Item 9A. Controls and Procedures
ITEM 9A: CONTROLS AND PROCEDURES
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The evaluation was undertaken in consultation with our accounting personnel. Based on that evaluation, our chief executive officer and our chief financial officer concluded that as of December 31, 2023, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that its internal control over
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financial reporting was effective as of December 31, 2023 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during the fourth quarter of the last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B: OTHER INFORMATION
None of the Company’s directors or officers adopted , modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended December 31, 2023, as such terms are defined under Item 408(a) of Regulation S-K.
The information set forth below is included herein for the purpose of providing the disclosure required under “ Item 1.01 – Entry into a Material Definitive Agreement. ” of Form 8-K.
On April 15, 2024, we entered into an amendment (the “Warrant Amendment”), effective as of March 11, 2024, with a counterparty located in the southwest region of the United States (“Counterparty A”) to a warrant to purchase 567,467 shares of our common stock (the “Counterparty A Warrant”), which was originally issued by Legacy XTI on February 2, 2022, amended on April 3, 2022 and assumed by us in connection with the closing of the XTI Merger on March 12, 2024.
The Warrant Amendment modifies the vesting criteria with respect to the shares of common stock underlying the Counterparty A Warrant. As amended by the Warrant Amendment, (i) one-third of the shares represented by the Counterparty A Warrant vested upon the execution and delivery of the conditional aircraft purchase contract (the “Aircraft Purchase Agreement”), dated February 2, 2022, by and between Legacy XTI and Counterparty A, relating to the purchase of 100 TriFan 600 aircraft, (ii) one-sixth of the shares vested on March 11, 2024 and (iii) one-third of the shares will vest upon the acceptance of delivery and final purchase of the first TriFan 600 aircraft by Counterparty A pursuant to the Aircraft Purchase Agreement. The Warrant Amendment requires the parties to agree on an initial strategic public and industry announcement within 90 days of March 11, 2024 or such other time as the parties may mutually agree.
The foregoing description of the Warrant Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant Amendment, a copy of which is filed as Exhibit 4.31 hereto and is incorporated herein by reference.
ITEM 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of all of our current directors and executive officers. Our officers are appointed by, and serve at the pleasure of, the Company’s Board of Directors (referred to herein as the “Board”) and/or our Chief Executive Officer.
Name Age Position
Scott Pomeroy 62 Chief Executive Officer, Chairman and Director
Brooke Turk 58 Chief Financial Officer
Michael Hinderberger 62 Chief Executive Officer, XTI Aircraft Company
Soumya Das 51 Chief Executive Officer, Real Time Location System Division, and Director
David Brody 75 Director
Kareem Irfan 63 Director
Scott Pomeroy, Chairman and Chief Executive Officer . Mr. Pomeroy served as Legacy XTI's Chief Financial Officer under a consulting arrangement since July 1, 2022 and as a director of Legacy XTI since February 2023 and was appointed as our Chief Executive Officer and as Chair of the Board effective as of the effective time of the XTI Merger. Mr. Pomeroy has served on several boards of directors, including the board of directors of AVX Aircraft Company since 2009. Mr. Pomeroy was the CFO of Dex Media, overseeing equity and debt capital raises of more than $10 billion, and was CEO and founder of Local Insight Media. He also co-founded Gen3 Financial Services, a boutique merchant bank providing financial and business advisory services in connection with capital raising to clients in a variety of industries including aerospace. He led capital raising efforts for a $50 million fund in 2021-22. Mr. Pomeroy began his career at KPMG Peat Marwick. He has a BBA in Accounting from the University of New Mexico and is a Certified Public Accountant.
We believe that Mr. Pomeroy’s over 35 years’ experience in launching new businesses, raising capital, and serving as founder and CEO, President, and Chief Financial Officer of several companies qualifies him to serve on our Board.
Brooke Turk, Chief Financial Officer. Ms. Turk served as a consultant for Legacy XTI since August 2023 and was appointed as our Chief Financial Officer effective as of the effective time of the XTI Merger. Ms. Turk has provided CFO services to multiple companies as a member of Springboard Ventures since August 2011. Ms. Turk has acted as the chief financial officer or fractional chief financial officer of several businesses, including MADSKY from March 2017 to October 2018, The Champion Group from April 2020 to present, Catalyst Solutions from February 2022 to March 2023, and CB Scientific, Inc. from November 2021 to present. Over her 32-year career, Ms. Turk has played a key role in multiple corporate transactions — including mergers, acquisitions and divestitures; restructures and reorganizations; debt and equity capital raises, a Chapter 11 bankruptcy and an IPO. Ms. Turk began her career at Arthur Andersen. She received a Master of Science in Business Administration from Colorado State University and a Bachelor of Arts in Organizational Communication from Western Colorado University and is a Certified Public Accountant..
Michael Hinderberger, Chief Executive Officer of XTI Aircraft Company . Mr. Hinderberger was named Chief Executive Officer of Legacy XTI on July 1, 2022 after serving as Legacy XTI’s SVP of Engineering and Technology since July 2021. He is responsible for all matters related to the development of the TriFan 600 aircraft and Legacy XTI's operations. Prior to joining Legacy XTI, from 2014 to 2021 he was Chief Engineer for Aerion Supersonic Corporation where he was instrumental in transitioning the Aerion AS-2 aircraft from an R&D project into a full-scale development program. Mr. Hinderberger has led major development projects at Gulfstream, Hawker Beechcraft, Rolls Royce, and Piper Aircraft. Mr. Hinderberger has a Bachelor of Science degree in Mechanical Engineering from the University of Cincinnati and a Master of Science degree in Technical Management from Embry Riddle Aeronautical University.
Soumya Das, Chief Executive Officer of Real Time Location System Division and Director. Mr. Das served as our Chief Operating Officer from February 2018 until the effective time of the XTI Merger, and was appointed as the Chief Executive Officer of Real Time Location System Division and a member of our Board effective as of the effective time of the XTI Merger. Mr. Das also currently serves as the Managing Director of our wholly owned subsidiary Inpixon GmbH and its wholly owned subsidiary IntraNav GmbH. He previously served as our Chief Marketing Officer from November 2016 until March 2021. Prior to joining the Company, from November 2013 until January 2016, Mr. Das was the Chief Marketing Officer
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of Identiv, a security technology company. From January 2012 until October 2013, Mr. Das was the Chief Marketing Officer of SecureAuth, a provider of multi-factor authentication, single sign-on, adaptive authentication and self-services tools for different applications. Prior to joining SecureAuth, Mr. Das was the Vice President, Marketing and Strategy of CrownPeak, a provider of web content management solutions, from April 2010 until January 2012. Mr. Das has also served as a member of the board of Museum on Mile since January 4, 2019. Mr. Das earned an MBA from Richmond College, London, United Kingdom, and Bachelor of Business Management from Andhra University in India.
We believe that Mr. Das’s experience in managing and operating high growth public companies qualifies him to serve on our Board.
Non-Executive Directors
David Brody, Director. Mr. Brody is the founder of Legacy XTI, previously served as its Chairman of its Board and was appointed as a member of our Board effective as of the effective time of the XTI Merger. He designed the initial TriFan 600 configuration, technology and performance objectives. He formed the initial leadership team, filed for patents and began development of the TriFan aircraft in 2014. Mr. Brody is also the founder of the advanced technology helicopter company, AVX Aircraft Company (an engineering design and U.S. defense contractor) and was its Chairman and Chief Executive Officer until 2013 and continues to serve on the AVX board. Mr. Brody, a lawyer, practiced law in Denver from 1974 to 2021, including with the international law firm, Hogan Lovells US LLP from 2013-2021. An inventor, he holds several patents for inventions in aircraft technology and other fields. He has a Bachelor of Arts degree in Political Science and Philosophy from the University of Colorado in Boulder, and a Juris Doctorate from American University Law School in Washington D.C.
We believe that Mr. Brody’s experience in the legal field, in the aerospace industry and as a founder of XTI qualifies him to serve on the combined company’s board of directors.
Kareem Irfan, Director. Mr. Irfan has served as a member of our Board since July 2014. Mr. Irfan has been Chicago-based CEO (Global Businesses) since 2013 of Cranes Software International Limited (Cranes), a group of multinational corporations providing IT, Big-Data Analytics, Business Intelligence & Tech-Education services. Mr. Irfan previously served as Chief Strategy Officer for Cranes; a General Counsel for Schneider Electric (a Paris-based global leader in energy management) from 2005 to 2011; a Chief Counsel for Square D (US), and practiced IP law at two international. law firms in the US. He also advises global corporate, NGOs, NPOs and ed-institutions on M&A strategies, CSG/SRI, strategic sustainability & governance, inter-faith bridge-building, diversity/cultural sensitivity, international collaborations, and industry-oriented management/Leadership programs. Mr. Irfan is a graduate of DePaul University College of Law, holds a MS in Computer Engineering from the University of Illinois, and a BS in Electronics Engineering from Bangalore University.
Mr. Irfan’s extensive experience in advising information technology companies, managing corporate governance and regulatory management policies, including over 30 years as a business strategist and over fifteen years of executive management leadership give him strong qualifications and skills to serve on our Board.
Family Relationships
There are no family relationships between any of our directors and executive officers.
Our Board
Our Board may establish the authorized number of directors from time to time by resolution. The current authorized number of directors is five (5). In accordance with the terms of our bylaws, as amended, our Board is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. The directors are divided among the three classes as follows:
• the Class I directors are Scott Pomeroy and Soumya Das, and their terms will expire at our annual meeting of stockholders to be held in 2024;
• the Class II director is Kareem Irfan, and his term will expire at our annual meeting of stockholders to be held in 2025; and
• the Class III director is David Brody and his term will expire at our annual meeting of stockholders to be held in 2026.
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We expect that any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our’s management or a change in control. We expect that in the first meeting of the newly comprised Board following the closing of the XTI Merger, the Board will reevaluate board committee chairs and composition.
We continue to review our corporate governance policies and practices by comparing our policies and practices with those suggested by various groups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we have adopted, and will continue to adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company.
Our Board held four (4) meetings during 2023 and acted through twenty-one (21) written consents. No member of our Board attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board (held during the period for which he or she was a director) and (ii) the total number of meetings held by all committees of the Board on which such director served (held during the period that such director served). Members of our Board are invited and encouraged to attend our annual meeting of stockholders.
Independence of Directors
In determining the independence of our directors, we apply the definition of “independent director” provided under the listing rules of Nasdaq. Pursuant to these rules, the Board has determined that all of the directors currently serving on the Board are independent within the meaning of Nasdaq Listing Rule 5605 with the exception of Scott Pomeroy and Soumya Das, who are executive officers.
Committees of our Board
The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. We expect that the newly comprised Board following the closing of the XTI Merger will reevaluate board committee chairs and composition.
Audit Committee
The Audit Committee consists of David Brody and Kareem Irfan, both of whom are “independent” as defined under section 5605(a)(2) of the Nasdaq Listing Rules. The Board has determined that Mr. Irfan qualifies as an “audit committee financial expert” as defined in the rules of the SEC. The Audit Committee operates pursuant to a charter, which can be viewed on our website at http://www.xtiaerospace.com (under “Investors”). The Inpixon Audit Committee met four (4) times during 2023. All members attended more than 75% of such committee meetings. The primary role of the Audit Committee is to:
• oversee management’s preparation of our financial statements and management’s conduct of the accounting and financial reporting processes;
• oversee management’s maintenance of internal controls and procedures for financial reporting;
• oversee our compliance with applicable legal and regulatory requirements, including without limitation, those requirements relating to financial controls and reporting;
• oversee the independent auditor’s qualifications and independence;
• oversee the performance of the independent auditors, including the annual independent audit of our financial statements;
• prepare the report required by the rules of the SEC to be included in our Proxy Statement; and
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• discharge such duties and responsibilities as may be required of the Committee by the provisions of applicable law, rule or regulation.
The Audit Committee is authorized to establish procedures to receive, address, monitor, and retain complaints arising out of accounting and auditing matters. As it deems appropriate, the Audit Committee is authorized to engage outside auditors, counsel, or other experts. A copy of the charter of the Audit Committee is available on our website at http://www.xtiaerospace.com (under "Investors").
Leonard Oppenheim, a former independent director and the former Chairman of the Audit Committee, resigned from the Board effective as of March 31, 2024. On April 4, 2024, the Company received a notification letter from the Listing Qualifications Department of Nasdaq that due to Mr. Oppenheim's resignation, the Company no longer complies with Nasdaq’s independent director and audit committee requirements as set forth in Listing Rule 5605 as the Board is not comprised of a majority of “independent directors” (as that term is defined in Nasdaq Listing Rule 5605(a)(2)) as required by Nasdaq Listing Rule 5605(b)(1) and the Audit Committee is not comprised of at least three independent directors as required by Nasdaq Listing Rule 5605(c)(2)(A). Consistent with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4), Nasdaq has provided the Company a cure period in order to regain compliance (i) until the earlier of the Company’s next annual shareholders’ meeting or March 31, 2025, or (ii) if the next annual shareholders’ meeting is held before September 27, 2024, then the Company must evidence compliance no later than September 27, 2024. The Company intends to appoint an additional independent director to the Board and the Audit Committee prior to the end of the cure period. In addition, the Company will appoint a new Chairman of the Audit Committee as expeditiously as possible.
