What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-31 · 980 added, 746 removed, 944 unchanged (65% of the section changed)

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ANNUAL FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB NO.

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020 and 2019

Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

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Description of the Matter

During the year ended December 31, 2020 the Company completed certain business combinations and asset acquisitions for net aggregate consideration of approximately $13 million.

The transactions were accounted for as a business combination.

During the year ended December 31, 2021 the Company completed certain business combinations for net aggregate consideration of approximately $36.3 million.

The transactions were accounted for as business combinations.

Accordingly, the purchase price was allocated, on a preliminary basis, to the assets acquired and liabilities assumed, based on their respective fair values identified including intangible assets with aggregate fair values of approximately $23.5 million.

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Such valuation models require significant assumptions;

these assumptions are primarily related to the complexity of the valuation models used to measure the fair values as well as the sensitivity of the fair values identified.

these assumptions are primarily related to the complexity of the valuation models used to measure the fair value as well as the sensitivity of the fair value identified.

The significant assumptions used to estimate the fair value of the identified intangible assets included discount rates, attrition rates, economic lives and financial projections including comparable company specific data.

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How We Addressed the Matter in our Audit

Our audit procedures related to the forecasts of future cash flows and the selection of the attrition rates, terminal growth rates and discount rates for the identified intangible assets for the acquired entities included the following:

Our audit procedures related to the forecasts of future cash flows and the selection of certain attrition rates, terminal growth rates and discount rates for the identified intangible assets for the acquired entities included the following:

(1) We assessed the reasonableness of fiscal year 2022 forecasted cash flows of revenues and operating margins by comparing them to the acquired entities actual 2021 cash flows.

• We assessed the reasonableness of the forecasted revenue growth rates and operating margins including the cash flow forecast period by comparing them to the acquired entities’ actual revenue growth rates and operating margins during the most recent historical periods.

• We performed sensitivity analyses of the significant assumptions used in the valuation model to evaluate the change in fair value resulting from changes in the significant assumptions.

• With the assistance of our value specialists, we evaluated the reasonableness of the (1) valuation methodologies;

(2) terminal growth rates by comparing them to industry growth rates and the projected nominal gross domestic product (GDP) growth rate;

(3) customer attrition rates by testing the mathematical accuracy of the rates used and comparing them to historical customer data;

and (4) discount rates, which included testing the source information underlying the determination of the discount rates, testing the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.

(2) We assessed the reasonableness of the forecasted revenue growth rates and operating margins over the cash flow forecast period by comparing them to the acquired entities’ actual revenues and operating margins during the most recent historical period including the Company's marketing plans.

(3) We evaluated the reasonableness of the (a) valuation methodologies;

(b) terminal growth rates by comparing them to industry growth rates;

and (d) discount rates, which included testing the source information underlying the determination of the discount rates, testing the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.

(4) We sensitized the projections and compared them to the valuation reports for reasonableness.

Valuation of Goodwill Impairment

Description of the Matter

The Company evaluates goodwill for impairment annually as of the end of the fourth fiscal quarter by comparing the carrying values of each of the Company’s reporting units to their estimated fair values as of the test dates.

The estimates of fair value of the reporting units are computed using a combination of both an income approach and a market approach.

Under the income approach, the Company utilizes the discounted cash flow method to estimate the fair value of the reporting units.

Some of the significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, operating income margin, and working capital) and a discount rate that appropriately reflects the risks inherent in each future cash flow stream.

The Company selected assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates, management’s plans, and guideline companies.

Under the market approach, fair value is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services.

The goodwill balance was $21.8 million as of December 31, 2021, of which $21.8 million was allocated to the Indoor Intelligence reporting unit.

As of the measurement date the carrying value of the Indoor Intelligence reporting unit exceeded the fair values as of the measurement date and, therefore, the Company recorded an impairment of $14.8 million.

We identified goodwill impairment as a critical audit matter because of the significant estimates and assumptions made by management to estimate fair value given the sensitivity of operations to changes in demand for all reporting units and historical results and long-range strategic plans of the reporting units.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the discount rates and forecasts of future net sales for all reporting units, and the future operating income margins for the Indoor Intelligence reporting unit.

How We Addressed the Matter in our Audit

The primary procedures we performed to address this critical audit matter included the following.

(1) We evaluated the Company’s forecasted revenue (2) Evaluated the guideline companies used operated in a similar industry as the subject reporting unit.

(3) The guideline companies and transaction appear appropriate (4) The Company used the appropriate modified capital asset pricing model and a weighted average cost of capital.

(5) We sensitized the projections and compared them to the valuation report to materially assess the impact to the reported amount of the impairment.

/s/ Marcum llp

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Software development costs, net 1,792 1,721

Investments in equity securities 1,838 —

Long-term investments 2,500 2,500

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Goodwill 7,672 6,588

Receivable from related party — 616

Other assets 253 152

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

As of December 31, 2021 As of December 31, 2020

Liabilities and Stockholders’ Equity

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Other liabilities, noncurrent 28 7

Deferred tax liability, noncurrent — 87

Acquisition liability, noncurrent 220 750

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Commitments and Contingencies

Mezzanine Equity

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

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

(Liquidation preference of $ 49,250,000 )

Stockholders’ Equity

Pref Stock - $ 0.001 par value;

Preferred Stock -$ 0.001 par value;

5,000,000 shares authorized

Series 4 Convertible Pref Stock - 10,415 shares auth;

1 and 1 issued, and 1 and 1 outstanding as of December 31, 2020 and December 31, 2019, respectively

Series 5 Convertible Pref Stock - 12,000 shares auth;

126 and 0 issued, and 126 and 0 outstanding as of December 31, 2020 and December 31, 2019, respectively.

