What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 307 added, 241 removed, 1006 unchanged (35% of the section changed)

3 unchanged sentences

In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

The results for the period ended June 30, 2021 are not necessarily indicative of the results of operations for the full year.

The results for the period ended September 30, 2021 are not necessarily indicative of the results of operations for the full year.

These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our audited consolidated financial statements for the fiscal years December 31, 2020 and 2019 included in the annual report on Form 10-K filed with the U.S.

3 unchanged sentences

(In thousands, except number of shares and par value data)

As of June 30,

As of September 30,

2021 As of December 31,

21 unchanged sentences

(In thousands, except number of shares and par value data)

As of June 30,

As of September 30,

2021 As of December 31,

16 unchanged sentences

Commitments and Contingencies

Mezzanine Equity

Series 7 Convertible Preferred Stock - 58,750 shares authorized;

49,250 and — issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.

(Liquidation preference of $ 49,250,000 )

Stockholders’ Equity

2 unchanged sentences

Series 4 Convertible Preferred Stock - 10,415 shares authorized;

1 issued, and 1 outstanding as of June 30, 2021 and December 31, 2020, respectively

1 issued, and 1 outstanding as of September 30, 2021 and December 31, 2020, respectively.

Series 5 Convertible Preferred Stock - 12,000 shares authorized;

126 issued, and 126 outstanding as of June 30, 2021 and December 31, 2020, respectively.

126 issued, and 126 outstanding as of September 30, 2021 and December 31, 2020, respectively.

Common Stock - $ 0.001 par value;

250,000,000 shares authorized;

116,454,028 and 53,178,462 issued and 116,454,027 and 53,178,461 outstanding as of June 30, 2021 and December 31, 2020, respectively.

124,593,720 and 53,178,462 issued and 124,593,719 and 53,178,461 outstanding as of September 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital 335,940 225,613

1 unchanged sentence

( 695 ) ( 695 )

Accumulated other comprehensive income 52 660

Accumulated other comprehensive (loss) income ( 352 ) 660

Accumulated deficit ( 212,593 ) ( 180,992 )

Stockholders’ Equity Attributable to Inpixon 122,425 44,639

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except number of shares and par value data)

Non-controlling Interest 2,460 41

Total Stockholders’ Equity 124,885 44,680

Total Liabilities and Stockholders’ Equity $ 174,414 $ 59,011

Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 191,037 $ 59,011

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands, except per share data)

For the Three Months Ended June 30, For the Six Months Ended

For the Three Months Ended September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

18 unchanged sentences

Total Other Income (Expense) ( 22,347 ) ( 1,205 ) 7,537 ( 4,068 )

Net Income (Loss), before tax 16,701 ( 7,304 ) 4,171 ( 13,556 )

Income tax (provision) benefit ( 2,195 ) — ( 2,204 ) 87

Net Income (Loss) $ 14,506 ( 7,304 ) 1,967 $ ( 13,469 )

Net Loss, before tax ( 34,803 ) ( 7,451 ) ( 30,632 ) ( 21,006 )

Income tax benefit (provision) 854 — ( 1,350 ) 87

Net Loss $ ( 33,949 ) ( 7,451 ) ( 31,982 ) $ ( 20,919 )

Net (Loss) Income Attributable to Non-controlling Interest ( 309 ) 16 ( 544 ) 25

Net Income (Loss) Attributable to Stockholders of Inpixon $ 14,759 $ ( 7,323 ) 2,202 $ ( 13,478 )

Net Income (Loss) Per Share - Basic $ 0.13 $ ( 0.32 ) $ 0.02 $ ( 0.97 )

Net Income (Loss) Per Share - Diluted $ 0.13 $ ( 0.32 ) $ 0.02 $ ( 0.97 )

Net Loss Attributable to Stockholders of Inpixon $ ( 33,640 ) $ ( 7,467 ) ( 31,438 ) $ ( 20,944 )

Net Loss Per Share - Basic and Diluted $ ( 0.29 ) $ ( 0.18 ) $ ( 0.31 ) $ ( 0.90 )

Weighted Average Shares Outstanding

Basic 110,040,532 22,823,976 94,577,520 13,931,245

Diluted 110,041,378 22,823,976 94,591,619 13,931,245

Basic and Diluted 117,753,206 41,544,961 102,387,641 23,203,004

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Three Months Ended June 30, For the Six Months Ended

For the Three Months Ended September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

Net Income (Loss) $ 14,506 $ ( 7,304 ) $ 1,967 $ ( 13,469 )

Net Loss $ ( 33,949 ) $ ( 7,451 ) $ ( 31,982 ) $ ( 20,919 )

Unrealized foreign exchange (loss) gain from cumulative translation adjustments ( 404 ) 69 ( 1,012 ) ( 226 )

Comprehensive Income (Loss) $ 14,558 $ ( 6,986 ) $ 1,348 $ ( 13,764 )

Comprehensive Loss $ ( 34,353 ) $ ( 7,382 ) $ ( 32,994 ) $ ( 21,145 )

The accompanying notes are an integral part of these financial statements

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In thousands, except per share data)

Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity

Shares Amount Shares Amount Shares Amount Shares Amount

Series 7 Preferred Stock Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2021 — — 1 — 126 — 53,178,462 52 225,613 ( 1 ) ( 695 ) 660 ( 180,992 ) 42 44,680

17 unchanged sentences

Balance - June 30, 2021 — — 1 — 126 — 116,454,028 $ 116 $ 322,196 ( 1 ) $ ( 695 ) $ 52 $ ( 178,931 ) $ 2,748 $ 145,486

Stock options granted to employees and consultants for services — — — — — — — — 1,664 — — — — — 1,664

Common shares issued for extinguishment of debt — — — — — — 877,192 1 999 — — — — — 1,000

Preferred Shares issued in public offering — — — — — — — — 1,589 — — — — — 1,589

Series 7 Preferred Stock issued for cash 58,750 48,995 — — — — — — — — — — — — —

Series 7 Preferred Stock converted to common stock ( 9,500 ) ( 9,500 ) — — — — — — — — — — — — —

Common shares issued for conversion of preferred shares — — — — — — 7,600,000 8 9,492 — — — — — 9,500

Restricted stock grants forfeited — — — — — — ( 337,500 ) — — — — — — — —

Cumulative translation adjustment — — — — — — — — — — — ( 404 ) ( 22 ) 21 ( 405 )

Net loss — — — — — — — — — — — — ( 33,640 ) ( 309 ) ( 33,949 )

Balance - September 30, 2021 49,250 39,495 1 — 126 — 124,593,720 $ 125 $ 335,940 ( 1 ) $ ( 695 ) $ ( 352 ) $ ( 212,593 ) $ 2,460 $ 124,885

The accompanying notes are an integral part of these financial statements

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In thousands, except per share data)

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2020 — — 1 $ — 126 $ — 4,234,923 $ 4 $ 158,383 ( 1 ) $ ( 695 ) $ 96 $ ( 151,762 ) $ 26 $ 6,052

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Balance - June 30, 2020 — — 1 $ — 126 $ — 40,175,002 $ 40 $ 209,789 ( 1 ) $ ( 695 ) $ ( 199 ) $ ( 165,242 ) $ 34 $ 43,727

Stock options granted to employees and consultants for services — — — — — — — — 256 — — — — — 256

Common shares issued for net cash proceeds from a public offering — — — — — — 1,604,312 2 2,268 — — — — — 2,270