Compensation Committee
The Compensation Committee consists of Kareem Irfan and David Brody each of whom are “independent” as defined in section 5605(a)(2) of the Nasdaq Listing Rules. Mr. Brody is the current Chairman of the Compensation Committee. The Inpixon Compensation Committee met four (4) times during 2023. All members attended 75% or more of such committee meetings. The primary role of the Compensation Committee is to:
• develop and recommend to the independent directors of the Board the annual compensation (base salary, bonus, stock options and other benefits) for our directors and officers;
• review, approve and recommend to the independent directors of the Board the annual compensation (base salary, bonus and other benefits) for all of our Executive Officers (as used in Section 16 of the Securities Exchange Act of 1934 and defined in Rule 16a-1 thereunder);
• review, approve and recommend to the Board the annual profit-sharing contribution, aggregate number of equity grants and other benefits to be granted to all other employees;
• review, the management's succession planning process in consultation with CEO, and provide report to the Board on Company's leadership succession planning for the CEO and other Executive Officers, on annual basis; and
• ensure that a significant portion of executive compensation is reasonably related to the long-term interest of our stockholders.
A copy of the charter of the Compensation Committee is available on our website at http://www.xtiaerospace.com (under “Investors”).
The Compensation Committee may form and delegate a subcommittee consisting of one or more members to perform the functions of the Compensation Committee. The Compensation Committee may engage outside advisers, including outside auditors, attorneys and consultants, as it deems necessary to discharge its responsibilities. The Compensation Committee has sole authority to retain and terminate any compensation expert or consultant to be used to provide advice on compensation levels or assist in the evaluation of director, President/Chief Executive Officer or senior executive compensation, including sole authority to approve the fees of any expert or consultant and other retention terms. In addition, the Compensation Committee considers, but is not bound by, the recommendations of our Chief Executive Officer with respect to the compensation packages of our other executive officers.
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Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, or the “Governance Committee,” consists of David Brody, who is “independent” as defined in section 5605(a)(2) of the Nasdaq Listing Rules. Mr. Brody is the Chairman of the Governance Committee. The Nominating and Corporate Governance Committee did not meet in person during 2023 and acted by written consent one (1) time during 2023. The role of the Governance Committee is to:
• evaluate from time to time the appropriate size (number of members) of the Board and recommend any increase or decrease;
• determine the desired skills and attributes of members of the Board, taking into account the needs of the business and listing standards;
• establish criteria for prospective members, conduct candidate searches, interview prospective candidates, and oversee programs to introduce the candidate to us, our management, and operations;
• annually recommend to the Board persons to be nominated for election as directors;
• recommend to the Board the members of all standing Committees;
• periodically review the “independence” of each director;
• adopt or develop for Board consideration corporate governance principles and policies; and
• provide oversight to the strategic planning process conducted annually by our management.
A copy of the charter of the Governance Committee is available on our website at http://www.xtiaerospace.com (under “Investors”).
Stockholder Communications
Two-way communication is important for maintaining transparency and resolving any grievances with stockholders. Stockholders may communicate with the members of the Board, either individually or collectively, by writing to the Board at 8123 InterPort Blvd., Suite C, Englewood, Colorado 80112. These communications will be reviewed by the Secretary as agent for the non-employee directors in facilitating direct communication to the Board. The Secretary will treat communications containing complaints relating to accounting, internal accounting controls, or auditing matters as reports under our Whistleblower Policy. Further, the Secretary will disregard communications that are bulk mail, solicitations to purchase products or services not directly related either to us or the non-employee directors’ roles as members of the Board, sent other than by stockholders in their capacities as such or from particular authors or regarding particular subjects that the non-employee directors may specify from time to time, and all other communications which do not meet the applicable requirements or criteria described below, consistent with the instructions of the non-employee directors.
General Communications. The Secretary will summarize all stockholder communications directly relating to our business operations, the Board, our officers, our activities or other matters and opportunities closely related to us. This summary and copies of the actual stockholder communications will then be circulated to the Chairman of the Governance Committee.
Stockholder Proposals and Director Nominations and Recommendations. Stockholder proposals are reviewed by the Secretary for compliance with the requirements for such proposals set forth in our Bylaws and in Regulation 14a-8 promulgated under the Exchange Act. Stockholder proposals that meet these requirements will be summarized by the Secretary. Summaries and copies of the stockholder proposals are circulated to the Chairman of the Governance Committee.
Stockholder nominations for directors are reviewed and summarized by the Secretary.
The Governance Committee will consider director candidates recommended by stockholders. If a director candidate is recommended by a stockholder, the Governance Committee expects to evaluate such candidate in the same manner it evaluates
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director candidates it identifies. Stockholders desiring to make a recommendation to the Governance Committee should follow the procedures set forth above regarding stockholder nominations for directors.
Retention of Stockholder Communications. Any stockholder communications which are not circulated to the Chairman of the Governance Committee because they do not meet the applicable requirements or criteria described above will be retained by the Secretary for at least ninety calendar days from the date on which they are received, so that these communications may be reviewed by the directors generally if such information relates to the Board as a whole, or by any individual to whom the communication was addressed, should any director elect to do so.
Distribution of Stockholder Communications. Except as otherwise required by law or upon the request of a non-employee director, the Chairman of the Governance Committee will determine when and whether a stockholder communication should be circulated among one or more members of the Board and/or Company management.
Director Qualifications and Diversity
The Board seeks independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. The Board is particularly interested in maintaining a mix that includes individuals who are active or retired executive officers and senior executives, particularly those with experience in technology; research and development; finance, accounting and banking; or marketing and sales.
There is no difference in the manner in which the Governance Committee evaluates nominees for director based on whether the nominee is recommended by a stockholder. In evaluating nominations to the Board, the Governance Committee also looks for depth and breadth of experience within the Company’s industry and otherwise, outside time commitments, special areas of expertise, accounting and finance knowledge, business judgment, leadership ability, experience in developing and assessing business strategies, corporate governance expertise, and for incumbent members of the Board, the past performance of the incumbent director. Each of the candidates nominated for election to our Board at our last annual meeting of stockholders was recommended by the Governance Committee.
Code of Business Conduct and Ethics
The Board has adopted a code of business conduct and ethics (the “Code”) designed, in part, to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with or submits to the SEC and in the Company’s other public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of Code violations to an appropriate person or persons, as identified in the Code and accountability for adherence to the Code. The Code applies to all directors, executive officers and employees of the Company. The Code is periodically reviewed by the Board. A copy of the Code is available on our website at http://www.xtiaerospace.com (under "Investors"). In the event we determine to amend or waive certain provisions of the Code, we intend to disclose such amendments or waivers on our website within four (4) business days following such amendment or waiver or as otherwise required by the Nasdaq Listing Rules.
Policy against Hedging Stock
Our insider trading policy (which was adopted by the Board in November 2015 and updated as of August 2020) prohibits our directors, officers, and other employees, and their designees, from engaging in short sales or from hedging transactions of any nature that are designed to hedge or offset a decrease in market value of such person's ownership of the Company's equity securities.
Risk Oversight
Our Board provides risk oversight for our entire company by receiving management presentations, including risk assessments, and discussing these assessments with management. Our officers are responsible for overseeing the material risk faced by our Company as part of their day-to-day management responsibilities. Our Board’s overall risk oversight, which focuses primarily on risks and exposures associated with current matters that may present material risk to our operations, plans, prospects or reputation, is supplemented by the various committees. Our Audit Committee discusses with management and our
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independent registered public accounting firm our risk management guidelines and policies, our major financial risk exposures and the steps taken to monitor and control such exposures. Our Compensation Committee oversees risks related to our compensation programs and discusses with management its annual assessment of our employee compensation policies and programs. Our Governance Committee oversees risks related to corporate governance and management and director succession planning.
Board Leadership Structure
Our Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as our Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board.
Our Board has determined that having an employee director serve as Chairman is in the best interest of our stockholders at this time because of the efficiencies achieved in having the role of Chief Executive Officer and Chairman combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly enhances the decision-making processes of our board of directors as a whole.
The Chairman of the Board and the other members of the Board work in concert to provide oversight of our management and affairs. Our Board encourages communication among its members and between management and the Board to facilitate productive working relationships. Working with the other members of the Board, our Chairman also strives to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight.
ITEM 11: EXECUTIVE COMPENSATION
Set forth below is information regarding the historical compensation of certain Inpixon executive officers prior to the completion of the XTI Merger. In addition, set forth below is information regarding the historical compensation of Legacy XTI executive officers prior to completion of the XTI Merger, and employment and compensatory arrangements we have made with our executive officers following the completion of the XTI Merger, both of which we are voluntarily providing.
Inpixon Executive Compensation
The table below sets forth, for the last two fiscal years, the compensation earned by (i) each individual who served as our principal executive officer and (ii) our two other most highly compensated executive officers, other than our principal executive officer, who were serving as an executive officer at the end of the last fiscal year. Together, these individuals are sometimes referred to as the “Named Executive Officers.”
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Name and Principal Position Year Salary
($) Bonus
($) Stock Awards ($) Option Awards
($)(1) All Other Compensation
($) Total
($)
Nadir Ali, 2023 $ 280,000 $ 2,451,225 (5) $ — $ — $ 754,399 (3) $ 3,485,624
Former Chief Executive Officer 2022 $ 280,000 $ 220,000 $ — $ 370,005 (1) $ 294,610 (3) $ 1,164,615
Soumya Das 2023 $ 312,000 $ 288,863 $ — $ — $ 106,897 (2) $ 707,760
Former Chief Operating Officer 2022 $ 312,000 $ 280,838 $ — $ 185,023 (1) $ 12,000 (2) $ 789,861
Wendy Loundermon 2023 $ 300,000 $ 530,175 (6) $ — $ — $ 203,035 (4) $ 1,033,210
Former Chief Financial Officer 2022 $ 300,000 $ 150,000 $ — $ 185,023 (1) $ 24,519 (4) $ 659,542
(1) The fair value of employee option grants are estimated on the date of grant using the Black-Scholes option pricing model with key weighted average assumptions, expected stock volatility and risk free interest rates based on US Treasury rates from the applicable periods.
(2) The 2022 amount represents automobile allowance. The 2023 amount includes a $12,000 automobile allowance and CVH unit grants valued at $94,897, which is the fair market value at the date of grant.
(3) The 2022 amount includes $54,611 of accrued vacation paid as compensation, a $12,000 automobile allowance and a $227,999 housing allowance. The 2023 amount includes $51,970 of accrued vacation paid as compensation, a $12,000 automobile allowance, a $227,999 housing allowance, and CVH unit grants valued at $462,430, which is the fair market value at the date of grant.
(4) The 2022 amount represents accrued vacation paid as compensation. The 2023 amount includes $21,635 of accrued vacation paid as compensation and CVH unit grants valued at $181,400, which is the fair market value at the date of grant.
(5) Bonus earned under Completed Transaction Bonus Plan.
(6) Bonus earned under Completed Transaction Bonus Plan and employment agreement.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding unexercised options, unvested stock, and/or equity incentive plan awards issued to our Named Executive Officers as of December 31, 2023.
Employment Agreements and Arrangements
Nadir Ali
On July 1, 2010, Nadir Ali entered into an at-will Employment and Non-Compete Agreement, as subsequently amended, with Inpixon Federal, Inc., Inpixon Government Services and Inpixon Consulting prior to their acquisition by the Company. Under the terms of the Employment Agreement Mr. Ali serves as President. The employment agreement was assumed by the Company and Mr. Ali became CEO in September 2011. Mr. Ali’s salary under the agreement was initially $240,000 per annum plus other benefits including a bonus plan, a housing allowance, health insurance, life insurance and other standard Inpixon employee benefits. If Mr. Ali’s employment is terminated without Cause (as defined), he will receive his base salary for 12 months from the date of termination. Mr. Ali’s employment agreement provides that he will not compete with the Company and will be subject to non-solicitation provisions relating to employees, consultants and customers, distributors,
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partners, joint ventures or suppliers of the Company during the term of his employment or consulting relationship with the Company. On April 17, 2015, the compensation committee approved the increase of Mr. Ali’s annual salary to $252,400, effective January 1, 2015. Effective May 16, 2018 the compensation committee approved an increase in Mr. Ali’s annual salary to $280,000 and an auto allowance of $1,000 a month.
On February 27, 2023, the Company entered into a Limited Liability Company Unit Transfer and Joinder Agreement with Mr. Ali, pursuant to which (i) the Company transferred 219,999 Class A Units of Cardinal Venture Holdings LLC, a Delaware limited liability company (“CVH”), to Mr. Ali in connection with Mr. Ali’s services performed for and on behalf of the Company as an employee and a director of the Company and (ii) Mr. Ali became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020 (the “CVH LLC Agreement”). The fair market value of the Class A Units at the date of grant is $462,430. In addition, Mr. Ali beneficially owned membership interests in CVH through 3AM LLC, a Delaware limited liability company and a founding member of CVH. CVH was dissolved as of December 31, 2023.
On March 12, 2024, the Company and Mr. Ali entered into an amendment (the “Ali Employment Agreement Amendment”) to Mr. Ali’s Amended and Restated Employment Agreement dated May 15, 2018, to provide for payment of his cash severance thereunder on or as soon as practicable following the date that is 21 days following the XTI Merger.