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

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

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

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

Common Stock - $ 0.001 par value;

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Accumulated other comprehensive income 44 660

Accumulated deficit (excluding $ 2,442 reclassified to additional paid in capital in quasi-reorganization)

( 180,992 ) ( 151,763 )

Accumulated deficit ( 250,309 ) ( 180,992 )

Stockholders’ Equity Attributable to Inpixon 81,803 44,639

Non-controlling Interest 1,688 41

INPIXON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

Total Stockholders’ Equity 83,491 44,680

Total Liabilities and Stockholders’ Equity $ 59,011 $ 21,219

Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 156,673 $ 59,011

The accompanying notes are an integral part of these financial statements

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Acquisition-related costs 1,248 1,057

Impairment of goodwill 14,789 —

Amortization of intangibles 4,467 2,306

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Loss from Operations ( 72,617 ) ( 23,794 )

Other Expense

Other Income (Expense)

Interest expense, net 1,183 ( 2,426 )

Loss on exchange of debt for equity ( 30 ) ( 210 )

Provision for valuation allowance on related party loan - held for sale ( 2,370 ) ( 10,627 )

Other expense ( 470 ) ( 558 )

Total Other Expense ( 5,476 ) ( 13,756 )

Benefit (provision) for valuation allowance on related party loan - held for sale 7,345 ( 2,370 )

Other income (expense) ( 173 ) ( 470 )

Gain on related party loan - held for sale 49,817 —

Unrealized loss on equity securities ( 57,067 ) —

Total Other Income (Expense) 1,075 ( 5,476 )

Net Loss, before tax ( 71,542 ) ( 29,270 )

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Net Loss ( 70,130 ) $ ( 29,214 )

Net Income Attributable to Non-controlling Interest 15 9

Net Income (Expense) Attributable to Non-controlling Interest ( 975 ) 15

Net Loss Attributable to Stockholders of Inpixon ( 69,155 ) ( 29,229 )

Deemed dividend for triggering of warrant down round feature — ( 1,250 )

Accretion of Series 7 preferred stock ( 8,161 ) —

Net Loss Attributable to Common Stockholders $ ( 77,316 ) $ ( 29,229 )

Net Loss Per Basic and Diluted Common Share

Net Loss Per Share - Basic and Diluted $ ( 0.72 ) $ ( 1.01 )

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Net Loss $ ( 70,130 ) $ ( 29,214 )

Unrealized foreign exchange gain from cumulative translation adjustments 566 68

Unrealized foreign exchange (loss) gain from cumulative translation adjustments ( 617 ) 566

Comprehensive Loss $ ( 70,747 ) $ ( 28,648 )

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INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

(In thousands)

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 53 225,613 ( 1 ) ( 695 ) 660 ( 180,992 ) 41 44,680

Common Shares issued for net cash proceeds of a public offering — — — — 33,416,830 33 46,110 — — — — — $ 46,143

Common Shares issued for net cash proceeds from a registered direct offering — — — — 5,000,000 5 9,200 — — — — — $ 9,205

Common shares issued for registered direct offering — — — — — — 15,800,000 15 74,058 — — — — — $ 74,073

Common shares issued for extinguishment of debt — — — — — — 1,771,113 2 2,498 — — — — — $ 2,500

Common shares issued for extinguishment of liability — — — — 183,486 0.2 200 — — — — — $ 200

Common shares issued for cashless stock options exercised — — — — — — 5,391 — — — — — $ —

Common shares issued for net proceeds from warrants exercised — — — — — — 31,505,088 32 3,747 — — — — — $ 3,779

Stock options granted to employees and consultants for services — — — — — — 1,193 — — — — — $ 1,193

Issuance of Ten Degrees Acquisition shares — — — — 480,000 0.5 599 — — — — — $ 599

Stock options and restricted stock awards granted to employees and consultants for services — — — — — — — — 10,879 — — — — — $ 10,879

Common shares issued for acquisition of 55.4 % of Game Your Game

— — — — — — 1,179,077 1 1,402 — — — — 2,472 $ 3,875

Common shares issued for Visualix acquisition — — — — — — 369,563 — 429 — — — — — $ 429

Common shares issued for the CXApp — — — — — — 8,849,538 9 9,991 — — — — — $ 10,000

Common shares issued for restricted stock grants — — — — — — 4,672,988 5 ( 5 ) — — — — — $ —

Taxes paid on stock based compensation — — — — — — — — ( 1,855 ) — — — — — $ ( 1,855 )

Series 7 Preferred Stock issued for cash 58,750 46,034 — — — — — — 4,551 — — — — — $ 4,551

Series 7 Preferred Stock converted to common stock ( 9,500 ) ( 9,500 ) — — — — 7,600,000 8 9,492 — — — — — $ 9,500

Accrete Discount - Preferred Shares — 8,161 — — — — — — ( 8,161 ) — — — — — $ ( 8,161 )

Restricted stock grants forfeited — — — — — — ( 490,296 ) ( 1 ) — — — — — — $ ( 1 )

Cumulative translation adjustment — — — — — — — — — — — ( 616 ) ( 162 ) 150 $ ( 628 )

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INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (CONTINUED)

(In thousands, except per share data)

Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Series 6 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, 2020 — — 1 — 126 — 4,234,923 4 158,382 ( 1 ) ( 695 ) 96 ( 151,763 ) 26 6,050

Common and Preferred Shares issued for net cash proceeds of a public offering — — 12,000 — 2,997 — 1,615,287 2 20,679 — — — — — 20,681

Common Shares issued for net cash proceeds of a public offering — — — — — — 33,416,830 33 46,110 — — — — — $ 46,143

Common Shares issued for net cash proceeds from a registered direct offering — — — — — — 5,000,000 5 9,200 — — — — — $ 9,205

Common shares issued for extinguishment of debt — — — — — — 6,863,223 7 9,929 — — — — — $ 9,936

Common shares issued for net proceeds from warrants exercised — — — — — — 306 — 46 — — — — — 46

Common shares issued for warrants exercised — — — — — — 425,952 1 ( 1 ) — — — — — —

Common stock issued for stock options exercised — — — — — — 14 — — — — — — — —

Redemption of convertible Series 5 Preferred Stock — — ( 11,874 ) — — — 79,242 — — — — — — — —

Redemption of convertible Series 6 Preferred Stock — — — — ( 2,997 ) — 240,001 — — — — — — — —

Common shares issued for extinguishment of liability — — — — — — 183,486 — 200 — — — — — $ 200

Common shares issued for services — — — — — — 4,445 — 242 — — — — — 242

Common shares issued for net proceeds from warrants exercised — — — — — — 3,000,000 3 — — — — — — $ 3

Stock options granted to employees and consultants for services — — — — — — — — 1,193 — — — — — $ 1,193