Issuance of Ten Degrees Acquisition shares — — — — — — 480,000 — 600 — — — — — 600

Cumulative Translation Adjustment — — — — — — — — — — — 69 ( 1 ) 1 69

Net loss — — — — — — — — — — — — ( 7,467 ) 16 ( 7,451 )

Balance - September 30, 2020 $ — — 1 $ — 126 $ — 42,259,314 $ 42 $ 212,913 ( 1 ) $ ( 695 ) $ ( 130 ) $ ( 172,710 ) $ 51 $ 39,471

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Six Months Ended June 30,

For the Nine Months Ended

September 30,

Cash Flows Used in Operating Activities (Unaudited)

Net income (loss) $ 1,967 $ ( 13,469 )

Adjustment to reconcile net income (loss) to net cash used in operating activities:

Net loss $ ( 31,982 ) $ ( 20,919 )

Adjustment to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 970 568

5 unchanged sentences

Accrued interest income, related party ( 1,627 ) ( 32 )

Provision for doubtful accounts 100 —

Unrealized gain on note ( 638 ) —

Provision for inventory obsolescense 300 —

(Recovery) provision for valuation allowance for held for sale loan ( 7,345 ) 1,514

19 unchanged sentences

Purchases of other short term investments ( 2,000 ) —

Sales of other short term investments 2,000 —

Purchases of treasury bills ( 63,362 ) —

1 unchanged sentence

Purchase of Systat licensing agreement ( 900 ) ( 2,200 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Issuance of note receivable ( 268 ) —

Acquisition of Ten Degrees — ( 1,500 )

Acquisition of Game Your Game 184 —

2 unchanged sentences

Net Cash Used in Investing Activities $ ( 52,708 ) ( 4,934 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Cash From Financing Activities

Net repayments to bank facility — ( 150 )

Net proceeds from issuance of preferred stock and warrants 50,584 —

Net proceeds from issuance of common stock and warrants 77,853 44,041

Taxes paid related to net share settlement of restricted stock units ( 1,687 ) —

Net proceeds from notes payable — 1

Net repayments of notes payable — ( 74 )

Loans to related party ( 117 ) ( 1,806 )

6 unchanged sentences

Effect of Foreign Exchange Rate on Changes on Cash 90 ( 42 )

Net Increase in Cash, Cash Equivalents and Restricted Cash 6,916 34,681

Cash, Cash Equivalents and Restricted Cash - Beginning of period 17,996 4,849

Cash, Cash Equivalents and Restricted Cash - End of period (Note 3) $ 24,912 $ 39,530

Net Increase in Cash and Cash Equivalents 48,789 26,527

Cash and Cash Equivalents - Beginning of period 17,996 4,849

Cash and Cash Equivalents - End of period $ 66,785 $ 31,376

Supplemental Disclosure of cash flow information:

8 unchanged sentences

Investment in equity securities $ 58,905 $ —

Common shares issued for Ten Degrees acquisition $ — $ 600

Common shares issued for CXApp acquisition $ 10,000 $ —

1 unchanged sentence

Common shares issued for Visualix asset acquisition $ 429 $ —

Preferred shares converted into common shares $ 9,500 $ —

The accompanying notes are an integral part of these financial statements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 1 - Organization and Nature of Business

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(“Jibestream”), which was amalgamated into Inpixon Canada on January 1, 2020, Inpixon Limited (“Inpixon UK”), Inpixon GmbH ("Inpixon Germany"), as well as Inpixon Germany's wholly-owned subsidiary, Nanotron GmbH ("Nanotron"), Design Reactor, Inc.

("CXApp"), and its majority-owned subsidiaries Inpixon India Limited (“Inpixon India”) and Game Your Game, Inc.

("CXApp"), and Inpixon's majority-owned subsidiaries Inpixon India Limited (“Inpixon India”) and Game Your Game, Inc.

("Game Your Game"), as well as Game Your Game's wholly-owned subsidiary "Active Mind Technology Ltd.

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The historical segment information has been recast to conform to the current segment structure.

As of June 30, 2021, the Company has a working capital surplus of approximately $ 54.2 million, cash of approximately $ 24.9 million and short term investments of $ 45.3 million.

For the three months ended June 30, 2021, the Company earned net income of approximately $ 14.5 million.

For the six months ended June 30, 2021, the Company earned net income of approximately $ 2.0 million.

The net income for each of these periods include a gain on the settlement of the Sysorex debt with the issuance of the Sysorex securities to the Company on April 14, 2021 offset by the unrealized loss on the related investment in equity securities as of June 30, 2021.

As of September 30, 2021, the Company has a working capital surplus of approximately $ 96.8 million, cash of approximately $ 66.8 million and short term investments of $ 43.2 million.

For the three months ended September 30, 2021, the Company had a net loss of approximately $ 33.9 million.

For the nine months ended September 30, 2021, the Company had a net loss of approximately $ 32.0 million.

The net income/loss for each of these periods include a gain on the settlement of the Sysorex debt with the issuance of the Sysorex securities to the Company on April 14, 2021 offset by the unrealized loss on the related investment in equity securities as of September 30, 2021.

See further details in Note 14, 22 and 24.

1 unchanged sentence

The Company raised net proceeds of $ 77.9 million after deduction of sales commissions and other offering expenses.

See further breakdown in Note 16 - Capital Raises.

On September 13, 2021, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which the Company sold in a registered direct offering (i) 58,750 shares of Series 7 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 47,000,000 shares of common stock.

Each share of Series 7 Convertible Preferred Stock and the related Warrants were sold at a subscription amount of $ 920 , representing an original issue discount of 8 % of the stated value of each share of Series 7 Convertible Preferred Stock

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 1 - Organization and Nature of Business (continued)

Risks and Uncertainties

The Company cannot assure you that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable.

In order to continue our operations, we have supplemented the revenues we earned with proceeds from the sale of our equity and debt securities and proceeds from loans and bank credit lines.

Our business has been impacted by the COVID-19 pandemic and may continue to be impacted.

While we have been able to continue operations remotely, we have and continue to experience supply chain constraints and delays in the receipt of certain components of our products impacting delivery times for our products.

We have also seen some impact in the demand of certain products and delays in certain projects and customer orders either because they require onsite services which could not be performed while shelter in place orders were in effect and in some places continue to be, compliance with new rules and regulations resulting from the pandemic or because of the uncertainty of the customer’s financial position and ability to invest in our technology.

Despite these challenges, we were able to realize growth in total revenue for the first and second quarters of 2021 and for the six months ended June 30, 2021 when compared to the same periods of 2020, as a result of the addition of new product lines including a full period of sales with the addition of the SAVES product lines following the second quarter of 2020, the addition of the RTLS product line in the fourth quarter of 2020, and the addition of the CXApp and Game Your Game product lines acquired during the second quarter of 2021.

The total impact that COVID-19 will have on general economic conditions is continuously evolving and the impact it may continue to have on our results of operations continues to remain uncertain and there are no assurances that we will be able to continue to experience the same growth or not be materially adversely effected.

A further discussion of the impact of the COVID-19 pandemic on our business is set forth below in Part II, Item 1A.

Risk Factors.

There are no assurances that we will be able to continue to experience the same growth or not be materially adversely affected.

for an aggregate subscription amount of $ 54.1 million.

The net proceeds to the Company from this offering was $ 50.6 million after placement agent commissions and other offering costs.