Mr. Ali was also a participant of the Completed Transaction Bonus Plan pursuant to which he received a cash bonus in an aggregate amount of 3.5% of the $70,350,000 transaction value of the Enterprise Apps Spin-off.
Mr. Ali is a participant of the Contemplated Transaction Plan pursuant to which he is eligible for (a) a cash bonus in an aggregate amount of 3.5% of the transaction value attributed to a Contemplated Transaction less $6.5 million; (b) a cash bonus in an aggregate amount equal to 100% of his aggregate annual base salary and target bonus amount following the closing of a Contemplated Transaction and (c ) an award (the “Award”) of fully vested shares of Company common stock (“Shares”) issued under the Inpixon 2018 Employee Stock Incentive Plan or any successor equity incentive plan adopted by the Company (the “Equity Plan”) on the date that is three (3) months following the Closing of the XTI Merger (the “Grant Date”) covering a number of shares having a fair market value (based on the closing price per Share on the Grant Date) equal to $1,023,600. Notwithstanding the foregoing, Nadir Ali shall not be eligible to receive the Award if his Consulting Agreement with the Company dated as of March 12, 2024 (the “Consulting Agreement”), terminates before the Grant Date due to (a) Company Good Reason (as defined in the Consulting Agreement) or (b) termination by Nadir Ali for any reason other than Consultant Good Reason (as defined in the Consulting Agreement). The XTI Merger is a Contemplated Transaction. (See Part II, Item 7, " Recent Events - Transaction Bonus Plan in connection with Future Strategic Transactions" for a description of the Contemplated Transaction Plan.)
Soumya Das
On November 4, 2016, and effective as of November 7, 2016, Mr. Das entered into an employment agreement to serve as Chief Marketing Officer of the Company. On February 2, 2018, he was promoted to Chief Operating Officer. In accordance with the terms of the agreement, Mr. Das will receive a base salary of $250,000 per annum. In addition, Mr. Das will receive a bonus up to $75,000 annually, provided that he completes the required tasks before their deadlines, and the tasks, their deadlines and the amount of corresponding bonuses shall be determined by the Company and the CEO. The agreement was effective for an initial term of twenty-four (24) months and was automatically renewed for one additional twelve (12) month period. The Company may terminate the services of Mr. Das with or without “just cause,” (as defined). If the Company terminates Mr. Das’ employment without just cause, or if Mr. Das resigns within twenty-four (24) months following a change of control (as defined) and as a result of a material diminution of his position or compensation, Mr. Das will receive (1) his base salary at the then current rate and levels for one (1) month if Mr. Das has been employed by the Company for at least six (6) months but not more than twelve (12) months as of the date of termination or resignation, for three (3) months if Mr. Das has been employed by the Company more than twelve (12) but not more than twenty-four (24) months as of the date of termination or resignation, or for six (6) months if Mr. Das has been employed by the Company for more than twenty-four (24) months as of the date of resignation or termination; (2) 50% of the value of any accrued but unpaid bonus that Mr. Das otherwise would have received; (3) the value of any accrued but unpaid vacation time; and (4) any unreimbursed business expenses and travel expenses that are reimbursable under the agreement. If the Company terminates Mr. Das’ employment with just cause, Mr. Das will receive only the portion of his base salary and accrued but unused vacation pay that has been earned through the date of termination. On August 31, 2018, the Company amended Mr. Das’ employment agreement to make the following changes to his compensation effective May 14, 2018: (1) increase in base salary to $275,000 per year, (2) have up to $50,000 in MBO’s annually, (3) commissions equal to 2% of recognized revenue associated with the IPA product line paid quarterly and subject to
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the Company policies in connection with commissions payable and (4) provide a transportation allowance of $1,000 per month. On May 10, 2019, the Company amended Mr. Das’ commission plan to include a 1% commission on recognized revenue associated with the Shoom product line paid quarterly and subject to Company commission plan policies. Mr. Das’s salary was increased to $275,000 effective May 31, 2018 and $312,000 effective January 1, 2021, Effective January 1, 2021, any entitlement to commissions payable to Mr. Das was superseded by adjusting his annual bonus target up to a maximum of $300,000 subject to the achievement of certain milestones, with tasks, deadlines and amounts determined by the Chief Executive Officer. Effective as of March 2021, Mr. Das resigned from his position as Chief Marketing Officer.
On February 27, 2023, the Company entered into a Limited Liability Company Unit Transfer and Joinder Agreement with Mr. Das, pursuant to which (i) the Company transferred 50,000 Class A Units of CVH to Mr. Das in connection with Mr. Das’ services performed for and on behalf of the Company as an employee of the Company and (ii) Mr. Das became a member of CVH and a party to the CVH LLC Agreement. The fair market value of the Class A Units at the date of grant is $94,897. CVH was dissolved as of December 31, 2023.
Mr. Das is a participant of the Contemplated Transaction Plan pursuant to which he is eligible for a cash bonus in an aggregate amount equal to 100% of his aggregate annual base salary and target bonus amount following the closing of a Contemplated Transaction and any applicable Qualifying Transaction. The XTI Merger qualifies as a Contemplated Transaction. (See Part II, Item 7, " Recent Events - Transaction Bonus Plan in connection with Future Strategic Transactions" for a description of the Contemplated Transaction Plan.)
Wendy Loundermon
On October 21, 2014, and effective as of October 1, 2014, the Company entered into an at-will employment agreement with Wendy Loundermon. Ms. Loundermon currently serves as CFO, Director and Secretary of the Company and Secretary of Inpixon Canada, Inc. Pursuant to the agreement, Ms. Loundermon was compensated at an annual rate of $200,000 and is entitled to benefits customarily provided to senior management including equity awards and cash bonuses subject to the satisfaction of certain performance goals determined by the Company. The standards and goals and the bonus targets is set by the compensation committee, in its sole discretion. The Company may terminate the services of Ms. Loundermon with or without “cause” (as defined). If the Company terminates Ms. Loundermon’s employment without cause or in connection with a change of control (as defined), Ms. Loundermon will receive (1) severance consisting of her base salary at the then current rate for twelve (12) months from the date of termination, and (2) her accrued but unpaid salary. If Ms. Loundermon’s employment is terminated under any circumstances other than the above, Ms. Loundermon will receive her accrued but unpaid salary. Ms. Loundermon’s salary was increased to $228,500 effective April 1, 2017, $250,000 effective March 1, 2018, $280,000 effective January 2021 and $300,000 effective January 2022.
On February 27, 2023, the Company entered into a Limited Liability Company Unit Transfer and Joinder Agreement with Ms. Loundermon, pursuant to which (i) the Company transferred 100,000 Class A Units of CVH to Ms. Loundermon in connection with Ms. Loundermon’s services performed for and on behalf of the Company as an employee and a director of the Company and (ii) Ms. Loundermon became a member of CVH and a party to the CVH LLC Agreement. The fair market value of the Class A Units at the date of grant is $181,400. CVH was dissolved as of December 31, 2023.
On March 12, 2024, the Company and Ms. Loundermon entered into an amendment (the “Loundermon Employment Agreement Amendment”) to Ms. Loundermon’s Employment Agreement dated October 1, 2014 (as amended), to provide for payment of her cash severance thereunder on or as soon as practicable following the date that is 21 days following the XTI Merger.
Ms. Loundermon was also a participant of the Completed Transaction Bonus Plan pursuant to which she received a cash bonus in an aggregate amount of 0.5% of the $70,350,000 transaction value of the Enterprise Apps Spin-off.
Ms. Loundermon is a participant of the Contemplated Transaction Plan pursuant to which she is eligible for (a) a cash bonus in an aggregate amount of 0.5% of the transaction value attributed to a Contemplated Transaction and (b) a cash bonus in an aggregate amount equal to 100% of her aggregate annual base salary and target bonus amount following the closing of a Contemplated Transaction. The XTI Merger qualifies as a Contemplated Transaction. (See Part II, Item 7, " Recent Events - Transaction Bonus Plan in connection with Future Strategic Transactions" for a description of the Contemplated Transaction Plan.)
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Employee Stock Incentive Plans
2018 Employee Stock Incentive Plan
The following is a summary of the material terms of our 2018 Employee Stock Incentive Plan, as amended to date (the “2018 Plan”). This description is not complete. For more information, we refer you to the full text of the 2018 Plan, and as amended from time to time.
The 2018 Plan is an important part of our compensation program. It promotes financial saving for the future by our employees, fosters good employee relations, and encourages employees to acquire shares of our common stock, thereby better aligning their interests with those of the other stockholders. Therefore, the Board believes it is essential to our ability to attract, retain, and motivate highly qualified employees in an extremely competitive environment both in the United States and internationally.
Amount of Shares of Common Stock. The number of shares of our common stock available for issuance under the 2018 Plan as of April 3, 2024 is 64,146,695, which number is automatically increased on the first day of each quarter through October 1, 2028, by a number of shares of common stock equal to the least of (i) 3,000,000 shares, (ii) twenty percent (20%) of the outstanding shares of common stock on the last day of the immediately preceding calendar quarter, or (iii) such number of shares that may be determined by the Board. The amount of shares available for issuance is not adjusted in connection with a change in the outstanding shares of common stock by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations; provided; however, that in no event will the Company issue more than 120,000,000 shares of common stock under the 2018 Plan, including the maximum amount of shares of common stock that may be added to the 2018 Plan in accordance with the automatic quarterly increases.
Types of Awards . The 2018 Plan provides for the granting of incentive stock options, non-qualified stock options (“NQSOs”), stock grants and other stock-based awards, including Restricted Stock and Restricted Stock Units (as defined in the 2018 Plan).
• Incentive and Nonqualified Stock Options. The plan administrator determines the exercise price of each stock option. The exercise price of an NQSO may not be less than the fair market value of our common stock on the date of grant. The exercise price of an incentive stock option may not be less than the fair market value of our common stock on the date of grant if the recipient holds 10% or less of the combined voting power of our securities, or 110% of the fair market value of a share of our common stock on the date of grant otherwise.
• Stock Grants. The plan administrator may grant or sell stock, including restricted stock, to any participant, which purchase price, if any, may not be less than the par value of shares of our common stock. The stock grant will be subject to the conditions and restrictions determined by the administrator. The recipient of a stock grant shall have the rights of a stockholder with respect to the shares of stock issued to the holder under the 2018 Plan.
• Stock-Based Awards. The plan administrator of the 2018 Plan may grant other stock-based awards, including stock appreciation rights, restricted stock and restricted stock units, with terms approved by the administrator, including restrictions related to the awards. The holder of a stock-based award shall not have the rights of a stockholder except to the extent permitted in the applicable agreement.
Plan Administration .Our Board is the administrator of the 2018 Plan, except to the extent it delegates its authority to a committee, in which case the committee shall be the administrator. Our Board has delegated this authority to our compensation committee. The administrator has the authority to determine the terms of awards, including exercise and purchase price, the number of shares subject to awards, the value of our common stock, the vesting schedule applicable to awards, the form of consideration, if any, payable upon exercise or settlement of an award and the terms of award agreements for use under the 2018 Plan.
Eligibility .The plan administrator will determine the participants in the 2018 Plan from among our employees, directors and consultants. A grant may be approved in advance with the effectiveness of the grant contingent and effective upon such person’s commencement of service within a specified period.
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Termination of Service .Unless otherwise provided by the administrator or in an award agreement, upon a termination of a participant’s service, all unvested options then held by the participant will terminate and all other unvested awards will be forfeited.
Transferability .Awards under the 2018 Plan may not be transferred except by will or by the laws of descent and distribution, unless otherwise provided by the plan administrator in its discretion and set forth in the applicable agreement, provided that no award may be transferred for value.
Adjustment .In the event of a stock dividend, stock split, recapitalization or reorganization or other change in change in capital structure, the plan administrator will make appropriate adjustments to the number and kind of shares of stock or securities subject to awards.
Corporate Transaction .If we are acquired, the plan administrator will: (i) arrange for the surviving entity or acquiring entity (or the surviving or acquiring entity’s parent company) to assume or continue the award or to substitute a similar award for the award; (ii) cancel or arrange for cancellation of the award, to the extent not vested or not exercised prior to the effective time of the transaction, in exchange for such cash consideration, if any, as the plan administrator in its sole discretion, may consider appropriate; or (iii) make a payment, in such form as may be determined by the plan administrator equal to the excess, if any, of (A) the value of the property the holder would have received upon the exercise of the award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise. In addition in connection with such transaction, the plan administrator may accelerate the vesting, in whole or in part, of the award (and, if applicable, the time at which the award may be exercised) to a date prior to the effective time of such transaction and may arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us with respect to an award.
Amendment and Termination .The 2018 Plan will terminate on January 4, 2028 or at an earlier date by vote of our Board; provided, however, that any such earlier termination shall not affect any awards granted under the 2018 Plan prior to the date of such termination. The 2018 Plan may be amended by our Board, except that our Board may not alter the terms of the 2018 Plan if it would adversely affect a participant’s rights under an outstanding stock right without the participant’s consent.