Issuance of Locality Acquisition Shares — — — — — — 14,445 — 513 — — — — — — 513

Issuance of GTX Acquisition Shares — — — — — — 22,223 — 650 — — — — — — 650

Issuance of Jibestream Acquisition Shares — — — — — — 176,289 — 1,349 — — — — — — 1,349

Fractional shares issued for stock split — — — — — — 62,276 — — — — — — — — —

Issuance of Ten Degrees Acquisition shares — — — — — — 480,000 1 599 — — — — — $ 600

Cumulative translation adjustment — — — — — — — — — — — 564 — — $ 564

Net loss — — — — — — — — — — — — ( 33,991 ) 8 ( 33,983 )

Net income (loss) — — — — — — — — — — — — ( 29,229 ) 15 $ ( 29,214 )

Balance - December 31, 2020 — — 1 — 126 — 53,178,462 $ 53 $ 225,613 ( 1 ) $ ( 695 ) $ 660 $ ( 180,992 ) $ 41 $ 44,680

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Stock based compensation 10,879 1,194

Amortization of technology — 66

Earnout payment expense 6,524 —

Loss on exchange of debt for equity 30 210

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Provision for doubtful accounts 121 956

Provision for inventory obsolescence 138 —

Provision for the valuation allowance held for sale loan 2,370 10,627

Provision for the valuation allowance related party receivable 648 —

Income tax benefit ( 87 ) ( 584 )

Other expenses ( 6 ) ( 223 )

Unrealized gain/loss on note ( 92 ) —

Provision for inventory obsolescense 300 138

(Recovery) provision for valuation allowance for held for sale loan ( 7,345 ) 2,370

Provision for valuation allowance for related party receivable — 648

Gain on settlement of related party promissory note ( 49,817 ) —

Deferred income tax ( 2,593 ) ( 87 )

Unrealized loss on equity securities 57,067 —

Impairment of goodwill 14,789 —

Loss on disposal of property and equipment 24 —

Other 235 ( 6 )

Changes in operating assets and liabilities:

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Accrued liabilities 490 269

Income tax liabilities 16 —

Deferred revenue 817 242

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Other liabilities 328 453

Total Adjustments 8,613 23,317

Net Cash Used in Operating Activities $ ( 37,131 ) $ ( 20,601 )

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Investment in capitalized software ( 1,019 ) ( 862 )

Investment in short term investment ( 7,998 ) —

Investment in Systat Licensing Agreement ( 2,200 ) —

Investment in Ten Degrees ( 1,500 ) —

Investment in Nanotron ( 7,786 ) —

Investment in long term investment ( 2,500 ) —

Cash paid for the acquisition of GTX — ( 250 )

Cash paid for the acquisition of Locality — ( 204 )

Purchases of short term investments ( 2,000 ) ( 7,998 )

INPIXON AND SUBSIDIARIES

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(In thousands)

Cash paid for the acquisition of Jibestream — ( 3,714 )

Cash acquired in the Locality acquisition — 70

Cash acquired in the Jibestream acquisition — 6

Sale of short term investments 2,000 —

Purchases of treasury bills ( 63,362 ) —

Sales of treasury bills 28,000 —

Investment in Systat licensing agreement ( 900 ) ( 2,200 )

Purchase of intangible assets ( 4 ) —

Acquisition of the Ten Degrees — ( 1,500 )

Acquisition of Nanotron — ( 7,786 )

Acquisition of Intranav ( 1,023 ) —

Acquisition of Game Your Game 184 —

Acquisition of CXApp ( 14,977 ) —

Acquisition of Visualix ( 61 ) —

Investment in long term investment — ( 2,500 )

Cash acquired in the Nanotron acquisition — 311

Net Cash Flows Used in Investing Activities $ ( 23,507 ) $ ( 5,108 )

Cash Flows From Financing Activities

Net (repayments) proceeds to bank facility ( 150 ) 127

Net proceeds from issuance of common stock, preferred stock and warrants 55,352 20,725

Repayment of notes payable ( 74 ) ( 70 )

Net Cash Used in Investing Activities $ ( 53,508 ) $ ( 23,507 )

Cash From Financing Activities

Net repayments to bank facility $ — $ ( 150 )

Net proceeds from issuance of preferred stock and warrants 50,585 —

Net proceeds from issuance of common stock and warrants 77,852 55,352

Taxes paid related to net share settlement of restricted stock units ( 1,855 ) —

Net repayments of notes payable — ( 74 )

Loans to related party ( 117 ) ( 2,569 )

Repayments from related party — 200

Advances to related party — ( 31 )

Loan to Jibestream — ( 141 )

Loan to GTX — ( 50 )

Net proceeds from promissory notes — 5,000

Repayment of CXApp acquisition liability ( 461 ) —

Repayment of acquisition liability to Nanotron shareholders ( 467 ) —

Repayment of acquisition liability to Locality shareholders ( 500 ) ( 500 )

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Effect of Foreign Exchange Rate on Changes on Cash 86 ( 4 )

Net Increase in Cash, Cash Equivalents and Restricted Cash 13,147 3,701

Cash, Cash Equivalents and Restricted Cash - Beginning of period 4,849 1,148

Cash, Cash Equivalents and Restricted Cash - End of period (Note 2) $ 17,996 $ 4,849

Net Increase in Cash and Cash Equivalents 34,484 13,147

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

Cash and Cash Equivalents - End of year $ 52,480 $ 17,996

Supplemental Disclosure of cash flow information:

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Common shares issued for extinguishment of liability $ — $ 200

INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Common shares issued for extinguishment of debt $ 2,500 $ 9,936

Right of use asset obtained in exchange for lease liability $ 401 $ 557

Common shares issued for GTX acquisition $ — $ 650

Common shares issued for Locality acquisition $ — $ 513

Common shares issued for Jibestream acquisition $ — $ 1,349

Settlement of Sysorex Note $ 7,462 $ —

Investment in equity securities $ 58,905 $ —

Common shares issued for Ten Degrees acquisition $ — $ 600

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

Common shares issued for Game Your Game acquisition $ 1,403 $ —

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

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Note 1 - Organization and Nature of Business

Inpixon, and its wholly-owned subsidiaries, Inpixon Canada, Inc.

