircraft or other competitive aircraft that adversely affect XTI’s market position; |
| ● | the risk that XTI’s future patent applications may
not be approved or may take longer than expected, and XTI may incur substantial costs in enforcing and protecting its intellectual property; |
| ● | the risk that XTI’s estimates of market demand may
be inaccurate; |
| ● | the risk that XTI’s ability to sell its aircraft may
be limited by circumstances beyond its control, such as a shortage of pilots and mechanics who meet the training standards, high maintenance
frequencies and costs for the sold aircraft, and any accidents or incidents involving VTOL aircraft that may harm customer confidence;
and |
| ● | other risks and uncertainties set forth in the sections entitled
“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Inpixon’s Annual Report on
Form 10-K for the year ended December 31, 2022, which was filed with the SEC on April 17, 2023 (the “2022 Form 10-K”), the
Quarterly Report on Form 10-Q for the quarterly period filed thereafter, and the Current Report on Form 8-K filed on July 25, 2023, and
in the section entitled “Risk Factors” in XTI’s periodic reports filed pursuant to Regulation A of the Securities Act
including XTI’s Annual Report on Form 1-K for the year ended December 31, 2022, which was filed with the SEC on July 13, 2023 (the
“2022 Form 1-K”), as such factors may be updated from time to time in Inpixon’s and XTI’s filings with the SEC,
the registration statement on Form S-4 and the proxy statement/prospectus contained therein. These filings identify and address other
important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking
statements. |
Nothing in this press release should be regarded as a representation
by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking
statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are
made. Neither Inpixon nor XTI gives any assurance that either Inpixon or XTI or the post-combination company will achieve its expected
results. Neither Inpixon nor XTI undertakes any duty to update these forward-looking statements, except as otherwise required by law.
Participants in the Solicitation
XTI and Inpixon and their respective directors and officers and other
members of management may, under SEC rules, be deemed to be participants in the solicitation of proxies from Inpixon’s stockholders
with the Proposed XTI Transaction and the other matters set forth in the registration statement. Information about Inpixon’s and
XTI’s directors and executive officers is set forth in Inpixon’s filings and XTI’s filings with the SEC, including Inpixon’s
2022 Form 10-K and XTI’s 2022 Form 1-K. Additional information regarding the direct and indirect interests, by security holdings
or otherwise, of those persons and other persons who may be deemed participants in the Proposed XTI Transaction may be obtained by reading
the proxy statement/prospectus regarding the Proposed XTI Transaction when it becomes available. You may obtain free copies of these documents
as described above under “Important Information About the Proposed Transaction and Where to Find It.”
No Offer or Solicitation
This press release is not a proxy statement or solicitation of a proxy,
consent or authorization with respect to any securities or in respect of the proposed transactions and is not intended to and does not
constitute an offer to sell or the solicitation of an offer to buy, sell or solicit any securities or any proxy, vote or approval, nor
shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities Act.
Contacts
Inpixon Contacts
General inquiries:
Email: marketing@inpixon.com
Web: inpixon.com/contact-us