The Board may at any time amend or terminate the 2018 Plan; provided that no amendment may be made without the approval of the stockholder if such amendment would increase either the maximum number of shares which may be granted under the 2018 Plan or any specified limit on any particular type or types of award, or change the class of employees to whom an award may be granted, or withdraw the authority to administer the 2018 Plan from a committee whose members satisfy the independence and other requirements of Section 162(m) and applicable SEC and Nasdaq requirements. Pursuant to the listing standards of the Nasdaq Stock Market, certain other material revisions to the 2018 Plan may also require stockholder approval.
Federal Income Tax Consequences of the 2018 Plan. The federal income tax consequences of grants under the 2018 Plan will depend on the type of grant. The following is a general summary of the principal United States federal income taxation consequences to participants and us under current law with respect to participation in the 2018 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any city, state or foreign jurisdiction in which a participant may reside or the rules applicable to deferred compensation under Section 409A of the Code. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of our tax reporting obligations.
From the grantees’ standpoint, as a general rule, ordinary income will be recognized at the time of delivery of shares of our common stock or payment of cash under the 2018 Plan. Future appreciation on shares of our common stock held beyond the ordinary income recognition event will be taxable as capital gain when the shares of our common stock are sold. The tax rate applicable to capital gain will depend upon how long the grantee holds the shares. We, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the grantee, and we will not be entitled to any tax deduction with respect to capital gain income recognized by the grantee.
Exceptions to these general rules arise under the following circumstances:
• If shares of our common stock, when delivered, are subject to a substantial risk of forfeiture by reason of any employment or performance-related condition, ordinary income taxation and our tax deduction will be delayed
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until the risk of forfeiture lapses, unless the grantee makes a special election to accelerate taxation under section 83(b) of the Code.
• If an employee exercises a stock option that qualifies as an ISO, no ordinary income will be recognized, and we will not be entitled to any tax deduction, if shares of our common stock acquired upon exercise of the stock option are held until the later of (A) one year from the date of exercise and (B) two years from the date of grant. However, if the employee disposes of the shares acquired upon exercise of an ISO before satisfying both holding period requirements, the employee will recognize ordinary income at the time of the disposition equal to the difference between the fair market value of the shares on the date of exercise (or the amount realized on the disposition, if less) and the exercise price, and we will be entitled to a tax deduction in that amount. The gain, if any, in excess of the amount recognized as ordinary income will be long-term or short-term capital gain, depending upon the length of time the employee held the shares before the disposition.
• A grant may be subject to a 20% tax, in addition to ordinary income tax, at the time the grant becomes vested, plus interest, if the grant constitutes deferred compensation under section 409A of the Code and the requirements of section 409A of the Code are not satisfied.
Section 162(m) of the Code generally disallows a publicly held corporation’s tax deduction for compensation paid to its chief executive officer or certain other officers in excess of $1 million in any year. Qualified performance-based compensation is excluded from the $1 million deductibility limit, and therefore remains fully deductible by the corporation that pays it. We intend that options and SARs granted under the 2018 Plan will be qualified performance-based compensation. Stock units, stock awards, dividend equivalents, and other stock-based awards granted under the 2018 Plan may be designated as qualified performance-based compensation if the Committee conditions such grants on the achievement of specific performance goals in accordance with the requirements of section 162(m) of the Code.
We have the right to require that grantees pay to us an amount necessary for us to satisfy our federal, state or local tax withholding obligations with respect to grants. We may withhold from other amounts payable to a grantee an amount necessary to satisfy these obligations. The Committee may permit a grantee to satisfy our withholding obligation with respect to grants paid in shares of our common stock by having shares withheld, at the time the grants become taxable, provided that the number of shares withheld does not exceed the individual’s minimum applicable withholding tax rate for federal, state and local tax liabilities.
2011 Employee Stock Incentive Plan
Except as set forth below, the material terms of our 2011 Employee Stock Incentive Plan, as amended to date (the “2011 Plan”) are substantially similar to the material terms of the 2018 Plan. However, this description is not complete. For more information, we refer you to the full text of the 2011 Plan.
The 2011 Plan is intended to encourage ownership of common stock by our employees and directors and certain of our consultants in order to attract and retain such people, to induce them to work for the benefit of us and to provide additional incentive for them to promote our success. The 2011 Plan terminated in accordance with its terms on August 31, 2021 and no new awards will be issued under the 2011 Plan.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 31, 2023 regarding the shares of our common stock to be issued upon exercise of outstanding options or available for issuance under equity compensation plans and other compensation arrangements that were (i) adopted by our security holders and (ii) were not approved by our security holders.
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Plan Category Number of securities to be issued upon
exercise of outstanding options
(a) Weighted-average exercise
price of outstanding options
(b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a)
(c)
Equity compensation plans approved by security holders 1,063 (1) $ 730,081.00 62,162,810 (2)
Equity compensation plans not approved by security holders — $ — —
Total 1,063 $ 730,081.00 62,162,810
(1) Represents 9 shares of common stock that may be issued pursuant to outstanding stock options granted under the 2011 Plan and 1,054 shares of common stock that may be issued pursuant to outstanding stock options granted under the 2018 Plan.
(2) Represents 0 shares of common stock available for future issuance in connection with equity award grants under the 2011 Plan and 62,162,813 shares of common stock available for future issuance in connection with equity award grants under the 2018 Plan.
Legacy XTI Executive Compensation
Legacy XTI’s named executive officers for 2023 are:
• Scott Pomeroy - Mr. Pomeroy is our current Chief Executive Officer. Mr. Pomeroy was appointed as Legacy XTI's Chief Financial Officer in July 2022.
• Michael Hinderberger - Mr. Hinderberger is Legacy XTI's current Chief Executive Officer. Mr. Hinderberger was Legacy XTI's “Principal Executive Officer” at the end of 2022. Mr. Hinderberger was serving as Legacy XTI's SVP of Engineering and Technology beginning August 2021 until he was named CEO on July 1, 2022.
We refer to these executives as the Legacy XTI named executive officers.
Legacy XTI Executive Compensation Program Overview
Legacy XTI's compensation program had two primary objectives: (1) to attract, motivate and retain our employees and (2) to align their interests with those of our stockholders.
Base Salary . Base salaries were intended to provide a level of compensation sufficient to attract and retain an effective management team, when considered in combination with the other components of the executive compensation program. In general, Legacy XTI provided a base salary level designed to reflect each executive officer’s scope of responsibility and accountability. Please see the “Base Salary” column in the Summary Compensation Table for the base salary amounts received by each Legacy XTI named executive officer in 2023 and 2022.
Bonus . No Legacy XTI named executive officers received or earned cash or non -cash bonuses with respect to fiscal year 2023.
Alignment of interests . Each of Legacy XTI's named executive officers has received certain equity awards as a form of long-term incentive compensation, which Legacy XTI believed served to align the interests of its employees with those of iequity holders.
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Summary Compensation Table
The following table sets forth information about the annual compensation of the Legacy XTI named executive officers during our last two completed fiscal years.
Name
Year
Base Salary ($)
Cash Bonus ($)
Option Awards (1) ($)
Total compensation ($)
Legacy XTI Named Executive Officers:
Scott Pomeroy
2023
$ 210,000 $ — $ — $ 210,000
(Chief Financial Officer) (2)
2022
$ 105,000 $ — $ 6,358 $ 111,358
Michael Hinderberger
2023
$ 350,000 $ — $ 356,360 $ 706,360
(Chief Executive Officer)
2022
$ 337,500 $ — $ 2,234,590 $ 2,572,090
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(1) Stock option awards are reported at grant date fair value in the year granted, in accordance with FASB ASC Topic 718.
(2) Mr. Pomeroy was appointed as Legacy XTI's Chief Financial Officer in July 2022.
Legacy XTI Employment Agreements
Scott Pomeroy - Mr. Pomeroy entered into a consulting agreement dated July 1, 2022, as amended effective January 1, 2023, that provided for his engagement as Legacy XTI’s Chief Financial Officer. The agreement provided that Mr. Pomeroy receive a monthly compensation of $17,500. Pursuant to the consulting agreement and in connection with the closing of the XTI Merger, Mr. Pomeroy received 4,000,000 shares of Legacy XTI common stock. Upon closing of the XTI Merger, these Legacy XTI shares were exchanged for 357,040 shares of XTI Aerospace common stock in accordance with the exchange ratio pursuant to the XTI Merger Agreement. Effective upon closing time of the XTI Merger, Mr. Pomeroy was appointed as XTI Aerospace's Chief Executive Officer. It is anticipated that the Company and Mr. Pomeroy will enter into an employment agreement on terms to be approved by the Board but which are expected to provide for an annual base salary of approximately $400,000 and a cash bonus target in an amount of up to 150% of base salary upon the satisfaction of certain performance criteria and milestones which shall be determined and approved by the Compensation Committee.
Michael Hinderberger - Mr. Hinderberger entered into an employment agreement dated July 1, 2022 that provides for his employment as Legacy XTI’s Chief Executive Officer. The agreement provides that Mr. Hinderberger will receive an annual base salary of $350,000, which may be increased by the board of directors. Mr. Hinderberger is also entitled to receive an annual bonus up to $350,000 based on achieving financing goals (40%) and TriFan 600 aircraft development milestones (60%) as outlined in the agreement. The calculated annual bonus payout amount is subject to approval by Legacy XTI's board of directors. Mr. Hinderberger’s employment agreement term ends on July 31, 2024 and automatically renews thereafter for one additional one-year period unless either party provides at least 60 days’ prior notice of non-renewal. The agreement provides that if Mr. Hinderberger is terminated without cause (other than due to death or disability) or if he resigns for good reason (as such terms are defined in the agreement), then Mr. Hinderberger will be entitled to (i) a cash payment equal to 12 months of base salary in effect at the time of termination and (ii) a cash payment for any unused vacation at the time of termination. In addition, and if Mr. Hinderberger is terminated for good reason, he is entitled to receive reimbursements of COBRA premium cost applicable to Mr. Hinderberger (and any dependents) for a period of six months after termination of employment. The agreement contains customary confidentiality obligations, non-solicitation and non-competition restrictions.
401(k) Plan
Legacy XTI maintains a qualified 401(k) savings plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. For the year ending December 31, 2023, Legacy XTI did not make matching employer contributions to the 401(k) plan on behalf of Michael Hinderberger.
Option Awards
During fiscal years 2023 and 2022, the Legacy XTI named executive officers were awarded the following stock options:
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Name
Grant Date
Number of Options
Option Exercise Price ($)
Date of Exercisability
Scott Pomeroy
12/31/2022
6,000
1.67 100% on Grant Date
Michael Hinderberger
03/10/2022
50,000
1.75
100% on Grant Date
Michael Hinderberger
07/01/2022
1,000,000
1.67
100% on Grant Date
Michael Hinderberger
07/01/2022
1,000,000
1.67
100% on Jan 1, 2023
Michael Hinderberger
03/22/2023
800,000
1.67
Performance Vesting
Outstanding Option Awards at Fiscal Year-End
The following table sets forth information about the outstanding stock options of the named executive officers as of our last completed fiscal year-end:
Name
Grant Date
Number of securities underlying unexercised options (#) exercisable
Number of securities underlying unexercised options (#) un-exercisable
Option Exercise Price ($)
Option expiration date
Scott Pomeroy
12/31/2022
6,000
-
1.75
12/31/2032
Michael Hinderberger
12/28/2021
171,429
-
1.75
12/28/2031
Michael Hinderberger
03/10/2022
50,000
-
1.75
03/10/2032
Michael Hinderberger
07/01/2022
1,000,000
-
1.67
07/01/2032
Michael Hinderberger
07/01/2022
1,000,000
-
1.67
07/01/2032
Michael Hinderberger
03/22/2023
-
800,000
1.67
03/22/2033
Michael Hinderberger
08/01/2021
200,000
300,000
1.75
08/01/2031
Executive Compensation Arrangements - Post-Closing Arrangements
As of the Effective Time, the Board appointed Scott Pomeroy as our Chief Executive Officer of the Company, Brooke Turk as our Chief Financial Officer, and Soumya Das as the Chief Executive Officer of Real Time Location System Division. Michael Hinderberger continued in his role as Chief Executive Officer of XTI Aircraft Company.
We intend to develop an executive compensation program that is designed to align compensation with our business objectives and the creation of stockholder value, while enabling us to attract, motivate and retain individuals who contribute to the long - term success of the combined company. We intend to enter into employment agreements with our executive officers that are consistent with that program. Decisions on the executive compensation program will be made by the compensation committee of the board of directors. Our employment agreements with Messrs. Das and Hinderberger are still in effect as of the date of this report. Until we enter into a new employment agreement with Mr. Pomeroy, he will continue to receive compensation in accordance with the terms of his existing consulting agreement.
Incentive Plan
Under our 2018 Plan, we are authorized to grant cash and equity incentive awards to eligible employees, consultants, and non-employee directors in order to attract, motivate and retain the talent for which we compete.
Inpixon Director Compensation
The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Directors in the year ended December 31, 2023 except Nadir Ali and Wendy Loundermon, whose aggregate compensation information has been disclosed above.