See further breakdown in Note 17 - Capital Raises.

Note 2 - Basis of Presentation

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These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the years ended December 31, 2020 and 2019 included in the annual report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 31, 2021.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies

11 unchanged sentences

• impairment of long-lived assets and goodwill.

Restricted Cash

In connection with certain transactions, the Company may be required to deposit assets, including cash or investment shares, in escrow accounts.

The assets held in escrow are subject to various contingencies that may exist with respect to such transactions.

Upon resolution of those contingencies or the expiration of the escrow period, some or all the escrow amounts may be used and the balance released to the Company.

As of June 30, 2021, there was no balance of restricted cash as all amounts related to the Shoom acquisition were released from escrow and paid to the Shoom pre-acquisition stockholders prior to that date.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the balance sheets that sum to the total of the same amounts show in the statement of cash flows.

As of June 30,

(in thousands) 2021 2020

Cash and cash equivalents $ 24,912 $ 39,458

Restricted cash — 72

Total cash, cash equivalents, and restricted cash $ 24,912 $ 39,530

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

4 unchanged sentences

Available for sale securities are carried at fair value, with an unrealized gains and losses included in the Other income (expense) line of the Condensed Consolidated Statements of Operations.

The Company recorded unrealized losses of approximately $ 64 thousand for the three months ended June 30, 2021 and an unrealized loss of approximately $ 62 thousand for the six months ended June 30, 2021.

No unrealized gain or loss was recorded on available for sale securities for the three and six month ended June 30, 2020.

The Company recorded unrealized losses of approximately $ 81 thousand for the three months ended September 30, 2021 and an unrealized loss of approximately $ 143 thousand for the nine months ended September 30, 2021.

No unrealized gain or loss was recorded on available for sale securities for the three and nine months ended September 30, 2020.

Mezzanine equity

When ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity).

The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

Investment in equity securities- fair value

3 unchanged sentences

Any unrealized appreciation or depreciation on investment securities is reported in the Condensed Consolidated Statement of Operations within Unrealized Loss on Equity Securities.

The Unrealized loss on equity securities for the three and six months ended June 30, 2021 was $ 29.0 million.

There were no unrealized gains or losses on equity securities during the three and six months ended June 30, 2020.

The Unrealized loss on equity securities for the three and nine months ended September 30, 2021 was $ 22.3 million and $ 51.3 million, respectively.

There were no unrealized gains or losses on equity securities during the three and nine months ended September 30, 2020.

Revenue Recognition

11 unchanged sentences

The Company has elected the practical expedient to expense the costs of obtaining a contract when they are incurred because the amortization period of the asset that otherwise would have been recognized is less than a year.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

Software As A Service Revenue Recognition

2 unchanged sentences

The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

Professional Services Revenue Recognition

13 unchanged sentences

Anticipated losses are recognized as soon as they become known.

For the three and six months ended June 30, 2021 and 2020, the Company did not incur any such losses.

For the three and nine months ended September 30, 2021 and 2020, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

12 unchanged sentences

Renewals or extensions of licenses are evaluated as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license.

Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract.

The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period.

Therefore, the Company recognizes revenue resulting from renewal of licensed software at a point in time, specifically, at the beginning of the license renewal period.

The Company recognizes revenue related to Maintenance Services evenly over the service period using a time-based measure because the Company is providing continuous service and the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the services are performed.

Renewal contracts are not

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract.

The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period.

Therefore, the Company recognizes revenue resulting from renewal of licensed software at a point in time, specifically, at the beginning of the license renewal period.

Contract Balances

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Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

The Company had deferred revenue of approximately $ 2,780,000 and $ 1,922,000 as of June 30, 2021 and December 31, 2020, respectively, related to cash received in advance for product maintenance services and professional services provided by the Company’s technical staff.

The Company had deferred revenue of approximately $ 4.5 million and $ 1.9 million as of September 30, 2021 and December 31, 2020, respectively, related to cash received in advance for product maintenance services and professional services provided by the Company’s technical staff.

The Company expects to satisfy its remaining performance obligations for these maintenance services and professional services, and recognize the deferred revenue and related contract costs over the next twelve months.

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Forfeitures of unvested stock options are recorded when they occur.

The Company incurred stock-based compensation charges of approximately $ 2.1 million and $ 0.3 million for the for the three months ended June 30, 2021 and 2020, respectively, and approximately $ 7.1 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively, which are included in general and administrative expenses.

The Company incurred stock-based compensation charges of approximately $ 1.7 million and $ 0.3 million for the three months ended September 30, 2021 and 2020, respectively, and approximately $ 8.8 million and $ 0.9 million for the nine months ended September 30, 2021 and 2020, respectively, which are included in general and administrative expenses.

Stock-based compensation charges are related to employee compensation and related benefits.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share ("ASC 260").

ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing net income (loss) available to common shareholders (i.e., the numerator) by the weighted average number of shares outstanding (i.e., the denominator) during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 2021 2020

Net Income (loss) Attributable to Stockholders of Inpixon $ 14,759 $ ( 7,323 ) $ 2,202 $ ( 13,478 )

Weighted -average number of shares outstanding 110,040,532 22,823,976 94,577,520 13,931,245

Incremental shares from assumed conversion of options — — 382 —

Incremental shares from assumed conversion of warrants — — 12,871 —

Incremental shares from assumed conversion of convertible preferred stock 846 — 846 —

Diluted Weighted-average number of shares outstanding 110,041,378 22,823,976 94,591,619 13,931,245

Earnings (loss) per Share- Basic $ 0.13 $ ( 0.32 ) $ 0.02 $ ( 0.97 )

Earnings (loss) per Share- Dilutive $ 0.13 $ ( 0.32 ) $ 0.02 $ ( 0.97 )

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net income (loss) per common share for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 2021 2020

The Company computes basic and diluted earnings per share by dividing net loss by the weighted average number of common shares outstanding during the period.

Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive.

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the nine months ended September 30, 2021 and 2020:

For the Nine Months Ended September 30,

Options 12,074,352 5,544,594

1 unchanged sentence

Convertible preferred stock 39,400,846 846

Earnout reserve 11,061,939 —

Total 158,935,475 5,638,692

5 unchanged sentences

Short-term debt approximates market value based on similar terms available to the Company in the market place.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

Recently Issued and Adopted Accounting Standards

4 unchanged sentences

The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.

In August 2020, the FASB issued ASU 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)" ("ASU 2020-06"), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

ASU 2020-06 removes from U.S.

GAAP the separation models for (1) convertible debt with a cash conversion feature ("CCF") and (2) convertible instruments with a beneficial conversion feature ("BCF").

As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt.

Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium.

ASU 2020-06 is effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The Company will adopt the provisions of ASU 2020-06 effective January 1, 2022 and is currently assessing potential impacts.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 3 - Summary of Significant Accounting Policies (continued)

In October 2020, the FASB issued ASU 2020-10, "Codification Improvements" (ASU 2020-10"), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC's regulations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 4 - Disaggregation of Revenue (continued)

Revenues consisted of the following (in thousands):

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

Total Revenue $ 4,450 $ 2,554 $ 10,857 $ 5,434

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 5 - Systat Licensing Agreement

33 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 5 - Systat Licensing Agreement (continued)

5 unchanged sentences

On February 22, 2021, the Company entered into a Second Amendment to the License Agreement to allow for the exercise of the purchase option in whole or in part anytime during the Purchase Option Period and to provide for cash consideration in lieu of an assignment of the Note at its option.

