XTI Aerospace, Inc. current report, 22 March 2022

Business Context and Reporting Period

This Form 8-K, dated March 22, 2022, reports on Inpixon (trading symbol: INPX), a Nevada corporation. The filing details the entry into a material definitive agreement for a registered direct offering and the redemption of existing preferred stock. The company's principal executive offices are located in Palo Alto, California.

Key Financial Metrics and Transaction Details

  • Registered Direct Offering: The Company agreed to sell up to 53,197.7234 shares of Series 8 Convertible Preferred Stock and related warrants.
  • Gross Proceeds: Aggregate subscription amount of $50,005,860.00.
  • Net Proceeds: Expected net proceeds are approximately $47,005,508.40 after placement agent commissions.
  • Discount: Securities sold at a 6% original issue discount (subscription price of $940.00 per $1,000 stated value share).
  • Conversion Terms: Initial conversion price of $0.4717 per share of Common Stock.
  • Warrants: Warrants to purchase up to 112,778,723 shares of Common Stock at an exercise price of $0.4717 per share, exercisable immediately and expiring in five years.
  • Series 7 Redemption: The Company received notices to redeem 16,250 shares of Series 7 Convertible Preferred Stock, requiring an aggregate cash payment of approximately $16.25 million.

Material Changes and Obligations

The filing introduces significant changes to the company's capital structure and liquidity obligations:

  • Capital Structure: Issuance of new Series 8 Convertible Preferred Stock and a substantial number of warrants, which will increase the potential dilution to common shareholders.
  • Liquidity Requirement: Until the earlier of conversion/redemption of all Series 8 shares or January 1, 2023, the Company must maintain a cash balance equal to the sum of the stated value of all outstanding Series 8 and Series 7 shares, aggregate debt, and other senior equity securities.
  • Redemption Liability: A cash outflow of approximately $16.25 million is triggered for the redemption of Series 7 Convertible Preferred Stock, with 9,750,000 related warrants being forfeited.
  • Standstill Period: The Company is restricted from issuing new common stock or convertible securities for 45 days following the closing date (expected March 24, 2022).

Guidance, Risks, and Contingencies

  • Closing Conditions: The offering is subject to customary closing conditions; there is no assurance the transaction will close.
  • Redemption Risk: Holders of Series 8 shares may require redemption between October 1, 2022, and 90 days thereafter. If the Company fails to pay timely, interest accrues at the lesser of 18% per annum or the maximum legal rate.
  • Forfeiture Provisions: Upon redemption of Series 8 shares, holders forfeit 50% of their warrants. Upon redemption of Series 7 shares, holders forfeit 75% of their warrants.
  • Lock-up Agreement: Executive officers and directors are restricted from selling shares for 20 days post-closing.
  • Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ materially from expectations due to various risks.

Investor Verification Checklist

  • Verify the final closing date and confirmation of the $47 million net proceeds receipt.
  • Confirm the Company's current cash balance to ensure compliance with the mandatory liquidity maintenance covenant for Series 8 shares.
  • Monitor the impact of the $16.25 million Series 7 redemption on immediate liquidity.
  • Review the dilution impact of the 112+ million warrants and the conversion of Series 8 preferred stock at the $0.4717 price.
  • Check for any subsequent filings regarding the 45-day standstill period expiration and potential new issuances.