(“Inpixon Canada”) and Jibestream, Inc.

(“Jibestream”), which was amalgamated into Inpixon Canada on January 1, 2020, Inipixon Limited ("Inpixon UK"), Inpixon GmbH ("Inpixon Germany"), as well as Inpixon Germany's wholly-owned subsidiary, Nanotron GmbH ("Nanotron"), and its majority-owned subsidiary Inpixon India Limited (“Inpixon India”) (unless otherwise stated or the context otherwise requires, the terms “Inpixon” “we,” “us,” “our” and the “Company” refer collectively to Inpixon and the aforementioned subsidiaries), are an indoor intelligence company.

Our business and government customers use our solutions to secure, digitize and optimize their indoor spaces with our positioning, mapping, RTLS (real time location systems) and analytics products.

Our indoor intelligence platform uses sensor technology to detect accessible cellular, Wi-Fi, Bluetooth, ultra-wide band (“UWB”) and chirp signals emitted from devices within a venue providing positional information similar to what global positioning system (“GPS”) satellite systems provide for the outdoors.

Combining this positional data with our dynamic and interactive mapping solution and a high-performance analytics engine, yields near real time insights to our customers providing them with visibility, security and business intelligence within their indoor spaces.

Our highly configurable platform can also ingest data from our customers’ and other third-party sensors, Wi-Fi access points, Bluetooth beacons, video cameras, and big data sources, among others, to maximize indoor intelligence.

The Company also offers digital tear-sheets with optional invoice integration, digital ad delivery, and an e-edition designed for reader engagement for the media, publishing and entertainment industry and a comprehensive set of data analytics and statistical visualization solutions with its SAVES product line catering to the needs of engineers and scientists.

The Company is headquartered in Palo Alto, California, and has subsidiary offices in Coquitlam, Canada, New Westminster, Canada, Toronto, Canada, Slough, United Kingdom, Ratingen, Germany, Berlin, Germany, Bangalore, India and Hyderabad, India.

On May 21, 2019, the Company acquired Locality Systems Inc.

(“Locality”), a technology company based near Vancouver, Canada, specializing in wireless device positioning and radio frequency augmentation of video surveillance systems (See Note 3 ).

On June 27, 2019, the Company acquired certain global positioning system (“GPS”) products, software, technologies, and intellectual property from GTX Corp (“GTX”), a U.S.

based company specializing in GPS technologies (See Note 4 ).

These transactions expanded our patent portfolio and included certain granted or licensed patents and GPS and radio frequency (“RF”) technologies.

Additionally, on August 15, 2019, the Company acquired Jibestream, a provider of indoor mapping and location technology based in Toronto, Canada (See Note 5).

On June 19, 2020, the Company entered into an exclusive license with Cranes Software International Ltd.

and Systat Software, Inc.

(together the “Systat Parties”) to use, market, distribute, and develop the SYSTAT and SigmaPlot software suite of products (See Note 6).

On August 19, 2020, the Company entered into an Asset Purchase Agreement with Ten Degrees Inc.

(“TDI”), Ten Degrees International Limited (“TDIL”), mCube International Limited (“MCI”), and the holder of a majority of the outstanding capital of TDIL and mCube, Inc., and the sole shareholder of 100% of the outstanding capital stock of MCI (“mCube,” together with TDI, TDIL, and MCI collectively, the “Transferors”), we acquired a suite of on-device “blue-dot” indoor location and motion technologies, including patents, trademarks, software and related intellectual property from the Transferors (See Note 7).

Additionally, on October 6, 2020, the Company acquired Nanotron Technologies GmbH (“Nanotron”), a manufacturer and developer of location-aware IoT systems and solutions based in Berlin, Germany (See Note 8).

As of December 31, 2020, the Company has a working capital surplus of approximately $ 18.2 million.

For the year ended December 31, 2020, the Company incurred a net loss of approximately $ 29.2 million.

On March 3, 2020, the Company entered into an Equity Distribution Agreement (“EDA”) with Maxim Group LLC (“Maxim”) under which the Company may offer and sell shares of its common stock in connection with an at-the-market equity facility (“ATM”) in an aggregate offering amount of up to $ 50 million, which was increased on June 19, 2020 to $ 150 million pursuant to an amendment to the EDA, from time to time through Maxim, acting exclusively as the Company’s sales agent.

The Company issued 33,416,830 shares of common stock during the year ended December 31, 2020 in connection with the ATM resulting in net proceeds to the Company of approximately $ 46.1 million after deduction of sales commissions and other offering expenses.

The EDA was terminated by the parties on February 12, 2021.

Inpixon is the Indoor Intelligence™ company.

Our solutions and technologies help organizations create and redefine exceptional workplace experiences that enable smarter, safer and more secure environments.

We leverage our positioning, mapping, analytics and app technologies to achieve higher levels of productivity and performance, increase safety and security, improve worker and employee satisfaction rates and drive a more connected workplace.

We have focused our corporate strategy on being the primary provider of the full range of foundational technologies needed in order to offer a comprehensive suite of solutions that make indoor data available and meaningful to organizations and their employees.

Our Indoor Intelligence solutions are used by our customers for a variety of use cases including, but not limited to, employee and visitor experience enhancement through a customer branded app with features such as desk booking, wayfinding and navigation, and the delivery of content to tens of thousands of attendees in hybrid events.

Our real time location (RTLS) and asset tracking products offer manufacturing and warehouse logistics optimization and automation, increase workforce productivity, and enhance worker safety and security.

In addition to our Indoor Intelligence technologies and solutions, we also offer:

• Digital solutions (eTearsheets;

eInvoice, adDelivery) or cloud-based applications and analytics for the advertising, media and publishing industries y advertising management platform referred to as Shoom by Inpixon;

• A comprehensive set of data analytics and statistical visualization solutions for engineers and scientists referred to as SAVES by Inpixon.

We report financial results for three segments:

Indoor Intelligence, Shoom and SAVES.

For Indoor Intelligence, we generate revenue from sales of hardware, software licenses and professional services.

For Shoom and SAVES we generate revenue from the sale of software licenses.