In addition, the Company exercised its option to purchase a portion of the underlying assets, including certain software, trademarks, solutions, domain names and websites from Systat in exchange for consideration in an amount equal to $ 900,000 .

The Second Amendment was accounted for as a business combination in accordance with ASC 805 Business Combinations.

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

A final valuation of the assets and purchase price allocation has not been completed as of the end of this reporting period as the third party valuation as not been finalized.

Consequently, the purchase price was preliminarily allocated based on the Company's best estimates at the time of this filing.

These amounts are subject of revision upon completion of the valuation.

The preliminary purchase price is allocated as follows (in thousands):

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

13 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 6 - Ten Degrees Acquisition (continued)

The total recorded purchase price for the transaction was $ 2.1 million, which consisted of the cash paid of $ 1.5 million and $ 600,000 representing the value of the stock issued upon closing.

The preliminary purchase price is allocated as follows (in thousands):

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

4 unchanged sentences

The value of the intangibles were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The developed technology and non-compete agreements acquired are included in the consolidated balance of intangible assets as of June 30, 2021.

The developed technology and non-compete agreements acquired are included in the consolidated balance of intangible assets as of September 30, 2021.

There was no goodwill acquired or recognized as a result of the acquisition of Ten Degrees.

10 unchanged sentences

Inpixon Germany paid the purchase price from funds received in connection with a capital contribution from Inpixon, and a portion of the purchase price was used by the Seller to satisfy outstanding loans payable to obtain the release of certain existing security interests on Nanotron’s assets.

On February 24, 2021, the Company entered into an amendment to the Nanotron share sale and purchase agreement pursuant to which we agreed to the early release of the Holdback Funds, in exchange for a reduction in the total amount payable to the Seller by $ 225,000 .

On February 24, 2021, the Company entered into an amendment to the Purchase Agreement pursuant to which we agreed to the early release of the Holdback Funds, in exchange for a reduction in the total amount payable to the Seller by $ 225,000 .

In addition, the amount payable was further reduced by $ 59,157 in connection with a post closing working capital adjustment and the satisfaction of a claim related to a customer dispute.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 7 – Nanotron Acquisition (continued)

The preliminary purchase price is allocated as follows (in thousands):

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 8 – Game Your Game Acquisition

13 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 8 – Game Your Game Acquisition (continued)

23 unchanged sentences

The calculated goodwill is not tax deductible for tax purposes.

Total acquisition-related costs for the Acquisition incurred during the period ended June 30, 2021 ended was $ 304,211 and is included in acquisition-related costs in the Purchaser’s Statements of Operations.

Total acquisition-related costs for the Acquisition incurred during the period ended September 30, 2021 ended was $ 304,211 and is included in acquisition-related costs in the Purchaser’s Statements of Operations.

The below table details the acquisition-related costs for the Acquisition (in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 9 – Visualix Acquisition

26 unchanged sentences

Total Purchase Price $ 32,500

In relation to the cash payment, Inpixon retained $ 4,875,000 of Holdback Funds from the Purchase Price to secure the Seller's obligations under the stock purchase agreement, with any unused portion of the Holdback Funds to be released to the Seller on the date that is 18 months after the Closing Date.

In addition, to the Holdback Funds, the Company is to pay various costs to

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 10 – CXApp Acquisition (continued)

In addition, to the Holdback Funds, the Company is to pay various costs to third parties on the Seller's behalf.

third parties on the Seller's behalf.

These costs consisted of Seller transaction expenses, option payouts, bonus payouts, and miscellaneous accrued expenses.

11 unchanged sentences

Total noncurrent 5,425

Less Payments made as of June 30, 2021 ( 136 )

Less payments made during the three months ended June 30, 2021 ( 136 )

Less payments made during the three months ended September 30, 2021 ( 104 )

Total acquisition liability $ 5,761

In connection with the Acquisition, the Company is to pay an additional amount up to $ 12,500,000 in contingent earnout payments subject to CXApp meeting certain revenue targets on the one year anniversary of the Acquisition date.

In connection with the Acquisition, the Company is to pay an additional amount up to $ 12,500,000 to certain select sellers of CXApp shares (payable in shares of the Company’s common stock based on a per share price of $ 1.13 , subject to stockholder approval) in contingent earnout payments subject to CXApp meeting certain revenue targets on the one year anniversary of the Acquisition date.

(the "Earnout Payment").

The Earnout Payment is payable to select sellers of CXApp.

The Earnout Payment is subject to and conditioned upon each individual select seller's continued active employment or service with the Company at the time of the earnout payment date.

The Earnout Payment is treated as post-combination compensation expense.

The Company recorded $ 2,058,536 of this expense for the three and six months ended June 30, 2021 which is included in the General and Administrative costs of the condensed consolidated statements of operations.

The Company recorded $ 0.8 million and $ 2.9 million of this expense for the three and nine months ended September 30, 2021 which is included in the General and Administrative costs of the condensed consolidated statements of operations.

The Acquisition is being accounted for as a business combination in accordance with ASC 805 Business Combinations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 10 – CXApp Acquisition (continued)

22 unchanged sentences

The calculated goodwill is not tax deductible for tax purposes.

Total acquisition-related costs for the Acquisition incurred during the period ended June 30, 2021 ended was $ 474,928 and is included in acquisition-related costs in the Company’s Statements of Operations.

Total acquisition-related costs for the Acquisition incurred during the period ended September 30, 2021 was $ 474,928 and is included in acquisition-related costs in the Company’s Statements of Operations.

The below table details the acquisition-related costs for the Acquisition (in thousands):

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 11 - Proforma Financial Information

Nanotron Proforma and CXApp Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company and Nanotron for the three and six months ended June 30, 2020, as if the acquisition had occurred as of the beginning of the first period presented instead of on October 6, 2020.

The following unaudited proforma financial information presents the consolidated results of operations of the Company and Nanotron for the three and nine months ended September 30, 2020, as if the acquisition had occurred as of the beginning of the first period presented instead of on October 6, 2020.

The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

The following unaudited proforma financial information presents the consolidated results of operations of the Company and the CXApp for the three and six months ended June 30, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 30, 2021.

The following unaudited proforma financial information presents the consolidated results of operations of the Company and the CXApp for the three and nine months ended September 30, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 30, 2021.