Investor relations:
Crescendo Communications for Inpixon
Tel: +1 212-671-1020
Email: INPX@crescendo-ir.com
XTI Aircraft Contacts
General inquiries:
Email: liftup@xtiaircraft.com
Web: xtiaircraft.com/cm/get-involved
Investor relations:
Crescendo Communications for XTI
Tel: +1 212-671-1020
Email: XTI@crescendo-ir.com
INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except number of shares and par
value data)
| | |
As of | |
| | |
September 30,
2023 | | |
December 31,
2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| ASSETS | |
| | |
| |
| Current Assets | |
| | |
| |
| Cash and cash equivalents | |
$ | 13,489 | | |
$ | 10,235 | |
| Accounts receivable, net of allowance for credit losses of $237 and $272, respectively | |
| 1,560 | | |
| 1,889 | |
| Other receivables | |
| 142 | | |
| 86 | |
| Inventory | |
| 3,355 | | |
| 2,442 | |
| Notes receivable | |
| 2,068 | | |
| 150 | |
| Prepaid assets and other current assets | |
| 1,949 | | |
| 2,803 | |
| Current assets of discontinued
operations | |
| -- | | |
| 12,261 | |
| Total Current Assets | |
| 22,563 | | |
| 29,866 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 1,013 | | |
| 1,064 | |
| Operating lease right-of-use asset, net | |
| 376 | | |
| 531 | |
| Software development costs, net | |
| 988 | | |
| 1,265 | |
| Investment in equity securities | |
| 189 | | |
| 330 | |
| Long-term investments | |
| 50 | | |
| 716 | |
| Intangible assets, net | |
| 2,304 | | |
| 2,994 | |
| Other assets | |
| 164 | | |
| 158 | |
| Non-current assets of discontinued operations | |
| -- | | |
| 20,711 | |
| Total Assets | |
$ | 27,647 | | |
$ | 57,635 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 1,920 | | |
$ | 1,503 | |
| Accrued liabilities | |
| 3,569 | | |
| 2,619 | |
| Warrant Liability | |
| 1,410 | | |
| -- | |
| Operating lease obligation, current | |
| 198 | | |
| 211 | |
| Deferred revenue | |
| 1,315 | | |
| 1,323 | |
| Short-term debt | |
| 11,165 | | |
| 13,643 | |
| Acquisition liability | |
| -- | | |
| 197 | |
| Current liabilities of discontinued operations | |
| -- | | |
| 5,218 | |
| Total Current Liabilities | |
| 19,577 | | |
| 24,714 | |
| | |
| | | |
| | |
| Long Term Liabilities | |
| | | |
| | |
| Operating lease obligations, noncurrent | |
| 188 | | |
| 334 | |
| Non-current liabilities of discontinued operations | |
| -- | | |
| 472 | |
| Total Liabilities | |
| 19,765 | | |
| 25,520 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders’ Equity | |
| | | |
| | |
| Preferred Stock - $0.001 par value; 5,000,000 shares authorized. | |
| | | |
| | |
| Series 4 Convertible Preferred Stock - 10,415 shares authorized; 1 issued and 1 outstanding as of September 30, 2023 and December 31, 2022, respectively; | |
| -- | | |
| -- | |
| Series 5 Convertible Preferred Stock - 12,000 shares authorized; 126 issued and 126 outstanding as of September 30, 2023 and December 31, 2022, respectively. | |
| -- | | |
| -- | |
| Common Stock - $0.001 par value; 500,000,000 shares authorized; 111,692,178 and 3,570,894 issued and 111,692,177 and 3,570,893 outstanding as of September 30, 2023 and December 31, 2022, respectively. | |
| 112 | | |
| 4 | |
| Additional paid-in capital | |
| 358,692 | | |
| 346,668 | |
| Treasury stock, at cost, 1 share | |
| (695 | ) | |
| (695 | ) |
| Accumulated other comprehensive income | |
| 41 | | |
| 1,061 | |
| Accumulated deficit | |
| (347,971 | ) | |
| (313,739 | ) |
| Stockholders’ Equity Attributable to Inpixon | |
| 10,179 | | |
| 33,299 | |
| | |
| | | |
| | |
| Non-controlling interest | |
| (2,297 | ) | |
| (1,184 | ) |
| | |
| | | |
| | |
| Total Stockholders’ Equity | |
| 7,882 | | |