Note 2 - Summary of Significant Accounting Policies

Change in Segment Reporting

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

During the second quarter of 2021, the Company changed the level of detail at which the Chief Executive Office ("CEO") as the Chief Operating Decision Maker, or "CODM", regularly reviews and manages certain metrics of its businesses The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that it operates and reports in three segments:

Indoor Intelligence, Saves and Shoom.

See Note 28 for further details.

As of December 31, 2021, the Company has a working capital surplus of approximately $ 78.8 million, cash of approximately $ 52.5 million and short term investments of $ 43.1 million.

For the year ended December 31, 2021, the Company incurred a net loss attributable to common stockholders of approximately $ 77.3 million The net loss includes 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 December 31, 2021.

See further details in Note 14 and Note 29.

On each of January 24, 2021, February 12, 2021 and February 16, 2021 the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company sold an aggregate of 15,800,000 shares of its common stock, warrants to purchase up to 44,305,088 shares of common stock at exercise prices ranging from $ 1.55 to $ 2.01 and

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

prefunded warrants to purchase up to 28,505,088 shares of common stock at an exercise price of $ 0.001 per share at purchase prices ranging from $ 1.549 to $ 2.01 per share.

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

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 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 21 - Capital Raises.

The EDA was terminated by the parties on February 12, 2021.

On November 25, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor, pursuant to which it sold in a registered direct offering, 5,000,000 shares of its common stock, and warrants to purchase up to 8,000,000 shares of common stock at an exercise price of $ 1.25 per share (the “2020 Purchase Warrants”) for a combined purchase price of $ 1.25 per share and pre-funded warrants to purchase up to 3,000,000 shares of common stock ("2020 Pre-funded Warrants") at an exercise price of $ 0.001 per share at a purchase price of $ 1.249 per share for net proceeds of $ 9.2 million after deduction of sales commissions and other offering expenses.

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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, 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, including a decline in revenue for certain existing product lines, we were able to realize growth in total revenue for the year ended December 31, 2020 when compared to the year ended 2019, as a result of the addition of new product lines including a full year of sales associated with our mapping product, the addition of the SAVES product lines following the second quarter of 2020 and the addition of the RTLS product line in the fourth quarter of 2020.

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 as a result of compliance with new rules and regulations resulting from the pandemic, customer facilities being partially or fully closed during the pandemic or because of the uncertainty of the customer’s financial position and ability to invest in our technology.

Despite these challenges, including a decline in revenue for certain existing product lines, we were able to realize growth in total revenue for the year ended December 31, 2021 when compared to the year ended 2020, as a result of the addition of new product lines including a full year of sales associated with our SAVES and RTLS product lines, the addition of the CXApp and Game Your Game product lines during the second quarter of 2021 and the addition of the IIoT product line in the fourth 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.

Note 2 - Summary of Significant Accounting Policies

The Company's recurring losses and utilization of cash in its operations are indicators of going concern however with the Company's current liquidity position, the Company believes it has the ability to mitigate such concerns for a period of at least one year from the date this financial statements were made issued.

Consolidations

The consolidated financial statements have been prepared using the accounting records of Inpixon, Inpixon Canada, Inpixon Germany, Inpixon UK, Nanotron and Inpixon India.

The consolidated financial statements have been prepared using the accounting records of Inpixon, Inpixon Canada, Inpixon Germany, Inpixon UK, Nanotron, Intranav, Inpixon India, Game Your Game, and CXApp.

All material inter-company balances and transactions have been eliminated.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Use of Estimates

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• the valuation of stock-based compensation;

• the valuation of the assets and liabilities acquired of Locality, GTX, Jibestream, Sysat, Ten Degrees, and Nanotron as described in Note 3, Note 4, Note 5, Note 6, Note 7, and Note 8 respectively, as well as the valuation of the Company’s common shares issued in the transaction;

• the allowance for doubtful accounts;

• the valuation of the assets and liabilities acquired of Sysat, Ten Degrees, Nanotron, Game your Game, Visualix, CXApp, and Intranav as described in Note 4 , Note 5, Note 6, Note 7 , Note 8, Note 9 and Note 10 respectively, as well as the valuation of the Company’s common shares issued in the transaction;

• the allowance for credit losses;

• the valuation of loans receivable;

• the valuation of equity securities;

• the valuation allowance for deferred tax assets;

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

• impairment of long-lived assets and goodwill.

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As of December 31, 2021 and 2020, the Company had no cash equivalents.

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 December 31, 2019, the Company had and $ 72,000 deposited in escrow as restricted cash for the Shoom acquisition, of which any amounts not subject to claims shall be released to the pre-acquisition stockholders of Shoom pro-rata on the next anniversary of the closing date of the Shoom acquisition.

The restricted cash balance was included in Prepaid Assets and Other Current Assets on the consolidated balance sheet.

As of December 31, 2020, 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 December 31,

(in thousands) 2020 2019

Cash and cash equivalents $ 17,996 $ 4,777

Restricted cash — 72

Total cash, cash equivalents, and restricted cash in the balance sheet $ 17,996 $ 4,849

Accounts Receivable, net and Allowance for Doubtful Accounts

Accounts Receivable, net and Allowance for Credit Losses

Accounts receivables are stated at the amount the Company expects to collect.

The Company recognizes an allowance for doubtful accounts to ensure accounts receivables are not overstated due to un-collectability.

The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to un-collectability.

Bad debt reserves are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience.

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If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted.

The Company has recorded an allowance for doubtful accounts of approximately $ 235,000 and $ 646,000 as of December 31, 2020 and 2019, respectively.

The Company has recorded an allowance for credit losses of approximately $ 0.3 million and $ 0.2 million as of December 31, 2021 and 2020, respectively.

Finished goods are measured at the cost of manufactured products including direct materials and subcontracted services.

The Company's latest acquisition, Nanotron, states finished goods at the lower of cost and net realizable value on an average cost basis.

Nanotron, states finished goods at the lower of cost and net realizable value on an average cost basis.

As the inventory held by Nanotron is typically small dollar value items with small variances in price, an estimate or average is used to determine the balance of inventory.

All other subsidiaries of the Company state inventory utilizing the first-

All other subsidiaries of the Company state inventory utilizing the first-in, first-out method.

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

in, first-out method.

The Company continually analyzes its slow-moving, excess and obsolete inventories.

continually analyzes its slow-moving, excess and obsolete inventories.