The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

2 unchanged sentences

Nanotron is not included in 2021 proforma information as the acquisition occurred on October 6, 2020:

For the Three Months Ended June 30, 2020 For the Six Months Ended June 30, 2020

For the Three Months Ended September 30, 2020 For the Nines Months Ended September 30, 2020

Revenues $ 4,426 $ 11,184

3 unchanged sentences

Basic and Diluted 50,394,519 32,052,562

For the Three Months Ended June 30, 2021 For the Six Months Ended June 30, 2021

For the Nines Months Ended For the Nine Months Ended September 30, 2021

Revenues $ 12,707

Net income (loss) attributable to common stockholders $ ( 32,049 )

Net income (loss) per basic common share $ 0.13 $ 0.02

Net income (loss) per diluted common share $ 0.13 $ 0.02

Net income (loss) per basic and diluted common share $ ( 0.30 )

Weighted average common shares outstanding:

Basic 112,957,969 100,444,630

Diluted 112,958,815 100,458,729

Basic and Diluted 106,278,729

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 12- Goodwill and Intangibles

The following table summarizes the changes in the carrying amount of Goodwill for the six months ended June 30, 2021 (in thousands):

Balance as of December 31, 2020 Goodwill additions through acquisitions Valuation Measurement Period Adjustments Exchange rate fluctuations as of June 30, 2021 Balance as of June 30, 2021

The following table summarizes the changes in the carrying amount of Goodwill for the nine months ended September 30, 2021 (in thousands):

Balance as of December 31, 2020 Goodwill additions through acquisitions Valuation Measurement Period Adjustments Exchange rate fluctuations as of September 30, 2021 Balance as of September 30, 2021

Systat $ 520 $ 175 $ — $ — $ 695

6 unchanged sentences

Total $ 6,588 $ 17,893 $ ( 255 ) ( 209 ) $ 24,017

Intangibles assets at June 30, 2021 and December 31, 2021 consisted of the following (in thousands):

Intangibles assets at September 30, 2021 and December 31, 2020 consisted of the following (in thousands):

Gross Carrying Amount Accumulated Amortization Amount Remaining Weighted Average Useful Life

June 30, December 31, June 30, December 31,

September 30, December 31, September 30, December 31,

2021 2020 2021 2020

8 unchanged sentences

Amortization Expense:

Amortization expense for the three months ended June 30, 2021 and 2020 was approximately $ 1.4 million and $ 0.5 million, respectively, and approximately $ 2.0 million and $ 1.5 million for the six months ended June 30, 2021 and 2020, respectively.

Amortization expense for the three months ended September 30, 2021 and 2020 was approximately $ 1.7 million and $ 0.4 million, respectively, and approximately $ 3.6 million and $ 1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 12- Goodwill and Intangibles (continued)

6 unchanged sentences

Note 13 - Inventory

Inventory as of June 30, 2021 and December 31, 2020 consisted of the following (in thousands):

As of June 30, 2021 As of December 31, 2020

Inventory as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):

As of September 30, 2021 As of December 31, 2020

Raw materials $ 531 $ 210

7 unchanged sentences

The composition of the Company’s investment securities—fair value was as follows (in thousands):

As of June 30, 2021

As of September 30, 2021

Cost Fair Value

3 unchanged sentences

Total investments in equity securities- fair value $ 58,905 $ 7,655

For the three and six month period ended June 30, 2021, the Company recognized a net unrealized loss on equity securities of $ 29.0 million in the other income/expense section of the condensed consolidated statements of operations.

There were no realized gains and losses on equity securities for the three and six month periods ended June 30, 2020.

For the three and nine months ended September 30, 2021, the Company recognized a net unrealized loss on equity securities of $ 22.3 million and $ 51.3 million in the other income/expense section of the condensed consolidated statements of operations.

There were no realized gains and losses on equity securities for the three and nine months ended September 30, 2020.

Note 15 - Accrued Liabilities

Accrued liabilities as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

As of September 30, 2021 As of December 31, 2020

Accrued compensation and benefits $ 4,278 $ 1,266

Accrued Interest Expense 904 536

Accrued Bonus and Commissions 699 426

Accrued Other 679 497

Accrued sales and other indirect taxes payable 63 14

$ 6,623 $ 2,739

Note 16 - Debt

Debt as of June 30, 2021 and December 31, 2020 consisted of the following (in thousands):

Short-Term Debt Maturity Principal June 30, 2021 December 31, 2020

Debt as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):

Short-Term Debt Maturity September 30, 2021 December 31, 2020

March 2020 10 % Note

19 unchanged sentences

On March 17, 2021, the Company extended the maturity date of the March 2020 10 % Note from March 18, 2021 to March 18, 2022.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

On February 11, 2021, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

1 unchanged sentence

and (ii) exchange the partitioned note for the delivery of 893,921 shares of the Company’s Common Stock, at an effective price per share equal to $ 1.678 .

The Company analyzed the exchange of the principal under the March 2020 10 % Note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded approximately a $ 30,000 loss on the exchange of debt for equity as a separate item in the other income/expense section of the condensed consolidated statements of operations for the six months ended June 30, 2021.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

The Company entered into an exchange agreement with Iliad which afforded a free trading date of July 1, 2021, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 1.0 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 1.0 million;

and (ii) exchange the partitioned note for the delivery of 877,192 shares of the Company’s Common Stock, at an effective price per share equal to $ 1.14 .

Note 17 - Capital Raises

13 unchanged sentences

In addition, the investor exercised its purchase rights for 3,000,000 shares of common stock pursuant to the the January 2021 Purchase Warrant on February 11, 2021.

On February 12, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which it sold in a registered direct offering, 7,000,000 shares of its common stock, and warrants to purchase up to 15,000,000 shares of common stock at an exercise price of $ 2.00 per share (the “First February 2021 Purchase Warrants”) for a combined purchase price of $ 2.00 per share and pre-funded warrants to purchase up to 8,000,000 shares of common stock ("First February 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 1.999 per share for net proceeds of approximately $ 27.8 million.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

purchase price of $ 2.00 per share and pre-funded warrants to purchase up to 8,000,000 shares of common stock ("First February 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 1.999 per share for net proceeds of approximately $ 27.8 million.

Each First February 2021 Purchase Warrant and First February 2021 Pre-funded Warrant is exercisable for one share of common stock, is immediately exercisable and will expire 5 years from the issuance date.

3 unchanged sentences

The Second February 2021 Pre-funded warrants were exercised in full as of March 1, 2021.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

In connection with this offering, the Company filed a Certificate of Designation for the Series 7 Convertible Preferred Stock with the Nevada Secretary of State.

The Company has authorized the issuance of 5,000,000 shares of preferred stock, of which 49,250 shares were issued and outstanding as of September 30, 2021.

Each share of Series 7 Convertible Preferred Stock has a par value of $ 0.001 per share and stated value of $ 1,000 per share.

The shares of Series 7 Convertible Preferred Stock are convertible into shares of the Company’s common stock, at a conversion price of $ 1.25 per share.

Each share of Series 7 Convertible Preferred Stock is entitled to receive cumulative dividends, payable in the same form as dividends paid on shares of the Company’s common stock.

At any time beginning on the 6-month anniversary of the date the shares of Series 7 Convertible Preferred Stock are issued and ending ninety (90) days thereafter, the holders of the Series 7 Convertible Preferred Stock have the right to redeem all or part of the shares held by such holder in cash for the redemption price equal to the stated value of such share, plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due.

Upon redemption, the holder of the Series 7 Convertible Preferred Stock will forfeit 75 % of the warrants issued in connection therewith.

The holders of the Series 7 Convertible Preferred Stock shall vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company.The Series 7 Convertible Preferred Stock and related warrants subject to forfeiture are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash and the warrants are an embedded feature for the Series 7 Convertible Preferred Stock.

The remaining warrants that are not subject to forfeiture are recorded within Stockholders' Equity as the remaining warrants are classified as freestanding instruments The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, were approximately $ 50.6 million.

The Company classified these warrants as equity resulting in a discount of $ 4,700,000 .

See Note 1 9 for Preferred Stock and Note 21 for Warrant details.

Note 18 - Common Stock

3 unchanged sentences

During the three months ended March 31, 2021, the Company issued 4,977 shares of common stock issued for cashless stock options exercised.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

During the three months ended March 31, 2021, the Company issued 31,505,088 shares of common stock in connection with the exchange of Pre-Funded Warrants (as defined in Note 21 ) offered under the Securities Purchase Agreement, resulting in net proceeds of $ 3,747,000 .