| 32,115 | |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Equity | |
$ | 27,647 | | |
$ | 57,635 | |
INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
| | |
For the Three Months Ended | | |
For the Nine Months Ended | |
| | |
September 30, | | |
September 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
(Unaudited) | |
| | |
| |
| Revenues | |
$ | 2,016 | | |
$ | 2,435 | | |
$ | 7,177 | | |
$ | 7,660 | |
| Cost of Revenues | |
| 451 | | |
| 756 | | |
| 1,632 | | |
| 2,409 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross Profit | |
| 1,565 | | |
| 1,679 | | |
| 5,545 | | |
| 5,251 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | | |
| | | |
| | |
| Research and development | |
| 2,347 | | |
| 2,136 | | |
| 6,380 | | |
| 6,713 | |
| Sales and marketing | |
| 1,149 | | |
| 1,036 | | |
| 3,506 | | |
| 2,960 | |
| General and administrative | |
| 3,747 | | |
| 3,573 | | |
| 13,596 | | |
| 12,705 | |
| Acquisition related costs | |
| 1,656 | | |
| 2 | | |
| 2,343 | | |
| 254 | |
| Transaction costs | |
| 1,527 | | |
| -- | | |
| 2,970 | | |
| -- | |
| Impairment of goodwill | |
| -- | | |
| -- | | |
| -- | | |
| 2,030 | |
| Amortization of intangibles | |
| 221 | | |
| 395 | | |
| 671 | | |
| 1,137 | |
| Total Operating Expenses | |
| 10,647 | | |
| 7,142 | | |
| 29,466 | | |
| 25,799 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from Operations | |
| (9,082 | ) | |
| (5,463 | ) | |
| (23,921 | ) | |
| (20,548 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other (Expense)/Income | |
| | | |
| | | |
| | | |
| | |
| Interest expense, net | |
| (818 | ) | |
| (234 | ) | |
| (4,300 | ) | |
| (65 | ) |
| Other income/(expense), net | |
| (44 | ) | |
| 830 | | |
| 1,169 | | |
| 802 | |
| Unrealized gain/(loss) on equity securities | |
| 5,791 | | |
| (5,854 | ) | |
| 5,733 | | |
| (7,110 | ) |
| Realized loss on equity securities | |
| (6,692 | ) | |
| (151 | ) | |
| (6,692 | ) | |
| (151 | ) |
| Total Other Expense | |
| (1,763 | ) | |
| (5,409 | ) | |
| (4,090 | ) | |
| (6,524 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss from Continuing Operations, before tax | |
| (10,845 | ) | |
| (10,872 | ) | |
| (28,011 | ) | |
| (27,072 | ) |
| Income tax provision | |
| (3 | ) | |
| -- | | |
| (2,488 | ) | |
| (22 | ) |
| Net Loss from Continuing Operations | |
| (10,848 | ) | |
| (10,872 | ) | |
| (30,499 | ) | |
| (27,094 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from Discontinued Operations, Net of Tax | |
| -- | | |
| (7,121 | ) | |
| (4,856 | ) | |
| (22,786 | ) |
| Net Loss | |
| (10,848 | ) | |
| (17,993 | ) | |
| (35,355 | ) | |
| (49,880 | ) |
| Net Loss Attributable to Non-controlling Interest | |
| (464 | ) | |
| (402 | ) | |
| (1,131 | ) | |
| (1,206 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss Attributable to Stockholders of Inpixon | |
| (10,384 | ) | |
| (17,591 | ) | |
| (34,224 | ) | |
| (48,674 | ) |
| Accretion of Series 7 preferred stock | |
| -- | | |
| -- | | |
| -- | | |
| (4,555 | ) |
| Accretion of Series 8 Preferred Stock | |
| -- | | |
| (6,305 | ) | |
| -- | | |
| (13,089 | ) |
| Deemed dividend for the modification related to Series 8 Preferred Stock | |
| -- | | |
| -- | | |
| -- | | |
| (2,627 | ) |
| Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock | |
| -- | | |
| -- | | |
| -- | | |
| 1,469 | |
| Amortization premium- modification related to Series 8 Preferred Stock | |
| -- | | |
| 1,265 | | |
| -- | | |
| 2,626 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss Attributable to Common Stockholders | |
$ | (10,384 | ) | |
$ | (22,631 | ) | |
$ | (34,224 | ) | |
$ | (64,850 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss Per Share - Basic and Diluted | |