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Name Fees Earned or paid in cash
($) Stock
awards
($) Option awards
($) (1) Non-equity Incentive plan compensation
($) Nonqualified deferred compensation earnings
($) All other compensation
($) Total
($)
Leonard Oppenheim (2) $ 53,500 — $ — — — $ — $ 53,500
Kareem Irfan $ 170,500 — $ — — — $ — $ 170,500
Tanveer Khader $ 44,500 — $ — — — $ — $ 44,500
(1) The fair value of the director option grants are estimated on the date of grant using the Black-Scholes option pricing model with key weighted average assumptions, expected stock volatility and risk free interest rates based on US Treasury rates from the applicable periods.
(2) Leonard Oppenheim resigned from the Board, effective as of March 31, 2024.
Directors are entitled to reimbursement of ordinary and reasonable expenses incurred in exercising their responsibilities and duties as a director.
Effective July 1, 2015, the Board approved the following compensation plan for the independent directors payable in accordance with each independent director’s services agreement: $30,000 per year for their services rendered on the Board, $15,000 per year for service as the audit committee chair, $10,000 per year for service as the compensation committee chair, $6,000 per year for service on the audit committee, $4,000 per year for service on the compensation committee, $2,500 per year for service on the nominating committee, a one-time non-qualified stock option grant to purchase 20,000 shares (on a pre-Reverse Splits basis) of the Company’s common stock under the 2011 Plan and restricted stock awards of 20,000 shares (on a pre-Reverse Splits basis) of common stock under the 2011 Plan, which are granted in four equal installments on a quarterly basis and are each 100% vested upon grant.
On January 25, 2019, each independent director entered into an amendment to his respective director services agreement pursuant to which the Company agreed to grant each independent director, so long as such director continues to fulfill his duties and provide services pursuant to their services agreement, an annual non-qualified stock option to purchase up to 20,000 shares of common stock in lieu of the above-mentioned equity awards. Each stock option grant will be subject to the approval of the Board, which shall determine the appropriate vesting schedule, if any, and the exercise price.
On May 16, 2022, Mr. Irfan's Director Services Agreement (as amended, the "Amended Director Services Agreement") was amended to increase his quarterly compensation by an additional $10,000 per month as consideration for the additional time and efforts dedicated to the Company and management in support of the evaluation of strategic relationships and growth initiatives. The Amended Director Services Agreement supersedes and replaces all prior agreements by and between the Company and Mr. Irfan.
During the year ended December 31, 2023, no independent director was awarded any stock options or restricted stock awards.
Legacy XTI Director Compensation
Historically, Legacy XTI did not pay cash or equity compensation to any of its directors for their services as directors. Commencing on January 1, 2022, we agreed to pay David Brody $10,000 per month for providing legal and strategic consulting services to XTI. Legacy XTI reimbursed its directors for reasonable expenses incurred during the course of their performance.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of April 3, 2024, regarding the beneficial ownership of our common stock by the following persons:
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• our Named Executive Officers;
• each director;
• all of our executive officers and directors as a group; and
• each person or entity who, to our knowledge, owns more than 5% of our common stock.
Except as indicated in the footnotes to the following table, subject to applicable community property laws, each stockholder named in the table has sole voting and investment power. Unless otherwise indicated, the address for each stockholder listed is c/o XTI Aerospace, Inc., 8123 InterPort Blvd., Suite C, Englewood, Colorado 80112. Shares of common stock subject to options, warrants, or other rights currently exercisable or exercisable within 60 days of April 3, 2024, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the stockholder holding the options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other stockholder. The information provided in the following table is based on our records, information filed with the SEC, and information furnished by our stockholders.
Name of Beneficial Owner Amount and nature of beneficial ownership Percent of Class(1)
Named Executive Officers and Directors
Dave Brody 2,497,799 (2) 25.18 %
Scott Pomeroy 357,574 (3) 3.60 %
Brooke Turk — *
Michael Hinderberger 216,136 (4) 2.13 %
Soumya Das — *
Kareem Irfan 1 *
Nadir Ali 643 (5) *
Wendy Loundermon 70 *
All current executive officers and directors as a group (7 persons) 3,071,510 (6) 30.30 %
Greater than 5% shareholders
Robert Denehy 812,025 8.19 %
NMV Aero Technologies LLC 667,099 (7) 6.71 %
Daniel Potter 1,020,564 10.29 %
* Represents beneficial ownership of less than 1%.
(1) Based on 9,919,411 shares outstanding as of April 3, 2024.
(2) Includes (i) 1,338,897 shares of common stock held indirectly through the Jason S. Brody 2019 Trust, of which Mr. Brody is the trustee, (ii) 843,505 shares of common stock held indirectly through the David E. Brody 2019 Spousal Trust, of which Susan R. Brody, Mr. Brody's spouse is the trustee, (iii) 49,093 shares held by Susan R. Brody, and (iv) 266,304 shares of common stock held directly by David Brody.
(3) Includes (i) 357,039 shares of common stock held of record by Mr. Pomeroy, and (ii) 535 shares of common stock issuable upon exercise of options exercisable within 60 days of April 3, 2024.
(4) Includes 216,136 shares of common stock issuable upon exercise of options exercisable within 60 days of April 3, 2024.
(5) Includes (i) 641 shares of common stock held of record by Nadir Ali, (ii) 1 share of common stock held of record by Lubna Qureishi, Mr. Ali’s wife, and (iii) 1 share of common stock held of record by the Qureishi Ali Grandchildren Trust, of which Mr. Ali is the joint-trustee (with his wife Lubna Qureishi) of the Qureishi Ali Grandchildren Trust and has shared voting and investment control over the shares held. Mr. Ali also indirectly owns 1,500 shares of Series 9 Preferred Stock
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through 3AM Investments LLC that are not included in this table because they are not convertible into common stock, have no voting rights except as required by law, and are not registered under Section 12 of the Exchange Act.
(6) Excludes beneficial ownership of Mr. Ali, our former Chief Executive Officer, and Ms. Loundermon, our former Chief Financial Officer. Includes (i) 672,437 shares of common stock held directly, or by spouse or relative, (ii) 2,182,402 shares of common stock held of record by entities, and (iii) 216,671 shares of common stock issuable upon exercise of options exercisable within 60 days of April 3, 2024.
(7) Includes (i) 649,249 shares of common stock and (ii) 17,850 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 3, 2024.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Review, Approval or Ratification of Transactions with Related Persons.
The Board reviews issues involving potential conflicts of interest, and reviews and approves all related party transactions, including those required to be disclosed as a “related party” transaction under applicable federal securities laws. The Board has not adopted any specific procedures for conducting reviews of potential conflicts of interest and considers each transaction in light of the specific facts and circumstances presented. However, to the extent a potential related party transaction is presented to the Board, the Company expects that the Board would become fully informed regarding the potential transaction and the interests of the related party, and would have the opportunity to deliberate outside of the presence of the related party. The Company expects that the Board would only approve a related party transaction that was in the best interests of the Company, and further would seek to ensure that any completed related party transaction was on terms no less favorable to the Company than could be obtained in a transaction with an unaffiliated third party. Other than as described below, no transaction requiring disclosure under applicable federal securities laws occurred during fiscal year 2023 that was submitted to the Board for approval as a “related party” transaction.
Related Party Transactions
SEC regulations define the related person transactions that require disclosure to include any transaction, arrangement or relationship in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years in which we were or are to be a participant and in which a related person had or will have a direct or indirect material interest. A related person is: (i) an executive officer, director or director nominee, (ii) a beneficial owner of more than 5% of our common stock, (iii) an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of our common stock, or (iv) any entity that is owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or control.
For the period from January 1, 2022, through the date of this report (the “Reporting Period”), described below are certain transactions or series of transactions between us and certain related persons.
Consulting Agreements
On March 12, 2024, the Company entered into a Consulting Agreement with Mr. Nadir Ali (the “Ali Consulting Agreement”), the Company's former Chief Executive Officer. Pursuant to the Ali Consulting Agreement, following the Closing of the XTI Merger, Mr. Ali will provide consulting services to the Company for 15 months or until earlier termination in accordance with its terms (the “Ali Consulting Period”). During the Ali Consulting Period, the Company will pay him a monthly fee of $20,000. If the Company terminates the Ali Consulting Agreement during the first six months of the Ali Consulting Period without Company Good Reason (as defined in the Ali Consulting Agreement), the Company will be required to pay all consulting fees that would be due for such six-month period. If Mr. Ali terminates the Ali Consulting Agreement during the Ali Consulting Period for Consultant Good Reason (as defined in the Ali Consulting Agreement), the Company will be required to pay all consulting fees that would be due for the remainder of the Ali Consulting Period, including the Equity Payment described below, including the Equity Payment described below.
In addition, the Company shall pay Mr. Ali (a) the amount of $1,500,000 due three months following the Closing, and (b) the aggregate amount of $4,500,000, payable in 12 equal monthly installments of $375,000 each, starting four months after the Effective Date (the payments described in (a) and (b), each an “Equity Payment”). Each Equity Payment may be made, in
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Company’s discretion, in (i) cash, (ii) fully vested shares of common stock under the Company’s equity incentive plan and registered on a registration statement on Form S-8 or another appropriate form (“Registered Shares”), or a combination of cash and Registered Shares. Mr. Ali must continue to provide consulting services to the Company on the date of payment of an Equity Payment to receive the Equity Payment, unless the Company terminates the Ali Consulting Agreement without Company Good Reason or Mr. Ali terminates the Ali Consulting Agreement for Consulting Good Reason, in which case the Equity Payments would become due and payable in full. To the extent all or a portion of an Equity Payment is made in shares, such shares will be valued based on the closing price per share on the date on which the Equity Payment is made.
Subject to compliance with Section 15(b)(13) of the Exchange Act, if Mr. Ali provides services involving the identification of prospective merger or acquisition targets for the Company or its affiliates, it is intended that he be eligible for a bonus upon the successful delivery of services. The specifics of the bonus will be negotiated and mutually agreed upon by the Company and Mr. Ali.
On March 12, 2024, the Company also entered into a Consulting Agreement with Ms. Wendy Loundermon (the “Loundermon Consulting Agreement”), the Company's former Chief Financial Officer. Pursuant to the Loundermon Consulting Agreement, following the Closing, Ms. Loundermon will provide consulting services to the Company for one year or until earlier termination in accordance with its terms (the “Loundermon Consulting Period”). As compensation for Ms. Loundermon ’s c onsulting services , the Company will pay her (i) $83,333 per month for the first six months of the Loundermon Consulting Period for services she perform s on an as-needed basis during the Loundermon Consulting Period regarding the transition of the management of the Company’s financial reporting function to ensure continuity of business operations (with such advisory fees payable , subject to certain conditions, pursuant to the payment schedule set forth in the Loundermon Consulting Agreement), and (ii) $300 per hour for services performed on an as needed basis regarding the preparation and filing of Company’s public company financial reporting and compliance matters including accounting, payroll, audit and tax compliance functions. If, during the first six months of the Loundermon Consulting Period, the Company terminates the Consulting Agreement without Company Good Reason (as defined in the Loundermon Consulting Agreement) or Ms. Loundermon terminates the Loundermon Consulting Agreement for Consultant Good Reason (as defined in the Consulting Agreement), the Company will be required to pay all advisory fees that would be due for such six month period.
Securities Purchase Agreement
On March 12, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an entity controlled by the Company’s former director and Chief Executive Officer, Mr. Nadir Ali (the “Purchaser”). Pursuant to the Securities Purchase Agreement, the Purchaser purchased 1,500 shares of Series 9 Preferred Stock for a total purchase price of $1,500,000, based on a purchase price of $1,000 per share of Series 9 Preferred Stock. The Company agreed that the Purchaser will be deemed a “Required Holder” as defined in the Certificate of Designations of Preferences and Rights of Series 9 Preferred Stock as long as the Purchaser holds any shares of Series 9 Preferred Stock.
The Securities Purchase Agreement sets forth certain restrictions on the Company’s use of the proceeds from the sale of the Series 9 Preferred Stock pursuant thereto, including that the proceeds must be used in connection with the redemption of the Series 9 Preferred Stock pursuant to the Certificate of Designation or working capital purposes, and may not, without the consent of the required holders of Series 9 Preferred Stock, be used for, among other things, (i) the redemption of any XTI Aerospace common stock or common stock equivalents, (ii) the settlement of any outstanding litigation, or (iii) for the repayment of debt for borrowed money to any officer or director, or XTI Merger-transaction related bonuses to any employee or vendor except for such non-merger transaction related bonuses as may be payable to participants pursuant to the Company’s existing employee bonus plan.
Subscription of Units of, and Loan to, Cardinal Venture Holdings
On September 30, 2020, we entered into a Subscription Agreement (the “Subscription Agreement”) with Cardinal Venture Holdings LLC, a Delaware limited liability company (“CVH”), pursuant to which we agreed to (i) contribute up to $1,800,000 (the “Contribution”) to CVH and (ii) purchase up to 599,999 Class A Units of CVH (the “Class A Units”) and up to 1,800,000 Class B Units of CVH (the “Class B Units,” and, together with the Class A Units, the “Units”). The aggregate purchase price of $1,800,000 for the Units is deemed to be satisfied in part through the Contribution. The Contribution was used by CVH to fund the Sponsor’s purchase of securities in the KINS.
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CVH owns certain interests in KINS Capital, LLC, a Delaware limited liability company, the sponsor entity (the “Sponsor”) to KINS Technology Group, Inc., a Delaware corporation and publicly traded former special purpose acquisition company ("KINS") with which the Company entered into the Business Combination.