8 unchanged sentences

During the three months ended June 30, 2021, the Company issued 414 shares of common stock for cashless stock options exercised.

During the three months ended September 30, 2021, the Company issued 877,192 shares of common stock under an exchange agreement to settle outstanding balances totaling approximately $ 1.0 million under a partitioned note.

(See Note 16 ).

During the three months ended September 30, 2021, 9,500 shares of Series 7 Convertible Preferred Stock were converted into 7,600,000 shares of the Company's common stock (See Note 1 9 ).

During the three months ended September 30, 2021, 337,500 shares of common stock issued in connection with unvested restricted stock grants were forfeited in connection with the departure of an employee.

Note 1 9 - Preferred Stock

On September 13, 2021, the Company filed the Certificate of Designation with the Secretary of State of the State of Nevada, amending the Company’s Articles of Incorporation, as amended, by establishing the Series 7 Convertible Preferred Stock, consisting of 58,750 authorized shares, $ 0.001 par value per share and $ 1,000 stated value per share.

The holders of the Series 7 Convertible Preferred Stock have full voting rights and powers, except as otherwise required by the Articles of Incorporation, as amended, or applicable law.

The holders of Series 7 Convertible Preferred Stock shall vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company.

Each holder of the Series 7 Convertible Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which the Series 7 Convertible Preferred Stock then held by such holder could be converted on the record date for the vote which is being taken, provided, however, that the voting power of a holder together with its Attribution Parties (as defined in the Certificate of Designation), may not exceed 19.99 % (or such greater percentage allowed by the Nasdaq Listing Rules without any shareholder approval requirements).

The Series 7 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 7 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 1.25 .

On September 13, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell in a registered direct offering (i) up to 58,750 shares of Series 7 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 47,000,000 shares of common stock (the “Warrants”).

Each share of Series 7 Convertible Preferred Stock and the related Warrants were sold at a subscription amount of $ 920 , representing an original issue discount of 8 % of the stated value for an aggregate subscription amount of $ 54,050,000 .

The shares of Series 7 Convertible Preferred Stocks are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash.

The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, was approximately $ 50.6 million.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

During the three months ended September 30, 2021, 9,500 shares of Series 7 Convertible Preferred Stock were converted into 7,600,000 shares of the Company's common stock.

As of September 30, 2021 there was 49,250 shares of Series 7 Convertible Preferred stock outstanding.

Note 20 - Stock Award Plans and Stock-Based Compensation

In September 2011, the Company adopted the 2011 Employee Stock Incentive Plan (the “2011 Plan”) which provides for the granting of incentive and non-statutory common stock options and stock based incentive awards to employees, non-employee directors, consultants and independent contractors.

The plan was amended and restated in May 2014.

Unless terminated sooner by the Board of Directors, this plan will terminate on August 31, 2021.

In February 2018, the Company adopted the 2018 Employee Stock Incentive Plan (the “2018 Plan” and together with the 2011 Plan, the “Option Plans”), which will be utilized with the 2011 Plan for employees, corporate officers, directors, consultants and other key persons employed.

The 2018 Plan will provide for the granting of incentive stock options, NQSOs, stock grants and other stock-based awards, including Restricted Stock and Restricted Stock Units (as defined in the 2018 Plan).

The plan was terminated by its terms on August 31, 2021 and and no new awards will be issued under the 2011 Plan.

In February 2018, the Company adopted the 2018 Employee Stock Incentive Plan (the “2018 Plan” and together with the 2011 Plan, the “Option Plans”), which is utilized for employees, corporate officers, directors, consultants and other key persons employed.

The 2018 Plan provides for the granting of incentive stock options, NQSOs, stock grants and other stock-based awards, including Restricted Stock and Restricted Stock Units (as defined in the 2018 Plan).

Incentive stock options granted under the Option Plans are granted at exercise prices not less than 100 % of the estimated fair market value of the underlying common stock at date of grant.

1 unchanged sentence

Options granted under the Option Plans vest over periods ranging from immediately to four years and are exercisable over periods not exceeding ten years .

The aggregate number of shares that may be awarded under the 2011 Plan as of June 30, 2021 is 5,317,853 and awarded under the 2018 Plan as of June 30, 2021 is 17,230,073 .

As of June 30, 2021, 11,520,865 of stock options and restricted stock were granted to employees, directors and consultants of the Company (including 1 share outside of our plan) and 11,027,062 options were available for future grant under the Option Plans.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Note 18 - Stock Award Plans and Stock-Based Compensation (continued)

The aggregate number of shares that may be awarded under the 2018 Plan as of September 30, 2021 is 18,730,073 .

As of September 30, 2021, 16,409,818 of stock options and restricted stock were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 81 under our 2011 Plan) and 2,320,337 options were available for future grant under the 2018 Plan.

Employee Stock Options

During the six months ended June 30, 2021, the Company granted options under the 2018 Plan for the purchase of 1,605,000 shares of common stock to employees and consultants of the Company.

These options are 100 % vested or vest pro-rata over 12 , 24 or 36 months, have a life of ten months and an exercise price of $ 1.83 per share.

During the three months ended March 31, 2021, the Company granted options under the 2018 Plan for the purchase of 1,605,000 shares of common stock to employees and consultants of the Company.

These options are 100% vested or vest pro-rata over 12 , 24 or 36 months, have a life of ten years and an exercise price of $ 1.83 per share.

The Company valued the stock options using the Black-Scholes option valuation model and the fair value of the awards was determined to be approximately $ 1.0 million.

2 unchanged sentences

On June 10, 2021, the Company issued 414 shares of common stock in connection with the cashless exercise of 6,111 employee stock options.

During the six months ended June 30, 2021 and 2020, the Company recorded a charge of $ 0.8 million and $ 0.7 million, respectively, for the amortization of employee stock options.

As of June 30, 2021, the intrinsic value of of the plan and non-plan stock options was approximately $ 0.4 million and the fair value of non-vested stock options totaled approximately $ 1.7 million, which will be amortized to expense over the weighted average remaining term of 0.85 years.

During the three months ended September 30, 2021, the Company granted options under the 2018 Plan for the purchase of 5,580,000 shares of common stock to employees and consultants of the Company.

These options are 100% vested or vest pro-rata over 36 months, have a life of ten years and an exercise price of $ 1.03 per share.

The Company valued the stock options using the Black-Scholes option valuation model and the fair value of the awards was determined to be approximately $ 1.9 million.

The fair value of the common stock as of the grant date was determined to be $ 1.03 per share.

During the three months ended September 30, 2021 and 2020, the Company recorded a charge for the amortization of stock options of approximately $ 0.6 million and $ 0.3 million, respectively, and $ 1.4 million and $ 0.9 million for the nine months ended September 30, 2021 and 2020, respectively, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of September 30, 2021, the fair value of non-vested stock options totaled approximately $ 4.9 million, which will be amortized to expense over the weighted average remaining term of 0.87 years.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 20 - Stock Award Plans and Stock-Based Compensation (continued)

See below for a summary of the stock options granted under the 2011 and 2018 plans:

5 unchanged sentences

Forfeited ( 459,771 ) ( 149,522 )

Ending balance as of June 30, 2021 84 6,847,792 1 6,847,877

There were no stock options granted from April 1, 2021 to June 30, 2021.

Ending balance as of September 30, 2021 81 12,074,248 1 6,847,877

The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model.