| | | |
| | | |
| | | |
| | |
| Continuing Operations | |
$ | (0.16 | ) | |
$ | (7.00 | ) | |
$ | (0.82 | ) | |
$ | (20.16 | ) |
| Discontinued Operations | |
$ | -- | | |
$ | (3.21 | ) | |
$ | (0.14 | ) | |
$ | (10.92 | ) |
| Net Loss Per Share - Basic and Diluted | |
$ | (0.16 | ) | |
$ | (10.21 | ) | |
$ | (0.96 | ) | |
$ | (31.08 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted Average Shares Outstanding | |
| | | |
| | | |
| | | |
| | |
| Basic and Diluted | |
| 65,840,189 | | |
| 2,216,544 | | |
| 35,845,916 | | |
| 2,086,633 | |
| Comprehensive Loss | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
$ | (10,848 | ) | |
$ | (17,993 | ) | |
$ | (35,355 | ) | |
$ | (49,880 | ) |
| Unrealized gain on available for sale debt securities | |
| -- | | |
| (375 | ) | |
| -- | | |
| -- | |
| Unrealized foreign exchange gain (loss) from cumulative translation adjustments | |
| 230 | | |
| 1,273 | | |
| (1,020 | ) | |
| 1,452 | |
| Comprehensive Loss | |
$ | (10,618 | ) | |
$ | (17,095 | ) | |
$ | (36,375 | ) | |
$ | (48,428 | ) |
INPIXON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | |
For the Nine Months Ended | |
| | |
September 30, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | |
| Cash Flows Used In Operating Activities | |
| | |
| |
| Net loss | |
$ | (35,355 | ) | |
$ | (49,880 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 834 | | |
| 1,008 | |
| Amortization of intangible assets | |
| 1,476 | | |
| 4,559 | |
| Amortization of right of use asset | |
| 206 | | |
| 536 | |
| Stock based compensation | |
| 797 | | |
| 2,962 | |
| Amortization of warrant liability to redemption value | |
| 20 | | |
| -- | |
| Earnout expense valuation benefit | |
| -- | | |
| (2,827 | ) |
| Gain on settlement with FOXO | |
| (1,142 | ) | |
| -- | |
| Amortization of debt issuance costs | |
| 2,103 | | |
| 121 | |
| Accrued interest income, related party | |
| -- | | |
| (278 | ) |
| Unrealized gain on note | |
| -- | | |
| 1,870 | |
| Unrealized loss on foreign currency transactions | |
| 176 | | |
| -- | |
| Distribution of equity method investment shares to employees as compensation | |
| 666 | | |
| -- | |
| Deferred income tax | |
| 2,591 | | |
| (1 | ) |
| Unrealized (gain) loss on equity securities | |
| (5,733 | ) | |
| 7,110 | |
| Impairment of goodwill | |
| -- | | |
| 7,570 | |
| Gain on fair value of warrant liability | |
| 71 | | |
| -- | |
| Realized loss on sale of equity securities | |
| 6,692 | | |
| 151 | |
| Gain on conversion of note receivable | |
| -- | | |
| (791 | ) |
| Loss on exchange of debt for equity | |
| 124 | | |
| -- | |
| Other | |
| 24 | | |
| 202 | |
| | |
| | | |
| | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable and other receivables | |
| (652 | ) | |
| 336 | |
| Inventory | |
| (951 | ) | |
| (1,002 | ) |
| Prepaid expenses and other current assets | |
| 1,110 | | |
| 1,545 | |
| Other assets | |
| 3 | | |
| 28 | |
| Accounts payable | |
| (372 | ) | |
| 237 | |
| Accrued liabilities | |
| 2,018 | | |
| 1,059 | |
| Income tax liabilities | |
| (119 | ) | |
| (38 | ) |
| Deferred revenue | |
| 530 | | |
| (915 | ) |
| Operating lease obligation | |
| (207 | ) | |
| (505 | ) |
| Net Cash Used in Operating Activities | |
$ | (25,090 | ) | |
$ | (26,943 | ) |
| | |
| | | |
| | |
| Cash Flows Used in Investing Activities | |
| | | |
| | |
| Purchase of property and equipment | |
| (142 | ) | |
| (221 | ) |
| Investment in capitalized software | |
| (135 | ) | |
| (611 | ) |
| Purchase of convertible note | |
| -- | | |
| (5,500 | ) |
| Sales of equity securities | |
| 323 | | |
| 229 | |
| Sales of treasury bills | |
| -- | | |