Based on historical and projected sales volumes and anticipated selling prices, the Company establishes reserves.

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Products that are determined to be obsolete are written down to net realizable value.

As of December 31, 2020 and 2019, the Company recognized inventory obsolescence of approximately $ 138,000 and $ 0 , respectively.

As of December 31, 2021 and 2020, the Company had recorded an inventory obsolescence of approximately $ 0.4 million and $ 0.1 million, respectively.

Short-term investments

Investments with maturities greater than 90 days but less than one year are classified as short-term investments on the consolidated balance sheets and consist of US Treasury Bills.

Accrued interest on US Treasury bills are also classified as short term investment.

Investments with maturities greater than 90 days but less than one year are classified as short-term investments on the consolidated balance sheets and consist of U.S.

Treasury Bills.

Accrued interest on U.S.

Treasury bills are also classified as short term investment.

Our short-term investments are considered available for use in current operations, are classified as available-for-sale securities .

Available for sale securities are carried at fair value, with an unrealized loss of approximately $ 2,000 .

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

The Company recorded unrealized losses of approximately $ 0.2 million for the year end December 31, 2021 which was included on the other income (expense) line in the consolidated statements of operations.

No unrealized gain or loss was recorded on available for sale securities for the year ended December 31, 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

Investment securities—fair value consist primarily of investments in equity securities and are carried at fair value in accordance with ASC 321, Investments-Equity Securities (“ASC 321”).

These securities are marked to market based on the respective publicly quoted market prices of the equity securities adjusted for liquidity, as necessary.

These securities transactions are recorded on a trade date basis.

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 was $ 57.1 million, and zero , for the years ended December 31, 2021 and 2020, respectively.

Property and Equipment, net

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The Company assesses the carrying value of its intangible assets for impairment each year.

Based on its assessments, the Company did no t incur any impairment charges for the years ended December 31, 2020 and 2019.

Based on its assessments, the Company did not incur any impairment charges for the years ended December 31, 2021 and 2020.

Acquired In-Process Research and Development (“IPR&D”)

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

In accordance with authoritative guidance, the Company recognizes IPR&D at fair value as of the acquisition date, and subsequently accounts for it as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts.

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If the IPR&D asset is abandoned, the remaining carrying value is written off.

During fiscal year 2014, the Company acquired IPR&D through the acquisition of AirPatrol, in 2015 through the acquisition of the assets of LightMiner, in 2019 through the acquisitions of Locality, Jibestream and certain assets of GTX and in 2020 through the SYSTAT licensing agreement, the acquisition of certain assets of Ten Degrees, and the acquisition of Nanotron.

The Company's IPR&D is comprised of AirPatrol, LightMiner, Locality, Jibestream, GTX, SYSTAT, Ten Degrees, and Nanotron, which was valued on the date of the acquisition.

During fiscal year 2014, the Company acquired IPR&D through the acquisition of AirPatrol, in 2015 through the acquisition of the assets of LightMiner, in 2019 through the acquisitions of Locality, Jibestream and certain assets of GTX, in 2020 through the SYSTAT licensing agreement, the acquisition of certain assets of Ten Degrees, and the acquisition of Nanotron, and in 2021 through the acquisitions of Game Your Game, certain assets of Visualix, CXApp and IntraNav.

The Company's IPR&D is comprised of AirPatrol, LightMiner, Locality, Jibestream, GTX, SYSTAT, Ten Degrees, Nanotron, Game Your Game, Visualix, CXApp and IntraNav, which was valued on the date of the acquisition.

It will take additional financial resources to continue development of these technologies.

The Company continues to seek additional resources, through both capital raising efforts and meeting with industry experts, for further development of the AirPatrol, Locality, Jibestream, GTX, SYSTAT, Ten Degrees, and Nanotron technologies.

The Company continues to seek additional resources, through both capital raising efforts and meeting with industry experts, for further development of these technologies.

Through December 31, 2021, the Company has made some progress with raising capital since these acquisitions, building their pipeline and getting industry acknowledgment.

The Company has been recognized by leading industry analysts in a report on leading indoor positioning companies and was also awarded the IoT Security Excellence award by TMC and Crossfire Media.

Management remains focused on growing revenue from these products and continues to pursue efforts to recognize the value of the AirPatrol, Locality, Jibestream, GTX, SYSTAT, Ten Degrees.

and Nanotron technologies.

Although there can be no assurance that these efforts will be successful, the Company intends to allocate financial and personnel resources when deemed

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

possible and/or necessary.

Management remains focused on growing revenue from these products and continues to pursue efforts to recognize the value of the technologies.

If the Company chooses to abandon these efforts, or if the Company determines that such funding is not available, the related IPR&D will be subject to significant impairment.

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The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.

The Company performed the annual impairment test as of December 31, 2020 and did no t record impairment of goodwill during the years ended December 31, 2020 and 2019, respectively.

The Company performed the annual impairment test as of December 31, 2021 and has recorded impairment of goodwill of $ 14.8 million and zero during the years ended December 31, 2021 and 2020, respectively.

Other Long Term Investments

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Software Development Costs

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company develops and utilizes internal software for the processing of data provided by its customers.

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The Company evaluates loans and notes receivable that don’t qualify as securities pursuant to ASC 310 – "Receivables", wherein such loans would first be classified as either “held for investment” or ‘held for sale”.

Loans would be classified as

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

“held for investment”, if the Company has the intent and ability to hold the loan for the foreseeable future, or to maturity or pay-off.

Loans would be classified as “held for investment”, if the Company has the intent and ability to hold the loan for the foreseeable future, or to maturity or pay-off.

Loans would be classified as “held for sale”, if the Company intends to sell the loan.

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Non-Controlling Interest

The Company has an 82.5 % equity interest in Inpixon India as of December 31, 2020.

The portion of the Company’s equity attributable to this third party non-controlling interest was approximately $ 41,000 and $ 26,000 as of December 31, 2020 and 2019, respectively.

The Company has an 82.5 % equity interest in Inpixon India and a 55.4 % equity interest in Game Your Game as of December 31, 2021.

The portion of the Company’s equity attributable to this third party non-controlling interest was approximately $ 1.7 million and $ 41 thousand as of December 31, 2021 and 2020, respectively.

Foreign Currency Translation

Assets and liabilities related to the Company’s foreign operations are calculated using the Indian Rupee, Canadian Dollar, British Pound and Euro, and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period.

Translation adjustments are recorded as a separate component of consolidated stockholders’ equity, totaling a gain of approximately $ 566,000 and $ 68,000 for the years ended December 31, 2020 and 2019, respectively.

Translation adjustments are recorded as a separate component of consolidated stockholders’ equity, totaling a gain/(loss) of approximately $( 0.6 ) million and $ 0.6 million for the years ended December 31, 2021 and 2020, respectively.

Gains or losses resulting from transactions denominated in foreign currencies are included in other income (expense) in the consolidated statements of operations.

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Comprehensive Income (Loss)

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company reports comprehensive income (loss) and its components in its consolidated financial statements.

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Revenue Recognition

The Company recognizes revenue when control is transfered of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services.

The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services.

The Company derives revenue from software as a service, design and implementation services for its Indoor Intelligence systems, and professional services for work performed in conjunction with its systems.

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The delivery of products to Inpixon's customers occurs in a variety of ways, including (i) as a physical product shipped from the Company’s warehouse, (ii) via drop-shipment by a third-party vendor, or (iii) via electronic delivery with respect to software licenses.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse.

The Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse.

In such arrangements, the Company negotiates the sale price with the customer, pays the supplier directly for the product shipped, bears credit risk of collecting payment from its customers and is ultimately responsible for the acceptability of the product and ensuring that such product meets the standards and requirements of the customer.

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Anticipated losses are recognized as soon as they become known.

For the years ended December 31, 2020 and 2019, the Company did not incur any such losses.

For the years ended

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

December 31, 2021 and 2020, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

SAVES by Inpixon Revenue Recognition

SAVES by Inpixon ("SAVES", formerly Systat) is a comprehensive set of data analytics and statistical visualization solutions for engineers and scientists.The Company enters into contracts with its customers whereby it grants a non-exclusive on-premise license for the use of its proprietary software.

License Revenue Recognition

The Company enters into contracts with its customers whereby it grants a non-exclusive on-premise license for the use of its proprietary software.

The contracts provide for either (i) a one year stated term with a one year renewal option, (ii) a perpetual term or (iii) a two year term for students with the option to upgrade to a perpetual license at the end of the term.

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All software provides customers with the same functionality and differ mainly in the duration over which the customer benefits from the software.

The timing of the Company's revenue recognition related to the SAVES revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.

The timing of the Company's revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.

Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service.

A software arrangement

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

that is provided through an access code or key represents the transfer of a good.

A software arrangement that is provided through an access code or key represents the transfer of a good.

Licenses for on-premises software represents a good and provide the customer with a right to use the software as it exists when made available to the customer.

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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 $ 1,922,000 and $ 912,000 as of December 31, 2020 and 2019, 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 $ 4.8 million and $ 1.9 million as of December 31, 2021 and 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.

Costs to Obtain a Contract

The Company recognizes eligible sales commissions as an asset as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs.

The capitalized costs are amortized over the expected contract term including any expected renewals.

Cost to Fulfill a Contract

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company incurs costs to fulfill their obligations under a contract once it has obtained, but before transferring goods or services to the customer.

These costs are recorded as an asset as these costs are an incremental cost of fulfilling the contract with the customer and the Company expects to recover these costs.

The capitalized costs are amortized over the expected remaining contract term.

Shipping and Handling Costs

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Advertising costs are expensed as incurred.

The Company incurred advertising costs, which are included in selling, general and administrative expenses of approximately $ 1.3 million and $ 19,000 during the years ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, the Company initiated an advertising campaign totaling approximately $ 1.3 million, resulting in the substantial increase of advertising costs compared to the year ended December 31, 2019.

The Company incurred advertising costs, which are included in selling, general and administrative expenses of approximately $ 0.4 million and $ 1.3 million during the years ended December 31, 2021 and 2020, respectively.

Stock-Based Compensation

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Forfeitures of unvested stock options are recorded when they occur.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The Company incurred stock-based compensation charges of approximately $ 10.9 million and $ 1.2 million for each of the years ended December 31, 2021 and 2020, respectively, which are included in general and administrative expenses.

The following table summarizes such charges for the periods then ended (in thousands):

For the Years Ended

Compensation and related benefits $ 1,194 $ 3,247

Professional and legal fees — 242

Totals $ 1,194 $ 3,489

Net Loss Per Share

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

Net Income (Loss) Per Share

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 sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

For the Years Ended December 31,

Net loss attributable to stockholders of Inpixon $ ( 69,155 ) $ ( 29,229 )

Accretion of Series 7 preferred stock ( 8,161 ) —

Net loss attributable to common stockholders $ ( 77,316 ) $ ( 29,229 )

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 107,981,441 28,800,493

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.72 ) $ ( 1.01 )

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 years ended December 31, 2021 and 2020:

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Convertible preferred stock 39,400,846 846

Earnout reserve 11,061,939 —

Totals 165,743,426 13,544,153

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Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets.

The Company has adopted Section 360-10-35 of the FASB ASC for its long-lived assets.

Pursuant to ASC Paragraph 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value.

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Recently Issued and Adopted Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables.

The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.

ASU 2016-13 also expands the disclosure requirements to enable users of financial

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, "Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes.

ASU 209-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 became effective for the Company beginning January 1, 2021.

The new guidance was effective upon issuance of this final

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

statements to understand the entity’s assumptions, models and methods for estimating expected credit losses.

In November 2019, the FASB issued ASU No.

2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) clarifying effective dates for the impacted ASUs.

For public business entities that meet the definition of an SEC filer and smaller reporting company, ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified retrospective approach.

Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018.

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

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement,” (“ASU 2018-13”).

ASU 2018-13 requires application of the prospective method of transition (for only the most recent interim or annual period presented in the initial fiscal year of adoption) to the new disclosure requirements for (1) changes in unrealized gains and losses included in other comprehensive income and (2) the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

ASU 2018-13 also requires prospective application to any modifications to disclosures made because of the change to the requirements for the narrative description of measurement uncertainty.

ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year.

The Company has evaluated this standard and adoption does not have a material impact on its condensed consolidated financials or disclosures.