Key weighted-average assumptions used to apply this pricing model during six months ended June 30, 2021 were as follows:

For the Six Months Ended June 30, 2021

Key weighted-average assumptions used to apply this pricing model during nine months ended September 30, 2021 were as follows:

For the Nine Months Ended September 30, 2021

Risk-free interest rate 0.59 % - 0.75 %

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 20 - Stock Award Plans and Stock-Based Compensation (continued)

2 unchanged sentences

These stock awards vest either 25 % on the Grant Date and 25 % on each one year anniversary of Grant Date or 50 % on Grant Date and 50 % on the one year anniversary.

921,838 of the restricted stock awards were forfeited to the Company to pay the employee portion of the required payroll taxes.

In accordance with the terms of the restricted stock award agreements 921,838 shares of common stock underlying the awards were withheld by the Company in satisfaction of the employee portion of the payroll taxes required to paid in connection with the grant of such awards.

On April 23, 2021, the Company granted 344,826 restricted stock awards to employees of the Company.

These stock awards either vest 50 % at the 6 months anniversary and 50 % on the one year anniversary or over 2 years pro rata every 6 months.

During the six months ended June 30, 2021 the Company recorded a charge of $ 6.3 million for the amortization of vested restricted stock awards.

On August 21, 2021, 337,500 of unvested restricted stock award grants were forfeited in connection with the departure of an employee.

During the three and nine months ended September 30, 2021 the Company recorded a charge of $ 1.1 million and $ 7.4 million, respectively,for the amortization of vested restricted stock awards.

The Company determined the fair value of these grants based on the closing price of the Company’s common stock on the respective grant dates.

8 unchanged sentences

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

During the six months ended June 30, 2021, the Company issued 13,554,838 shares of common stock in connection with the exercise of 13,554,838 Pre-Funded Warrants at $ 0.001 per share in connection with the January 24, 2021 Securities Purchase Agreement.

During the nine months ended September 30, 2021, the Company issued 13,554,838 shares of common stock in connection with the exercise of 13,554,838 Pre-Funded Warrants at $ 0.001 per share in connection with the January 24, 2021 Securities Purchase Agreement.

On February 12, 2021, Inpixon entered into a Securities Purchase Agreement with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 7,000,000 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 15,000,000 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 2.00 per share.

5 unchanged sentences

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

During the six months ended ended June 30, 2021, the Company issued 8,000,000 shares of common stock in connection with the exercise of 8,000,000 Pre-Funded Warrants at $ 0.001 per share in connection with the February 12, 2021 Securities Purchase Agreement.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 21 - Warrants (continued)

On February 16, 2021, Inpixon entered into a Securities Purchase Agreement with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 3,000,000 shares of the Company’s common stock, par value 0.001 per share, and warrants to purchase up to 9,950,250 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 2.01 per share.

During the nine months ended ended September 30, 2021, the Company issued 8,000,000 shares of common stock in connection with the exercise of 8,000,000 Pre-Funded Warrants at an exercise price of $ 0.001 per share in connection with the February 12, 2021 Securities Purchase Agreement.On February 16, 2021, Inpixon entered into a Securities Purchase Agreement with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 3,000,000 shares of the Company’s common stock, par value 0.001 per share, and warrants to purchase up to 9,950,250 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 2.01 per share.

The Purchase Warrants have an exercise price of $ 2.01 per share.

4 unchanged sentences

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

During the six months ended June 30, 2021, the Company issued 6,950,250 shares of common stock in connection with the exercise of 6,950,250 pre-funded warrants at $ 0.001 per share in connection with the February 16, 2021 Securities Purchase Agreement.

During the nine months ended September 30, 2021, the Company issued 6,950,250 shares of common stock in connection with the exercise of 6,950,250 pre-funded warrants at $ 0.001 per share in connection with the February 16, 2021 Securities Purchase Agreement.

On September 13, 2021, the Company entered into a Securities Purchase Agreement (the "Offering") with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 58,750 shares of the Company’s Series 7 Convertible Preferred Shares, par value $ 0.001 per share, which are convertible into 47,000,000 shares of the Company’s common stock and warrants to purchase up to 47,000,000 shares of common stock.

Each share and related warrants were sold together at a subscription amount of $ 920 , representing an original issue discount of 8 % of the Stated Value for an aggregate subscription amount of $ 54.1 million.

Note 22- Income Taxes

There is an income tax expense of approximately $ 2.2 million for the three months ended June 30, 2021.

There is an income tax benefit of approximately $ 0.9 million and an income tax expense of approximately $ 1.4 million for the three and nine months ended September 30, 2021.

The income tax expense relates primarily to Inpixon and the gain on related party loan held for sale, which is offset by the release of valuation allowance attributable to acquired intangible assets from CXApp.

6 unchanged sentences

Cash is also maintained at foreign financial institutions for its Canadian subsidiary, UK subsidiary, German subsidiaries and its majority-owned India subsidiary.

Cash in foreign financial institutions as of June 30, 2021 and December 31, 2020 was immaterial.

Cash in foreign financial institutions as of September 30, 2021 and December 31, 2020 was immaterial.

The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash.

The following table sets forth the percentages of revenue derived by the Company from those customers, which accounted for at least 10% of revenues during the six months ended June 30, 2021 and 2020 (in thousands):

For the Three Months Ended June 30, 2021 For the Three Months Ended June 30, 2020

The following table sets forth the percentages of revenue derived by the Company from those customers, which accounted for at least 10% of revenues during the three and nine months ended September 30, 2021 and 2020 (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 23 - Credit Risk and Concentrations (continued)

For the Three Months Ended September 30, 2021 For the Three Months Ended September 30, 2020

Customer A — — % 800 31 %

Customer B 327 8 % 305 12 %

For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020

For the nine months ended September 30, 2021 For the nine months ended September 30, 2020

Customer A — — % 1,300 23 %

Customer B 956 9 % 916 17 %

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Note 21 - Credit Risk and Concentrations (continued)

As of June 30, 2021, there were no customers that exceeded 10% of total accounts receivable.

As of June 30, 2021, two vendors represented approximately 23 % of total gross accounts payable.

Purchases from these vendors during the six months ended June 30, 2021 was $ 408,470 .

For the six months ended June 30, 2021 three vendors represented approximately 23 %, 16 %, and 12 % of total purchases.

For the six months ended June 30, 2020, five vendors represented approximately 30 %, 18 %, 15 %, 14 %, and 13 % of total purchases.

As of September 30, 2021, two customers represented approximately 27 % of total accounts receivable.

As of September 30, 2021, two vendors represented approximately 37 % of total gross accounts payable.

Purchases from these vendors during the nine months ended September 30, 2021 was $ 512,201 .

For the nine months ended September 30, 2021 three vendors represented approximately 24 %, 18 %, and 8 % of total purchases.

For the nine months ended September 30, 2020, five vendors represented approximately 30 %, 18 %, 15 %, 14 %, and 13 % of total purchases.

Revenue Segments

8 unchanged sentences

Revenues and gross profit segments consisted of the following (in thousands):

For the Three Months Ended June 30 For the Six Months Ended June 30

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 23 - Credit Risk and Concentrations (continued)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

14 unchanged sentences

Note 24 - Fair Value of Financial Instruments

The Company's assets measured at fair value consisted of the following at June 30, 2021:

Fair Value at June 30, 2021

The Company's assets measured at fair value consisted of the following at September 30, 2021:

Fair Value at September 30, 2021

Total Level 1 Level 2 Level 3

7 unchanged sentences

The Company had no Level 3 investments for the twelve months ended December 31, 2020.