| 43,001 | |
| Proceeds from repayment of note receivable | |
| 150 | | |
| -- | |
| Issuance of note receivable | |
| (2,025 | ) | |
| (150 | ) |
| Net Cash (Used in) Provided By Investing Activities | |
$ | (1,829 | ) | |
$ | 36,748 | |
| | |
| | | |
| | |
| Cash From Financing Activities | |
| | | |
| | |
| Net proceeds from issuance of preferred stock | |
$ | -- | | |
| 46,906 | |
| Net proceeds from promissory note | |
| 125 | | |
| 5,539 | |
| Net proceeds from ATM stock offerings | |
| 26,510 | | |
| -- | |
| Cash paid for redemption of preferred stock series 7 | |
| -- | | |
| (49,250 | ) |
| Taxes paid related to net share settlement of restricted stock units | |
| -- | | |
| (336 | ) |
| Net proceeds from issuance of warrants | |
| 1,409 | | |
| -- | |
| Repayment of CXApp acquisition liability | |
| (197 | ) | |
| (1,957 | ) |
| Distribution to shareholders related to spin-off of CXApp | |
| (10,003 | ) | |
| -- | |
| Common shares issued for net proceeds from warrants | |
| 2,341 | | |
| -- | |
| Net Cash Provided By Financing Activities | |
$ | 20,185 | | |
$ | 902 | |
| | |
| | | |
| | |
| Effect of Foreign Exchange Rate on Changes on Cash | |
| (12 | ) | |
| (34 | ) |
| | |
| | | |
| | |
| Net (Decrease) Increase in Cash and Cash Equivalents | |
| (6,746 | ) | |
| 10,673 | |
| | |
| | | |
| | |
| Cash and Cash Equivalents - Beginning of year | |
| 20,235 | | |
| 52,480 | |
| | |
| | | |
| | |
| Cash and Cash Equivalents - End of year | |
$ | 13,489 | | |
$ | 63,153 | |
Reconciliation of Non-GAAP Financial Measures:
| | |
For the Three Months Ended | | |
For the Nine Months Ended | |
| | |
September 30, | | |
September 30, | |
| (In thousands) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
| | |
| | |
| | |
| |
| Net loss attributable to common stockholders | |
$ | (10,384 | ) | |
$ | (22,631 | ) | |
$ | (34,224 | ) | |
$ | (64,850 | ) |
| Loss from discontinued operations, net of tax | |
| - | | |
| 7,121 | | |
| 4,856 | | |
| 22,786 | |
| Interest expense, net | |
| 818 | | |
| 234 | | |
| 4,300 | | |
| 65 | |
| Income tax provision | |
| 3 | | |
| - | | |
| 2,488 | | |
| 22 | |
| Depreciation and amortization | |
| 433 | | |
| 705 | | |
| 1,277 | | |
| 2,123 | |
| EBITDA | |
| (9,130 | ) | |
| (14,571 | ) | |
| (21,303 | ) | |
| (39,854 | ) |
| Adjusted for: | |
| | | |
| | | |
| | | |
| | |
| Non-recurring one-time charges: | |
| | | |
| | | |
| | | |
| | |
| Unrealized (gain)/loss on equity securities | |
| (5,791 | ) | |
| 5,854 | | |
| (5,733 | ) | |
| 7,110 | |
| Realized loss on equity securities | |
| 6,692 | | |
| 151 | | |
| 6,692 | | |
| 151 | |
| Unrealized gain on note | |
| - | | |
| 153 | | |
| - | | |
| 325 | |
| Acquisition transaction/financing costs | |
| 1,656 | | |
| 2 | | |
| 2,343 | | |
| 254 | |
| Professional service fees | |
| - | | |
| - | | |
| - | | |
| 8 | |
| Impairment of goodwill | |
| - | | |
| - | | |
| - | | |
| 2,030 | |
| Transaction costs | |
| 1,527 | | |
| - | | |
| 2,970 | | |
| - | |
| Accretion of series 7 preferred stock | |
| - | | |
| - | | |
| - | | |
| 4,555 | |
| Accretion of series 8 preferred stock | |
| - | | |
| 6,305 | | |
| - | | |
| 13,089 | |
| Deemed dividend for the modification related to Series 8 preferred stock | |
| - | | |
| - | | |
| - | | |
| 2,627 | |
| Deemed contribution for the modification related to warrants issued in connection with the Series 8 Preferred Stock | |
| - | | |
| - | | |
| - | | |
| (1,469 | ) |
| Amortization premium - modification to Series 8 preferred stock | |
| - | | |
| (1,265 | ) | |
| - | | |
| (2,626 | ) |
| Distribution of equity method investment shares to employees as compensation | |
| - | | |
| - | | |
| 666 | | |
| - | |
| Gain on equity securities | |
| - | | |
| - | | |
| (1,142 | ) | |
| - | |
| Loss on exchange of debt for equity | |
| 124 | | |
| - | | |
| 124 | | |
| - | |
| Unrealized foreign exchange losses | |
| 354 | | |
| 1,019 | | |
| 209 | | |
| 1,143 | |
| Bad debts expense/provision | |
| - | | |
| - | | |
| 24 | | |
| - | |
| Reserve for inventory obsolescence | |
| (8 | ) | |
| - | | |
| 8 | | |
| - | |
| Stock-based compensation – compensation and related benefits | |
| 227 | | |
| 688 | | |
| 797 | | |
| 2,962 | |
| Severance costs | |
| 244 | | |
| 239 | | |
| 371 | | |
| 301 | |
| Adjusted EBITDA | |
$ | (4,105 | ) | |
$ | (1,425 | ) | |
$ | (13,974 | ) | |
$ | (9,394 | ) |
| | |
For the Three Months Ended | | |
For the Nine Months Ended | |
| | |
September 30, | | |
September 30, | |
| (In thousands, except share data) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
| | |
| | |
| | |
| |
| Net loss attributable to common stockholders | |
$ | (10,384 | ) | |
$ | (22,631 | ) | |
$ | (34,224 | ) | |
$ | (64,850 | ) |
| Adjustments: | |
| | | |
| | | |
| | | |
| | |
| Non-recurring one-time charges: | |
| | | |
| | | |
| | | |
| | |
| Loss from discontinued operations, net of tax | |
| - | | |
| 7,121 | | |
| 4,856 | | |
| 22,786 | |
| Unrealized (gain)/loss on equity securities | |
| (5,791 | ) | |
| 5,854 | | |
| (5,733 | ) | |
| 7,110 | |
| Realized loss on equity securities | |
| 6,692 | | |
| 151 | | |
| 6,692 | | |
| 151 | |
| Unrealized gain on note | |
| - | | |
| 153 | | |
| - | | |
| 325 | |
| Acquisition transaction/financing costs | |
| 1,656 | | |
| 2 | | |
| 2,343 | | |
| 254 | |
| Professional service fees | |
| - | | |
| - | | |
| - | | |
| 8 | |
| Impairment of goodwill | |
| - | | |
| - | | |
| - | | |
| 2,030 | |
| Transaction costs | |
| 1,527 | | |
| - | | |
| 2,970 | | |
| - | |
| Accretion of series 7 preferred stock | |
| - | | |
| - | | |
| - | | |
| 4,555 | |
| Accretion of series 8 preferred stock | |
| - | | |
| 6,305 | | |
| - | | |
| 13,089 | |
| Deemed dividend for the modification Series 8 preferred stock | |
| - | | |
| - | | |
| - | | |
| 2,627 | |
| Deemed contribution for the modification related to warrants issued in connection with the Series 8 Preferred Stock | |
| - | | |
| - | | |
| - | | |
| (1,469 | ) |
| Amortization premium - modification to Series 8 preferred stock | |
| - | | |
| (1,265 | ) | |
| - | | |
| (2,626 | ) |
| Distribution of equity method investment shares to employees as compensation | |
| - | | |
| - | | |
| 666 | | |
| - | |
| Gain on equity securities | |
| - | | |
| - | | |
| (1,142 | ) | |
| - | |
| Loss on exchange of debt for equity | |
| 124 | | |
| - | | |
| 124 | | |
| - | |
| Unrealized foreign exchange losses | |
| 354 | | |
| 1,019 | | |
| 209 | | |
| 1,143 | |
| Bad debts expense/provision | |
| - | | |
| - | | |
| 24 | | |
| - | |
| Reserve for inventory obsolescence | |
| (8 | ) | |
| - | | |
| 8 | | |
| - | |
| Stock-based compensation - compensation and related benefits | |
| 227 | | |
| 688 | | |
| 797 | | |
| 2,962 | |
| Severance costs | |
| 244 | | |
| 239 | | |
| 371 | | |
| 301 | |
| Amortization of intangibles | |
| 221 | | |
| 511 | | |
| 671 | | |
| 1,640 | |
| Proforma non-GAAP net loss | |
$ | (5,138 | ) | |
$ | (1,853 | ) | |
$ | (21,368 | ) | |
$ | (9,964 | ) |
| Proforma non-GAAP net loss per common share - basic and diluted | |
$ | (0.08 | ) | |
$ | (0.84 | ) | |
$ | (0.60 | ) | |
$ | (4.78 | ) |
| Weighted average basic and diluted common shares outstanding | |
| 65,840,189 | | |
| 2,216,544 | | |
| 35,845,916 | | |
| 2,086,633 | |
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