Concurrently with our entry into the Subscription Agreement, we entered into the Amended and Restated Limited Liability Company Agreement of CVH (the “LLC Agreement”), dated as of September 30, 2020. Under the terms of the LLC Agreement, in the event the Managing Member can no longer manage CVH’s affairs due to his death, disability or incapacity, 3AM will serve as CVH’s replacement Managing Member. Except as may be required by law, we, as a non-managing member under the LLC Agreement, do not have any voting rights and generally cannot take part in the management or control of CVH’s business and affairs.
On December 16, 2020, the Company entered into a second subscription agreement with CVH, pursuant to which the Company agreed to (i) contribute $700,000 (the "Additional Contribution") to CVH and (ii) purchase 700,000 Class B Units. The aggregate purchase price of $700,000 for the Class B Units is deemed to be satisfied through the Additional Contribution. Following the closing of the Additional Contribution, the Company owned an aggregate of 599,999 Class A Units and 2,500,000 Class B Units.
Additionally, on July 1, 2022, we loaned $150,000 to CVH. The loan bears no interest and is due and payable in full on the earlier of (i) the date by which KINS has to complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a "business combination"), and (ii) immediately prior to the date of consummation of the Business Combination of KINS, unless accelerated upon the occurrence of an event of default. As a result of the closing of the Business Combination, the loan was repaid on March 15, 2023.
On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020.
Nadir Ali, the Company's former Chief Executive Officer and a former director, beneficially owned membership interests in CVH through 3AM LLC, a Delaware limited liability company and a founding member of CVH ("3AM"). Mr. Ali's relationship may create conflict of interest between Mr. Ali's obligation to our company and its shareholders and his economic interests and possible fiduciary obligation to 3AM. CVH was dissolved as of December 31, 2023.
Enterprise Apps Spin-off and Business Combination
On September 25, 2022, we entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Inpixon, KINS Technology Group Inc., a Delaware corporation (renamed CXApp Inc., "KINS" or "New CXApp"), CXApp Holding Corp., a Delaware corporation and wholly-owned subsidiary of New CXApp (formerly a wholly-owned subsidiary of Inpixon, "CXApp"), and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS ("Merger Sub"), pursuant to which KINS would acquire Inpixon's enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the "Enterprise Apps Business") through the merger of Merger Sub with and into CXApp (the “Merger”), with CXApp continuing as the surviving company and as a wholly-owned subsidiary of KINS, in exchange for the issuance of shares of KINS capital stock valued at $69 million (the "Business Combination"). Immediately prior to the Merger and pursuant to a Separation and Distribution Agreement, dated as of September 25, 2022, among KINS, Inpixon, CXApp and Design Reactor, Inc., a California corporation ("Design Reactor") (the "Separation Agreement"), and other ancillary conveyance documents, Inpixon would, among other things and on the terms and subject to the conditions of the Separation Agreement, transfer the Enterprise Apps Business, including certain related subsidiaries of Inpixon, including Design Reactor, to CXApp (the "Reorganization"). Following the Reorganization, Inpixon would distribute 100% of the common stock of CXApp, par value $0.00001, to certain holders of Inpixon securities as of the record date of March 6, 2023 (the "Enterprise Apps Spin-Off"). The Merger closed on March 14, 2023. See “Recent Events - Enterprise Apps Spin-off and Business Combination” under Part II, Item 7 herein for more details.
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Effective as of the closing of the Merger, Design Reactor, entered into a consulting agreement with 3AM, pursuant to which Mr. Ali provideed advisory services following the closing of the Business Combination in exchange for $180,000 in consulting fees.
CVH Class A Unit Transfers
On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees and directors (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020.
The following table sets forth the number of Class A Units awarded to each Transferee pursuant to the terms of their respective Transfer Agreement:
Name Title Number of Class A Units
Nadir Ali Chief Executive Officer, Director 219,999
Wendy Loundermon Chief Financial Officer, Director 100,000
Soumya Das Chief Operating Officer 50,000
Solutions Divestiture
Grafiti Group Equity Purchase Agreement
On February 21, 2024, the Company completed the disposition of the remaining portion of the Shoom, SAVES, and GYG business lines and assets (the "Grafiti Group Divestiture") that were excluded from the Grafiti Holding Transaction in accordance with the terms and conditions of an Equity Purchase Agreement, dated February 16, 2024, by and among Inpixon (“Seller”), Grafiti LLC, and Grafiti Group LLC (a newly formed entity controlled by Nadir Ali, the Company's CEO and a director) (“Buyer”). Pursuant to the terms of the Equity Purchase Agreement, Buyer acquired from 100% of the equity interest in Grafiti LLC, including the assets and liabilities primarily relating to Inpixon’s Saves, Shoom and Game Your Game business, including 100% of the equity interests of Inpixon India, Grafiti GmbH (previously Inpixon GmbH) and Game Your Game, Inc. from the Company for a minimum purchase price of $1.0 million paid in two annual cash installments of $0.5 million due within 60 days after December 31, 2024 and 2025. The purchase price and annual cash installment payments will be (i) increased for 50% of net income after taxes, if any, from the operations of Grafiti LLC for the years ended December 31, 2024 and 2025; (ii) decreased for the amount of transaction expenses assumed; (iii) increased or decreased by the amount working capital of Grafiti LLC on the closing balance sheet is greater or less than $1.0 million.
Transition Services Agreement
On February 21, 2024, in connection with the closing of the Grafiti Group Divestiture, Grafiti LLC and Inpixon entered into a Transition Services Agreement (the “Grafiti Transition Services Agreement”) with respect to services to be provided for a period of one year following closing. Pursuant to the Grafiti Transition Services Agreement, the Company will provide contracted IT and accounting services to Grafiti LLC and Grafiti LLC will provide certain accounting and payroll services, in each case on an hourly as needed basis to ensure the orderly transition of the business.
Sublease Arrangement
The Company and Grafiti LLC have also arranged for the Company to sublease office space in Palo Alto, CA from Grafiti LLC at a cost of 50% of monthly rent and operating expenses as of February 1, 2024. The cost is estimated at approximately $5,800 per month.
Legacy XTI Transactions
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During the years ended December 31, 2023 and 2022, Legacy XTI paid its Chief Operating Advisor consultant, Charlie Johnson, who was then a board member and stockholder of Legacy XTI, compensation of $60,000 and $30,000, respectively. As of December 31, 2023 and December 31, 2022, Legacy XTI owed Mr. Johnson accrued compensation of $120,000 and $60,000, respectively. Pursuant to an amendment to the consulting agreement in 2024, the Company paid $60,000 to Mr. Johnson in March 2024 and the remaining accrued compensation balance of $60,000 was waived.
Transactions with Mr. Brody
Replacement Note
Legacy XTI entered into an amended convertible note agreement with Mr. Brody, its founder, Chairman and majority shareholder, in 2021 that consolidated a number of his outstanding notes (the “2021 Note”). On October 1, 2023, the existing 2021 Note was replaced by a new convertible note with a principal balance of $1,079,044 (2021 Note principal of $1,007,323 plus accrued interest of $71,721) (the “Brody Note”) and with a maturity date defined as the earlier of (i) a closing of a merger with a company whose shares are traded on a public stock exchange, or (ii) March 31, 2024 (as amended). The Brody Note accrued interest at a rate of 4% compounded annually, provided that on and after the maturity date interest the note shall accrue from and after such date on the unpaid principal and all accrued but unpaid interest of the note at a rate of 10% per annum. The Brody Note provided that at any time prior to the maturity date, Mr. Brody may convert all or a portion of the outstanding note balance into shares of Legacy XTI at a conversion price equal to $1.00.
Prior to Closing, Mr. Brody elected to convert all except $175,000 of the Brody Note. On March 11, 2024, Legacy XTI and Mr. Brody entered into an Amendment No. 1 (the “Brody Note Amendment”) to the Brody Note pursuant to which Mr. Brody converted $922,957 principal amount of the Brody Note and accrued and unpaid interest thereon, into shares of Legacy XTI common stock at a rate of $0.3094 in principal amount per share, and Legacy XTI agreed to pay Mr. Brody the remaining $175,000 in principal amount at the time of Closing. The shares issued as consideration under the Brody Note Amendment converted into 266,273 shares of XTI Aerospace common stock in accordance with the exchange ratio pursuant to the XTI Merger Agreement. After the Closing of the Merger, the Company assumed the Brody Note as Maker, and the Company and Mr. Brody entered into Amendment No. 2 (the “Brody Note Second Amendment”) to the Brody Note which extended the maturity date for the $175,000 payment to April 1, 2024.
January 2023 Note
In connection with the XTI Merger, the Company assumed a Promissory Note issued by XTI to Mr. Brody on January 5, 2023 (the “January 2023 Note”), with an outstanding principal balance of $125,000 along with an interest balance of $10,058 calculated as of April 30, 2024. On March 27, 2024, Mr. Brody and the Company entered into an amendment to the January 2023 Note which extended the Maturity Date to April 30, 2024.
Consulting Agreement
Mr. Brody provided legal and strategic consulting services to Legacy XTI under a consulting agreement. During the years ended December 31, 2023 and 2022, Legacy XTI paid Mr. Brody compensation of $60,000 and $100,000, respectively. As of December 31, 2023 and December 31, 2022, Legacy XTI had payable amounts owed to Mr. Brody of $320,000 and $260,000, respectively, under his consulting agreement. Pursuant to an amendment to the consulting agreement, these accrued amounts were waived by Mr. Brody and the consulting agreement terminated in connection with the closing of the XTI Merger.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Inpixon incurred the following fees for services rendered by Marcum LLP, Inpixon's independent registered public accounting firm, for the fiscal years ended December 31, 2023 and 2022.
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2023 2022
Audit Fees(1) $ 318,554 $ 289,410
Audit Related Fees $ 688,220 $ 542,693
Tax Fees $ — $ —
All Other Fees $ — $ —
(1) Audit fees represent fees for professional services provided in connection with the audit of our Company's 2023 and 2022 annual consolidated financial statements included in this Annual Report on Form 10-K and review of our quarterly financial statements included in the Company's Quarterly Reports on Form 10-Q and audit services provided in connection with other statutory or regulatory filings.
Audit Fees . The “Audit Fees” are the aggregate fees of Marcum attributable to professional services rendered in 2023 and 2022 for the audit of our annual financial statements in our annual reports on Form 10-K, for review of financial statements included in our quarterly reports on Form 10-Q or for services that are normally provided by Marcum in connection with statutory and regulatory filings or engagements for that fiscal year. These fees include fees billed for professional services rendered by Marcum for the review of registration statements or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.
Audit-Related Fees . Marcum billed us for professional services that were reasonably related to the performance of the audit or review of financial statements for fiscal years ended 2023 and 2022, which are not included under Audit Fees above including the filing of our registration statements, including our Registration Statement on Form S-3. This amount also includes audit fees related to acquisitions and fees for special audits related to our transactions.
Tax Fees . Marcum did not perform any tax advice or planning services in 2023 or 2022.
All Other Fees . Marcum did not perform any services for us or charge any fees other than the services described above in 2023 and 2022.
Pre-approval Policies and Procedures
The Audit Committee is required to review and approve in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services and the fees for such services. The Audit Committee may delegate to one or more of its members the authority to grant pre-approvals for the performance of certain non-audit services, and any such Audit Committee member who pre-approves a non-audit service must report the pre-approval to the full Audit Committee at its next scheduled meeting. The Audit Committee is required to periodically notify the Board of their approvals. The required pre-approval policies and procedures were complied with during 2023.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
15(a)(1) Financial Statements
The financial statements filed as part of this report are listed and indexed in the table of contents. Financial statement schedules have been omitted because they are not applicable or the required information has been included elsewhere in this report.
15(a)(2) Financial Statement Schedules
Not applicable.
15(a)(3) Exhibits
The exhibits filed as part of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding the exhibits. The Company has identified in the Exhibit Index each management contract and compensation plan filed as an exhibit to this Annual Report on Form 10-K in response to Item 15(a)(3) of Form 10-K.
ITEM 16. FORM 10-K SUMMARY.
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
XTI AEROSPACE, INC.
Date: April 16, 2024 By: /s/ Scott Pomeroy
Scott Pomeroy
Chief Executive Officer
Each person whose signature appears below constitutes and appoints Scott Pomeroy and Brooke Turk, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Scott Pomeroy
Chief Executive Officer, Chairman and Director
April 16, 2024
Scott Pomeroy
(Principal Executive Officer)
/s/ Brooke Turk
Chief Financial Officer
April 16, 2024
Brooke Turk
(Principal Financial and Accounting Officer)
/s/ David Brody
Director April 16, 2024
David Brody
/s/ Soumya Das
Director April 16, 2024
Soumya Das
/s/ Kareem Irfan
Director April 16, 2024
Kareem Irfan
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EXHIBIT INDEX
Exhibit
Number Exhibit Description Form File No. Exhibit Filing Date Filed
Herewith
2.1 Agreement and Plan of Merger dated August 31, 2013 by and among Sysorex Global Holdings Corp., Sysorex Merger Sub, Inc., Shoom, Inc. and the Shareholder Representative.