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the six months ended June 30, 2021:

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the nine months ended September 30, 2021:

Level 3 Investments

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 25 - Foreign Operations

3 unchanged sentences

States Canada India Germany United Kingdom Ireland Eliminations Total

For the Three Months Ended June 30, 2021:

For the Three Months Ended September 30, 2021:

Revenues by geographic area $ 3,189 $ 557 $ 255 $ 879 $ 119 $ 2 $ ( 551 ) $ 4,450

1 unchanged sentence

Net income (loss) by geographic area $ ( 31,892 ) $ ( 1,182 ) $ ( 29 ) $ ( 720 ) $ 19 $ ( 145 ) $ — $ ( 33,949 )

For the Three Months Ended June 30, 2020:

For the Three Months Ended September 30, 2020:

Revenues by geographic area $ 1,919 $ 1,199 $ 372 $ 42 $ 31 $ — $ ( 1,009 ) $ 2,554

1 unchanged sentence

Net income (loss) by geographic area $ ( 7,178 ) $ ( 126 ) $ 91 $ ( 146 ) $ ( 92 ) $ — $ — $ ( 7,451 )

For the Six Months Ended June 30, 2021:

For the Nine Months Ended September 30, 2021:

Revenues by geographic area $ 7,245 $ 2,018 $ 919 $ 2,288 $ 288 $ 2 $ ( 1,903 ) $ 10,857

1 unchanged sentence

Net income (loss) by geographic area $ ( 26,133 ) $ ( 3,371 ) $ 10 $ ( 2,284 ) $ 23 $ ( 227 ) $ — $ ( 31,982 )

For the Six Months Ended June 30, 2020:

For the Nine Months Ended September 30, 2020:

Revenues by geographic area $ 3,634 $ 3,925 $ 797 $ 42 $ 31 $ — $ ( 2,995 ) $ 5,434

1 unchanged sentence

Net income (loss) by geographic area $ ( 20,747 ) $ ( 77 ) $ 143 $ ( 146 ) $ ( 92 ) $ — $ — $ ( 20,919 )

As of June 30, 2021:

As of September 30, 2021:

Identifiable assets by geographic area $ 246,832 $ 8,765 $ 578 $ 17,476 $ 262 $ 70 $ ( 82,946 ) $ 191,037

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 26 - Related Party Transactions

21 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 26 - Related Party Transactions (continued)

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Securities and Exchange Commission (the “SEC”), during the period that begins on the 90th day following April 14, 2021.

In the event Sysorex fails to register such shares within that timeframe, or otherwise fails to meet its obligations under the RRA, then, subject to certain limitations, the Company and the Holders may be entitled to receive from Sysorex an amount in cash equal to the product of 1.5 % multiplied by the value of their shares (as set forth in the RRA), which amount is payable each month for so long as the failure continues.

provided that the shares are considered "Registrable Securities" as defined by the RRA.

The shares of Sysorex common stock were not deemed Registrable Securities as defined by the RRA as of the date of the registration obligation.

Also, under the RRA, if Sysorex determines to prepare and file with the SEC a registration statement relating to an offering of any of its equity securities, for its own account or the account of others, then the Company and the Holders will have the right, subject to certain limitations, to require Sysorex to include in such registration statement all or any part of the shares of common stock held by them.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 26 - Related Party Transactions (continued)

Inpixon Canada Promissory Note

On August 12, 2019, prior to the acquisition of Jibestream, the Company loaned Jibestream $ 140,600 for operating expenses.

The note accrues interest at a rate of 5 % per annum and has a maturity date of December 31, 2020.

However, upon the acquisition of Jibestream by Inpixon Canada, Inpixon Canada assumed the loan through consolidation.

As of September 30, 2021, Inpixon Canada owed the Company $ 15.3 million.

This note is recorded as a current note receivable on the Company books, however, it is eliminated in the consolidated financial statements.

As of June 30, 2021, the principal and interest of the Jibestream note and the other amounts advanced to Inpixon Canada by the Company totaled $ 14,290,529 .

Cardinal Ventures Holdings Investment

4 unchanged sentences

Ali may be in a position to influence or manage the affairs of CVH in a manner that may be viewed as contrary to the best interests of either the Company or CVH and their respective stakeholders.

Consulting Services

Kareem Irfan, a director of the Company, is providing consulting services to the Company in support of strategic initiatives for which he receives compensation of $ 10,000 a month under a consulting agreement effective through April 30, 2022 unless terminated earlier under the provisions of the agreement.

Note 27 - Leases

The Company has operating leases for administrative offices in the United States (California), Canada, India, United Kingdom and Germany.

The Company terminated the lease in Ratingen, Germany during January 31, 2021.

The Company terminated the lease in Ratingen, Germany in January 2021.

The Company entered into two new operating leases for its administrative offices in Ratingen, Germany, both from February 1, 2021 through January 1, 2023.

2 unchanged sentences

Right-of-use assets are summarized below (in thousands):

As of June 30, 2021

As of September 30, 2021

Palo Alto, CA Office $ 631

Encino, CA Office 195

Hyderabad, India Office 360

8 unchanged sentences

Lease expense for operating leases recorded in the balance sheet is included in operating costs and expenses and is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the three months ended June 30, 2021 was $ 0.3 million and $ 570,828 for the six months ended June 30, 2021.

During the three-month period ended June 30, 2021, the Company recorded $ 170,824 as rent expense to the right-of-use assets.

During the six-month period ended June 30, 2021, the Company recorded $ 335,945 as rent expense to the right-of-use assets.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the three months ended September 30, 2021 was $ 0.3 million and $ 0.8 million for the nine months ended September 30, 2021.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 27 - Leases (continued)

During the three-month period ended September 30, 2021, the Company recorded approximately $ 0.2 million as rent expense to the right-of-use assets.

During the nine-month period ended September 30, 2021, the Company recorded approximately $ 0.6 million as rent expense to the right-of-use assets.

Lease liability is summarized below (in thousands):

As of June 30, 2021

As of September 30, 2021

Total lease liability $ 1,617

13 unchanged sentences

In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of ASC 842, Leases ("ASC 842").

As of June 30, 2021, the weighted average remaining lease term is 3.74 and the weighted average discount rate used to determine the operating lease liabilities was 8.0 %.

As of September 30, 2021, the weighted average remaining lease term is 3.56 and the weighted average discount rate used to determine the operating lease liabilities was 8.0 %.

Note 28 - Commitments and Contingencies

7 unchanged sentences

Note 29 - Subsequent Events

During the quarter ending September 30, 2021, the Company exchanged approximately $ 1,000,000 of the outstanding principal and interest under the March 2020 10 % Note Purchase Agreement and Promissory Note for 877,192 shares of the Company's common stock at an exchange rate of $ 1.14 per share.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

On October 29, 2021, the Company entered into a note purchase agreement with Game Your Game, pursuant to which the Company agreed to issue and sell to the holder a promissory note (the "October 2021 8 % Note") in an aggregate initial principal amount of $ 261,000 , which is payable on or before December 31, 2022.

The October 2021 8 % note is one of several notes (the "October 2021 Notes") issued by Game Your Game in connection with an offering of the October 2021 Notes.

Interest on the loan amount will accrue at the rate of 8 % per annum.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements