8-K: XTI Aerospace Completes Merger with Inpixon, Appoints New CEO and CFO

XTI Aerospace, formerly Inpixon, completed its merger with XTI Aircraft Company, changed its name, and began trading on the Nasdaq Capital Market under the ticker symbol XTIA.

Summary

• Inpixon merged with XTI Aircraft Company on March 12, 2024, with XTI surviving as a wholly-owned subsidiary.
• Following the merger, Inpixon changed its name to XTI Aerospace, Inc. and began trading on the Nasdaq under the ticker symbol XTIA on March 13, 2024.
• Nadir Ali resigned as CEO, and Scott Pomeroy was appointed as the new CEO of XTI Aerospace.
• Inpixon executed a 1-for-100 reverse stock split before the merger.
• XTI shareholders received 7,843,668 shares of XTIA common stock, and options and warrants were converted to approximately 1,068,959 and 382,610 shares of XTIA common stock, respectively.
• Convertible notes of XTI totaling $7,535,701 were converted into XTI common stock prior to the merger.
• Remaining XTI convertible notes of $51,658 were assumed by XTI Aerospace and became convertible into approximately 4,611 shares of XTIA common stock.
• Immediately after the merger, XTIA had 9,786,801 shares of common stock issued and outstanding.
• Streeterville Capital exchanged $9,801,521 of debt for 9,801.521 shares of Series 9 Preferred Stock.
• Nadir Ali, through 3AM Investments LLC, purchased 1,500 shares of Series 9 Preferred Stock for $1,500,000.
• Nadir Ali will receive $20,000 per month for consulting services for 15 months, plus $1,500,000 after three months and $4,500,000 in 12 monthly installments.
• Wendy Loundermon will receive $83,333 per month for six months for consulting services, plus $300 per hour for additional services.
• The company issued 385,359 shares to Maxim Group LLC and 189,037 shares to Chardan Capital Markets as part of the merger.
• The company received a Nasdaq extension to regain compliance with the $1.00 minimum bid price rule by May 7, 2024.

Sentiment

Score: 4

Explanation: The document details a complex merger and restructuring, with some positive aspects like the completion of the merger and new leadership, but also significant negatives such as the reverse stock split, delisting concerns, and large consulting fees. The overall sentiment is cautiously negative.

Positives

• The merger with XTI Aircraft Company was successfully completed.
• The company has a new CEO and CFO.
• The company has a new ticker symbol and is trading on the Nasdaq.
• The company has secured additional capital through the sale of Series 9 Preferred Stock.
• The company has a plan to regain compliance with the Nasdaq minimum bid price rule.

Negatives

• The company had to execute a 1-for-100 reverse stock split.
• The company has a history of non-compliance with Nasdaq listing rules.
• The company has significant consulting fees and payments to former executives.
• The company has a complex capital structure with multiple classes of stock and convertible notes.

Risks

• The company may not be able to regain compliance with the Nasdaq minimum bid price rule by May 7, 2024.
• The company may not be able to raise additional capital in the future.
• The company's complex capital structure may make it difficult to attract new investors.
• The company's reliance on consulting agreements with former executives may create conflicts of interest.
• The company's financial performance may not meet expectations.

Future Outlook

The company is focused on integrating the two businesses and regaining compliance with Nasdaq listing requirements. The company is also exploring future financing opportunities.

Management Comments

• Nadir Ali resigned as the Companys Chief Executive Officer.
• Mr. Scott Pomeroy was appointed as the new Chief Executive Officer of XTIA.

Industry Context

The merger reflects a trend of consolidation in the aerospace industry, as companies seek to gain scale and resources. The company is now positioned to compete in the emerging market for advanced air mobility.

Comparison to Industry Standards

• The reverse stock split is a common tactic for companies facing delisting from major exchanges, but it can be a sign of financial distress.
• The use of preferred stock and convertible notes is a common way for early-stage companies to raise capital, but it can also create a complex capital structure.
• The consulting agreements with former executives are not unusual, but the amounts involved are significant.
• The company's need to regain compliance with Nasdaq listing rules is a concern, as it suggests that the company has not been meeting the exchange's minimum standards.

Management Changes

Corporate Governance

Legal Proceedings

• The company received a delisting determination letter from Nasdaq due to the Companys securities having a closing bid price of $0.10 or less for ten consecutive trading days.
• The company requested a hearing before the Nasdaq Hearings Panel and was granted continued listing subject to the condition that, on or before May 7, 2024, the Company will have demonstrated compliance with the Bid Price Rule.

Related Party Transactions

• Nadir Ali, through 3AM Investments LLC, purchased 1,500 shares of Series 9 Preferred Stock for $1,500,000.
• Nadir Ali will receive $20,000 per month for consulting services for 15 months, plus $1,500,000 after three months and $4,500,000 in 12 monthly installments.
• Wendy Loundermon will receive $83,333 per month for six months for consulting services, plus $300 per hour for additional services.
• Mr. Pomeroy received 357,040 shares of common stock of XTIA in accordance with the exchange ratio pursuant to the Merger Agreement.
• Mr. Brody converted $922,957 principal amount of the Brody Note and accrued and unpaid interest thereon, into shares of XTI common stock and XTI agreed to pay Mr. Brody the remaining $175,000 in principal amount upon the consummation of the Merger.

Stakeholder Impact

• Shareholders of Inpixon experienced a reverse stock split and a change in the company's name and ticker symbol.
• Shareholders of XTI Aircraft Company received shares of XTIA common stock.
• Employees of both companies may experience changes in their roles and responsibilities.
• Creditors of XTI Aircraft Company may have their debt converted into equity or assumed by XTI Aerospace.
• Customers and suppliers of both companies may experience changes in their relationships.

Next Steps

• The company needs to regain compliance with the Nasdaq minimum bid price rule by May 7, 2024.
• The company needs to integrate the two businesses.
• The company needs to file a resale registration statement for shares issued in the merger.
• The company needs to explore future financing opportunities.

Key Dates

Keywords

merger, acquisition, aerospace, reverse stock split, Nasdaq, preferred stock, convertible notes, consulting agreement, executive compensation, financial reporting