S-1 333-191648
2.4 October 9, 2013
2.2 Agreement and Plan of Merger dated as of December 20, 2013, by and among Sysorex Global Holdings Corp., AirPatrol Corporation, AirPatrol Acquisition Corp. I, AirPatrol Acquisition Corp. II, and Shareholders Representative Services LLC.
S-1/A 333-191648
2.6 January 21, 2014
2.3 Amendment No. 1 to Agreement and Plan of Merger dated February 28, 2014 with AirPatrol Corporation.
S-1/A 333-191648
2.7 March 13, 2014
2.4 Amendment No. 2 to Agreement and Plan of Merger dated April 18, 2014 with AirPatrol Corporation.
8-K 001-36404
2.8 April 24, 2014
2.5 Waiver and Amendment No. 3 to Agreement and Plan of Merger dated May 30, 2014 with AirPatrol Corporation.
S-1 333-198502
12.9 August 29, 2014
2.6†
Asset Purchase Agreement, dated as of April 24, 2015, between Sysorex Global Holdings Corp., LightMiner Systems, Inc. and Chris Baskett.
8-K 001-36404
2.1 April 30, 2015
2.7 Separation and Distribution Agreement, dated August 7, 2018 between Inpixon and Sysorex, Inc.
10-Q 001-36404
2.1 August 13, 2018
2.8 Amendment No. 1 to Separation and Distribution Agreement dated August 31, 2018 between Inpixon and Sysorex, Inc.
8-K 001-36404
10.5 September 4, 2018
2.9†
Share Purchase Agreement, dated May 21, 2019, by and among Inpixon, Inpixon Canada, Inc., Locality Systems Inc., Kirk Moir, in his capacity as the Sellers’ Representative, the Sellers and Garibaldi Capital Advisors Ltd.
8-K 001-36404 2.1 May 22, 2019
2.10†
Asset Purchase Agreement, dated June 27, 2019, by and between Inpixon and GTX Corp.
8-K 001-36404
2.1 July 1, 2019
94
Table of Contents
2.11†
Share Purchase Agreement, dated July 9, 2019, by and among Inpixon, Inpixon Canada, Inc., Jibestream Inc., the Vendors, and Chris Wiegand, in his capacity as the Vendors’ Representative.
8-K 001-36404
2.1 July 11, 2019
2.12†
Amendment to Share Purchase Agreement, dated as of August 8, 2019, by and among Inpixon, Inpixon Canada, Inc., Jibestream Inc., the Vendors, and Chris Wiegand, in his capacity as the Vendors’ Representative.
8-K 001-36404
2.1 August 9, 2019
2.13 The Second Amendment to the Share Purchase Agreement, dated August 15, 2019, by and among Inpixon, Inpixon Canada, Inc., Jibestream Inc, and Chris Wiegand, in his capacity as the Vendors’ representative.
8-K 001-36404
2.1 August 19, 2019
2.14† Asset Purchase Agreement, dated as of August 19, 2020, by and among Inpixon, Ten Degrees Inc., Ten Degrees International Limited, mCube International Limited and mCube, Inc.
8-K 001-36404
2.1 August 20, 2020
2.15† Share Sale and Purchase Agreement, dated as of October 5, 2020, among Inpixon GmbH, Sensera Limited and Nanotron Technologies GmbH.
8-K 001-36404 2.1 October 5, 2020
2.16 Amendment to the Share Sale and Purchase Agreement, dated as of February 24, 2021, among Inpixon GmbH, Sensera Limited and Nanotron Technologies GmbH.
8-K 001-36404 2.1 February 26, 2021
2.17† Stock Purchase Agreement, dated as of March 25, 2021, among Inpixon, Game Your Game, Inc., Rick Clemmer, and Martin Manniche.
10-K 001-36404 2.23 March 31, 2021
2.18† Stock Purchase Agreement, dated as of April 30, 2021, among Inpixon, Design Reactor, Inc., dba The CXApp, the sellers set forth on the signature page thereto and each other person who owns outstanding capital stock of The CXApp and executes a Joinder to Stock Purchase Agreement, and Leon Papkoff, as Sellers’ Representative
8-K 001-36404 2.1 May 6, 2021
2.19† Share Sale and Purchase Agreement, dated as of December 8, 2021, between Nanotron Technologies GmbH and the Shareholders of IntraNav GmbH.
8-K 001-36404 2.1 December 13, 2021
95
Table of Contents
2.20 Amendment to Stock Purchase Agreement, dated as of December 30, 2021, by and between Inpixon and Leon Papkoff, in his capacity as the Sellers’ Representative.
8-K 001-36404 2.1 December 30, 2021
2.21 Second Amendment to Stock Purchase Agreement, dated as of March 3, 2022, by and between Inpixon and Leon Papkoff, in his capacity as Sellers' Representative
8-K 001-36404 2.1 March 9, 2022
2.22† Agreement and Plan of Merger, dated as of September 25, 2022, by and among KINS Technology Group Inc., Inpixon, CXApp Holding Corp. and KINS Merger Sub Inc.
8-K 001-36404 2.1 September 26, 2022
2.23† Separation and Distribution Agreement, dated as of September 25, 2022, by and among KINS Technology Group, Inc., Inpixon, CXApp Holding Corp. and Design Reactor Inc.
8-K 001-36404 2.2 September 26, 2022
2.24 Sponsor Support Agreement, dated as of September 25, 2022, by and among KINS Capital LLC, KINS Technology Group Inc., Inpixon and CXApp Holding Corp
8-K 001-36404 2.3 September 26, 2022
2.25†
Agreement and Plan of Merger, dated July 24, 2023, among Inpixon, Superfly Merger Sub Inc. and XTI Aircraft Company.
8-K 001-36404 2.1 July 25, 2023
2.26
First Amendment to Merger Agreement, dated December 30, 2023, by and between Inpixon, Superfly Merger Sub Inc. and XTI Aircraft Company.
X
2.27† Second Amendment to Merger Agreement, dated March 12, 2024, by and between Inpixon, Superfly Merger Sub Inc. and XTI Aircraft Company.
8-K 001-36404 10.1 March 15, 2024
2.28†
Separation Agreement, dated as of October 23, 2023, by and between Inpixon and Grafiti Holding Inc.
8-K 001-36404 2.1 October 23, 2023
2.29†
Business Combination Agreement, dated as of October 23, 2023, by and among Inpixon, Grafiti Holding Inc., 1444842 B.C. Ltd. and Damon Motors Inc.
8-K 001-36404 2.2
October 23, 2023
2.30† Equity Purchase Agreement, dated as of February 16, 2024, by and among Inpixon, Grafiti LLC and Grafiti Group LLC.
8-K 001-36404 2.1 February 23, 2024
3.1 Restated Articles of Incorporation.
S-1 333-190574 3.1 August 12, 2013
96
Table of Contents
3.2 Certificate of Amendment to Articles of Incorporation (Increase Authorized Shares).
S-1 333-218173 3.2 May 22, 2017
3.3 Certificate of Amendment to Articles of Incorporation (Reverse Split).
8-K 001-36404 3.1 April 10, 2014
3.4 Articles of Merger (renamed Sysorex Global).
8-K 001-36404 3.1 December 18, 2015
3.5 Articles of Merger (renamed Inpixon).
8-K 001-36404 3.1 March 1, 2017
3.6 Certificate of Amendment to Articles of Incorporation (Reverse Split).
8-K 001-36404 3.2 March 1, 2017
3.7 Certificate of Amendment to Articles of Incorporation (authorized share increase).
8-K 001-36404 3.1 February 5, 2018
3.8 Certificate of Amendment to Articles of Incorporation (Reverse Split).
8-K 001-36404 3.1 February 6, 2018
3.9 Certificate of Amendment to Articles of Incorporation (Reverse Split).
8-K 001-36404 3.1 November 1, 2018
3.10 Certificate of Amendment to Articles of Incorporation, effective as of January 7, 2020 (Reverse Split).
8-K 001-36404
3.1 January 7, 2020
3.11 Certificate of Amendment to the Articles of Incorporation increasing the number of authorized shares of Common Stock from 250,000,000 to 2,000,000,000 filed with the Secretary of State of the State of Nevada on November 18, 2021
8-K 001-36404
3.1 November 19, 2021
3.12 Certificate of Change filed with the Secretary of State of the State of Nevada on October 4, 2022 (effective as of October 7, 2022)
8-K 001-36404 3.1 October 6, 2022
97
Table of Contents
3.13 Certificate of Amendment to the Articles of Incorporation increasing the number of authorized shares of Common Stock from 26,666,667 to 500,000,000 filed with the Secretary of State of the State of Nevada on November 29, 2022
8-K 001-36404 3.1 December 2, 2022
3.14
C ertificate of Designations of Preferences and Rights of Series 9 Preferred Stock .
8-K 001-36404
3.1
March 15, 2024
3.15
C ertificate of Amendment (Reverse Stock Split).
8-K 001-36404
3.2
March 15, 2024
3.16
C ertificate of Amendment (Name Change).
8-K 001-36404
3.3
March 15, 2024
3.17
Bylaws, as amended.
S-1 333-190574
3.2 August 12, 2013
3.18
Bylaws Amendment
8-K 001-36404
3.2 September 13, 2021
3.19
By-Laws Amendment No. 3
8-K 001-36404
3.1
September 19, 2023
3.20
By-Laws Amendment No. 4
8-K 001-36404
3.2
September 19, 2023
3.21
B ylaws Amendment.
8-K 001-36404
3.4
March 15, 2024
4.1 Specimen Stock Certificate of the Company.
S-1 333-190574 4.1 August 12, 2013
4.2 Form of Certificate of Designation of Preferences, Rights and Limitations of Series 4 Convertible Preferred Stock.
8-K 001-36404
3.1 April 24, 2018
4.3 Certificate of Designation of Series 5 Convertible Preferred Stock, dated as of January 14, 2019.
8-K 001-36404
3.1 January 15, 2019
4.4
Promissory Note, dated as of December 21, 2018
8-K 001-36404 4.1 December 31, 2018
4.5
Form of Warrant
8-K 001-36404 4.1 January 15, 2019
98
Table of Contents
4.6
Form of Warrant Agency Agreement
8-K 001-36404 4.2 January 15, 2019
4.7
Promissory Note, dated as of May 3, 2019
8-K 001-36404 4.1 May 3, 2019
4.8
Promissory Note, dated as of June 27, 2019.
8-K 001-36404 4.1 June 27, 2019
4.9
Form of Series A warrants.
8-K 001-36404 4.2 August 14, 2019
4.10
Series 6 Preferred Certificate of Designation, effective as of August 13, 2019.
8-K 001-36404 4.1 August 14, 2019
4.11
Promissory Note, dated as of March 18, 2020.
8-K 001-36404 4.1 March 20, 2020
4.12
Series 7 Convertible Preferred Stock Certificate of Designation, filed with the Secretary of State of the State of Nevada and effective September 13, 2021
8-K 001-36404 3.1 September 15, 2021
4.13
Description of Registrant's Securities
X
4.14
Series 8 Convertible Preferred Stock Certificate of Designation, filed with the Secretary of State of the State of Nevada and effective March 22, 2022
8-K 001-36404 3.1 March 24, 2022
4.15
Promissory Note, dated as of July 22, 2022
8-K 001-36404 4.1 July 22, 2022
4.16
Form of Purchase Warrants
8-K 001-36404 4.1 October 20, 2022
4.17
Promissory Note, dated as of December 30, 2022
8-K 001-36404 4.1 December 30, 2022
4.18
Common Stock Purchase Warrant
10-Q
001-36404 4.7
May 16, 2023
99
Table of Contents
4.19
Form of New Warrant.
8-K
001-36404 4.1 December 15, 2023
4.20
Promissory Note, dated effective as of January 5, 2023
X
4.21
Amendment No. 1 to Promissory Note, dated as of March 27, 2024, by and between XTI Aerospace, Inc. and David E. Brody.
X
4.22
Unsecured Convertible Promissory Note, dated as of October 1, 2023.
X
4.23
Amendment No. 1 to Unsecured Convertible Promissory Note, dated as of March 12, 2024, by and between XTI Aircraft Company and David E. Brody.
X
4.24
Amendment No. 2 to Unsecured Convertible Promissory Note, dated as of March 27, 2024, by and between XTI Aerospace, Inc. and David E. Brody.
X
4.25
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.26
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.27
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.28
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.29#
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.30
Form of Warrant initially issued by XTI Aircraft Company and assumed by the Registrant.
X
4.31#
F orm of Amendment No. 2 to Warrant initially issued by XTI Aircraf t Company and assumed by the Registrant.
X
10.1+ Amended and Restated 2011 Employee Stock Incentive Plan.
S-8 333-195655 10.22 May 2, 2014
100
Table of Contents
10.2+
F orm of Incentive Stock Option Agreement.
8-K
001-36404 10.9 October 27, 2014
10.3+ Form of Non-Qualified Stock Option Agreement.
8-K 001-36404 10.5 October 27, 2014
10.4+ Form of Restricted Stock Award Agreement.
8-K 001-36404 10.6 October 27, 2014
10.5+ 2018 Employee Stock Incentive Plan, as amended.
S-8 333-234458 99.1 November 1, 2019
10.6+ 2018 Employee Stock Incentive Plan Form of Incentive Stock Option Agreement.
10-K 001-36404 10.8 March 31, 2021
10.7+ 2018 Employee Stock Incentive Plan Form of Non-Qualified Stock Option Agreement.
10-K 001-36404 10.7 March 31, 2021
10.8+ 2018 Employee Stock Incentive Plan Form of Restricted Stock Award Agreement.
10-K 001-36404 10.6 March 31, 2021
10.9+ Director Services Agreement with Leonard A. Oppenheim dated October 21, 2014.
8-K 001-36404 10.1 October 27, 2014
10.10+ Director Services Agreement with Kareem M. Irfan dated October 21, 2014.
8-K 001-36404 10.3 October 27, 2014
10.11+ Director Services Agreement with Tanveer A. Khader dated October 21, 2014.
8-K 001-36404 10.4 October 27, 2014
10.12+ Amended and Restated Employment Agreement by and between the Company and Nadir Ali
10-Q 001-36404 10.14 May 15, 2018
10.13+ Employment Agreement, effective as of October 1, 2014, between Wendy Loundermon and the Company.
8-K 001-36404 10.8 October 27, 2014
101
Table of Contents
10.14+ Employment Agreement dated November 4, 2016, by and between Sysorex USA and Soumya Das.
10-K 001-36404 10.51 April 17, 2017
10.15+ Amendment to Employment Agreement dated August 31, 2018 among Inpixon, Sysorex, Inc. and Soumya Das
8-K 001-36404 10.8 September 4, 2018
10.16+ Waiver and Amendment No. 1 to Board of Directors Services Agreement with Leonard A. Oppenheim dated February 4, 2019.
10-K 001-36404 10.9 March 28, 2019
10.17+ Waiver and Amendment No. 1 to Board of Directors Services Agreement with Kareem M. Irfan dated February 4, 2019.
10-K 001-36404 10.11 March 28, 2019
10.18+ Waiver and Amendment No. 1 to Board of Directors Services Agreement with Tanveer A. Khader dated February 4, 2019.
10-K 001-36404 10.13 March 28, 2019
10.19 Second Amendment Agreement, dated as of April 2, 2019, between Inpixon and Sysorex, Inc.
8-K 001-36404 10.1 April 5, 2019
10.20† Patent Assignment and License-Back Agreement, dated June 27, 2019, by and between Inpixon and GTX Corp.
8-K 001-36404 10.1 July 1, 2019
10.21† Patent License Agreement, dated June 27, 2019, by and between Inpixon and Inventergy.
8-K 001-36404 10.4 July 1, 2019
102
Table of Contents
10.22† Patent License Agreement, dated June 27, 2019, by and between Inpixon and GTX Corp.
8-K 001-36404 10.2 July 1, 2019
10.23 Note Purchase Agreement, dated as of March 18, 2020.
8-K 001-36404 10.1 March 20, 2020
10.24† Exclusive Software License and Distribution Agreement, dated as of June 19, 2020, by and among Inpixon, Cranes Software International Ltd., and Systat Software, Inc.
8-K 001-36404 10.1 June 22, 2020
10.25 Amendment and Waiver to Exclusive Software License & Distribution Agreement, dated as of June 30, 2020, by and among Inpixon, Cranes Software International Ltd., and Systat Software, Inc.
8-K 001-36404 10.1 July 2, 2020
10.26+ Amendment No. 4 to Inpixon 2018 Employee Stock Incentive Plan.
10-Q 001-36404 10.7 August 14, 2020
10.27 Form of Amended and Restated Limited Liability Company Agreement of Cardinal Venture Holdings LLC.
8-K 001-36404 10.2 October 5, 2020
10.28 Amendment #2 to Promissory Note, dated as of March 17, 2021, by and between Inpixon and Iliad Research and Trading, L.P.
8-K 001-36404 10.1 March 19, 2021
10.29 Securities Settlement Agreement, dated as of April 14, 2021, by and between Sysorex, Inc. and Inpixon.
8-K 001-36404 10.1 April 14, 2021
103
Table of Contents
10.30 Right to Shares Letter Agreement, dated as of April 14, 2021, by and between Sysorex, Inc. and Inpixon.
8-K 001-36404 10.2 April 14, 2021
10.31 Form of Registration Rights Agreement, dated as of April 14, 2021 by and among Sysorex, Inc. and the parties to the Securities Subscription Agreement and certain other parties.
8-K 001-36404 10.3 April 14, 2021
10.32# Stockholders’ Agreement, dated as of April 9, 2021, among Inpixon, Game Your Game, Inc. and the Minority Stockholders.
8-K 001-36404 10.4 April 14, 2021
10.33 Amendment #3 to Promissory Note, dated as of March 16, 2022, by and between Inpixon and Iliad Research and Trading, L.P.
10-K 001-36404 10.40 March 16, 2022
10.34+ Amendment to the Inpixon 2018 Employee Stock Incentive Plan
8-K 001-36404 10.1 November 19, 2021
10.35† Exchange Agreement, dated January 28, 2022, by and between Inpixon and Warrant Holder
8-K 001-36404 10.1 January 28, 2022
10.36† Form of Securities Purchase Agreement
8-K 001-36404 10.1 March 22, 2022
10.37 Form of Lock-up Agreement
8-K 001-36404 10.2 March 22, 2022
10.38 Equity Distribution Agreement, dated as of July 22, 2022, between Inpixon and Maxim Group LLC
8-K 001-36404 10.1 July 22, 2022
104
Table of Contents
10.39† Note Purchase Agreement, dated as of July 22, 2022
8-K 001-36404 10.2 July 22, 2022
10.40 Securities Purchase Agreement, dated as of April 27, 2022, by and between Inpixon and FOXO Technologies, Inc.
10-Q 001-36404 10.1 August 15, 2022
10.41 10% Original Issue Discount Senior Convertible Debenture
10-Q 001-36404 10.2 August 15, 2022
10.42 Subsidiary Guarantee
10-Q 001-36404 10.3 August 15, 2022
10.43† Form of Securities Purchase Agreement.
8-K 001-36404 10.1 October 20, 2022
10.44 Placement Agency Agreement, dated as of October 18, 2022, by and between Inpixon and Maxim Group LLC
8-K 001-36404 10.2 October 20, 2022
10.45 Amendment to the Inpixon 2018 Employee Stock Incentive Plan
8-K 001-36404 10.1 December 2, 2022
10.46 Amendment No. 2 to Board of Directors Services Agreement, dated as of May 16, 2022, between Inpixon and Kareem M. Irfan
10-Q 001-36404 10.1 November 14, 2022
10.47† Note Purchase Agreement, dated as of December 30, 2022
8-K 001-36404 10.1 December 30, 2022
10.48
Form of Amendment No. 1 to Common Stock Purchase Warrants.
8-K 001-36404 10.1 February 28, 2023
10.49
Form of Limited Liability Company Unit Transfer and Joinder Agreement.
8-K 001-36404 10.2 February 28, 2023
105
Table of Contents
10.50†
Employee Matters Agreement, dated March 14, 2023, by and among KINS, KINS Merger Sub Inc., Inpixon, and Legacy CXApp.
8-K 001-36404 10.1 March 20, 2023
10.51
Tax Matters Agreement, dated March 14, 2023, by and among KINS, Inpixon, and Legacy CXApp.
8-K 001-36404 10.2 March 20, 2023
10.52†
Transition Services Agreement, dated March 14, 2023, by and between Inpixon and Legacy CXApp.
8-K 001-36404 10.3 March 20, 2023
10.53
Warrant Purchase Agreement
10-Q 001-36404 10.6 May 16, 2023
10.54
Placement Agency Agreement
10-Q 001-36404 10.7 May 16, 2023
10.55
Amendment #2 to Promissory Note, dated as of May 16, 2023.
8-K 001-36404 10.1 May 19, 2023
10.56
Amendment to Promissory Note, dated as of May 16, 2023.
8-K 001-36404 10.2 May 19, 2023
10.57
Amendment No. 1 to Equity Distribution Agreement, dated as of June 13, 2023, by and between Inpixon and Maxim Group LLC.
8-K 001-36404 10.1 June 13, 2023
10.58
Form of Amendment Agreement.
8-K 001-36404 10.1 June 21, 2023
10.59
XTI Amended and Restated Senior Secured Note with Loan Schedule.
10-Q 001-36404 10.23 November 20, 2023
10.60
Form of Security and Pledge Agreement.
8-K 001-36404 10.2 July 25, 2023
10.61+
Inpixon Transaction Bonus Plan, dated July 24, 2023.
8-K 001-36404 10.3 July 25, 2023
10.62+
Inpixon Transaction Bonus Plan, dated July 24, 2023.
8-K 001-36404 10.4 July 25, 2023
10.63+
First Amendment to Employment Agreement, dated July 24, 2023, between Inpixon and Wendy Loundermon.
8-K 001-36404 10.5 July 25, 2023
10.64
Form of Securities Purchase Agreement by and between Damon Motors Inc. and Inpixon.
8-K 001-36404 10.1 October 23, 2023
10.65
Form of Convertible Promissory Note to be issued by Damon Motors Inc. to Inpixon.
8-K 001-36404 10.2 October 23, 2023
106
Table of Contents
10.66
Form of Common Share Purchase Warrant to be issued by Damon Motors Inc. to Inpixon.
8-K 001-36404 10.3 October 23, 2023
10.67
Form of Securityholder Support Agreement by and among Inpixon, Grafiti Holding Inc., Damon Motors Inc. and certain securityholders.
8-K 001-36404 10.4 October 23, 2023
10.68
Form of Lockup Agreement by and among Grafiti Holding Inc., Damon Motors and certain securityholders who are insiders.
8-K 001-36404 10.5 October 23, 2023
10.69
Form of Lockup Agreement by and among Grafiti Holding Inc., Damon Motors and certain securityholders who are not insiders.
8-K 001-36404 10.6 October 23, 2023
10.70
Form of Inducement Agreement by and between Inpixon and the Holder.
8-K 001-36404 10.1 December 15, 2023
10.71
Amendment No. 2 to Equity Distribution Agreement, dated as of June 13, 2023, by and between Inpixon and Maxim Group LLC.
8-K 001-36404 10.1 January 3, 2024
10.72
Liquidating Trust Agreement, dated as of December 27, 2023, by and among Inpixon, Grafiti Holding Inc. and the sole original trustee named therein.
8-K 001-36404 10.2 January 3, 2024
10.73
First Amendment to Senior Secured Promissory Note, dated as of December 30, 2023, by and between Inpixon and XTI Aircraft Company.
8-K 001-36404 10.3 January 3, 2024
10.74
Second Amendment to Senior Secured Promissory Note, dated as of February 2, 2024, by and between Inpixon and XTI Aircraft Company.
8-K 001-36404 10.1 February 5, 2024
10.75
Exchange Agreement, dated March 12, 2024, by and between Inpixon and Streeterville Capital, LLC.
8-K 001-36404 10.2 March 15, 2024
10.76
Securities Purchase Agreement, dated March 12, 2024, by and between Inpixon and 3AM Investments LLC.
8-K 001-36404 10.3 March 15, 2024
10.77
Form of Indemnification Agreement.
8-K 001-36404 10.4 March 15, 2024
10.78
Consulting Agreement, dated March 12, 2024, by and between XTI Aerospace, Inc. and Nadir Ali.
8-K 001-36404 10.5 March 15, 2024
107
Table of Contents
10.79
Consulting Agreement, dated March 12, 2024, by and between XTI Aerospace, Inc. and Wendy Loundermon.
8-K 001-36404 10.6 March 15, 2024
10.80+
Amendment to Employment Agreement, dated March 12, 2024, by and between Inpixon and Nadir Ali.
8-K 001-36404 10.7 March 15, 2024
10.81+
Amendment to Employment Agreement, dated March 12, 2024, by and between Inpixon and Wendy Loundermon.
8-K 001-36404 10.8 March 15, 2024
10.82+
Amendment to Inpixon Transaction Bonus Plan, dated March 11, 2024.
8-K 001-36404 10.9 March 15, 2024
10.83+
Form of Acknowledgement Agreement.
8-K 001-36404 10.10
March 15, 2024
10.84†#
Aircraft Purchase Agreement, dated February 2, 2022, between XTI Aircraft Company and Counterparty A.
S-1 333-273964 10.62 October 6, 2023
10.85+#
Consulting Services Agreement, dated July 5, 2022, by and between XTI Aircraft Company and Waymaker Capital, LLC.
X
10.86+
Consulting Agreement, dated August 16, 2023, by and between XTI Aircraft Company and Playa Property Management, LLC, d/b/a Springboard Ventures.
X
10.87+
Employment Agreement, dated July 28, 2022, but effective as of July 1, 2022, by and between XTI Aircraft Company and Michael Hinderberger.
X
21.1 List of Subsidiaries of the Company.
X
23.1 Consent of Marcum LLP.
X
24.1 Power of Attorney (included on signature page).
X
108
Table of Contents
31.1 Certification of the Company’s Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2 Certification of the Company’s Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1## Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
97.1
XTI Aerospace, Inc. Clawback Policy.
X
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
109
Table of Contents
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) X
+ Indicates a management contract or compensatory plan.
† Exhibits, schedules and similar attachments have been omitted pursuant to Item 601 of Regulation S-K and the registrant undertakes to furnish supplemental copies of any of the omitted exhibits and schedules upon request by the SEC.
# Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[****]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
## This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
110