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”) and in May 2019, the FASB issued Accounting Standards Update No.

2019-05, Financial Instruments--Credit Losses (Topic 326) (“ASU 2019-05”).

These amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early application permitted.

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

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes,” (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for the Company beginning January 1, 2021.

The Company does not expect this ASU will have a material effect on its condensed consolidated financial statements or disclosures.

In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities, Investments—Equity Method and Joint Ventures, and Derivatives and Hedging" ("ASU 2020-01"), which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815.

The effective date of the standard will be for annual periods beginning after December 15, 2020, and interim periods within those fiscal years.

The Company is currently evaluating the impact of the new guidance and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements or disclosures.

In February 2020, the FASB issued ASU 2020-02, “Financial Statements - Credit losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Relating to Accounting Standards Update No.

2016-02, Leases (Topic 842)” (“ASU 2020-02”), which provides guidance on the measurement and requirements related to credit losses.

The new guidance was effective upon issuance of this final accounting standards update.

accounting standards update.

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

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.

The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities.

The Company will adopt ASU 2020-10 as of the reporting period beginning January 1, 2021.

The adoption of this update is not expected to have a material effect on the Company’s consolidated financial statements.

The effective date of the standard is for interim and annual reporting periods beginning after December 15, 2020 for public entities.

The Company adopted ASU 2020-10 as of the reporting period beginning January 1, 2021.

The new guidance was effective upon issuance of this final accounting standards update.

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

Recently Issued Accounting Standards Not Yet Adopted

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.

In May 2021, the FASB issued ASU 2021-04, "Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options'" ("ASU 2021-04"), which introduces a new way for companies to account for warrants either as stock compensation or derivatives.

Under the new guidance, if the modification does not change the instrument's classification as equity, the company accounts for the modification as an exchange of the original instrument for a new instrument.

In general, if the fair value of the "new" instrument is greater than the fair value of the "original" instrument, the excess is recognized based on the substance of the transaction, as if the issuer has paid cash.

The effective date of the standard is for interim and annual reporting periods beginning after December 15, 2021 for all entities, and early adoption is permitted.

In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU 2021-08"), which addresses diversity in practice related to the accounting for revenue contracts with customers acquired in a business combination.

Under the new guidance, the acquirer is required to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

The effective date of the standard is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The effects of this change on the Company's financial statements have not yet been determined.

In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832)" ("ASU 2021-10"), which provides guidance on disclosing government assistance.

Under the new guidance, the Company is required to including the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on the entity's financial statements.

The effective date of the standard is for annual periods beginning after December 15, 2021.

Reverse Stock Split

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

On January 7, 2020, the Company effected a 1-for-45 reverse stock split of its outstanding common stock.

The consolidated financial statements and accompanying notes give effect to the reverse stock split as if it occurred at the beginning of the first period presented.

Subsequent Events

The Company evaluates events and/or transactions occurring after the balance sheet date and before the issue date of the consolidated financial statements to determine if any of those events and/or transactions requires adjustment to or disclosure in the consolidated financial statements.

Note 3 - Locality Acquisition

On May 21, 2019, the Company, through its wholly owned subsidiary, Inpixon Canada as purchaser, completed its acquisition of Locality in which Locality’s stockholders sold all of their shares to the purchaser in exchange for consideration of (i) $ 1,500,000 (the “Aggregate Cash Consideration”) minus a working capital adjustment equal to $ 85,923 , and (ii) 14,445 shares of the Company's common stock with a fair market value of $ 514,000 .

Locality was a technology company specializing in wireless device positioning and radio frequency augmentation of video surveillance systems.

The Locality acquisition allows the Company to accept wireless device positioning from third-party Wi-Fi access points as well as surveillance systems and combine that information with Inpixon's own location data into their analytics platform, providing customers with additional data and ability to see video and radio frequency data concurrently.

The Aggregate Cash Consideration, less the working capital adjustment applied against the Aggregate Cash Consideration of $ 85,923 , is payable in installments as follows:

(i) the initial installment representing $ 250,000 minus $ 46,422 of the working capital adjustment was paid on the closing date;

(ii) $ 210,499 was paid on November 21, 2019, which was comprised of a $ 250,000 installment less $ 39,501 of the working capital adjustment;

(iii) two additional installments, each equal to $ 250,000 , were paid twelve months and eighteen months after the closing date;

and (iv) one final installment representing $ 500,000 will be paid on the second anniversary of the closing date, in each case minus the cash fees payable to the advisor in connection with the acquisition.

Inpixon Canada will have the right to offset any loss, as defined in the purchase agreement, first, against any installment of the installment cash consideration that has not been paid and second, against the sellers and the advisor on a several basis, in accordance with the indemnification provisions of the purchase agreement.

The total recorded purchase price for the transaction was approximately $ 1,928,000 , which consisted of cash at closing of $ 204,000 , approximately $ 1,210,000 of cash that will be paid in installments as discussed above and $ 514,000 representing the value of the stock issued upon closing.

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The purchase price was allocated and modified for measurement period adjustments due to the receipt of the valuation report and updated tax provision estimates as follows (in thousands):

Preliminary Allocation Valuation Measurement Period Adjustments Tax Provision Measurement Period Adjustments Adjusted Allocation

Assets Acquired:

Cash $ 70 $ — $ — $ 70

Accounts receivable 7 — — 7

Other current assets 4 — — 4

Inventory 2 — — 2

Fixed assets 1 — — 1

Developed technology 1,523 ( 78 ) — 1,445

Customer relationships 216 ( 31 ) — 185

Non-compete agreements 49 — — 49

Goodwill 619 80 ( 46 ) 653

$ 2,491 $ ( 29 ) $ ( 46 ) $ 2,416

Liabilities Assumed:

Accounts payable $ 13 $ — $ — $ 13

Accrued liabilities 48 — — 48

Deferred revenue 28 — — 28

Deferred tax liability 474 ( 29 ) ( 46 ) 399

563 ( 29 ) ( 46 ) 488

Total Purchase Price $ 1,928 $ — $ — $ 1,928

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.

The deferred revenue included in the financial statements is the expected liability to service the projects.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not deductible for tax purposes.

The financial data of Locality is included in the Company’s financial statements starting on the acquisition date through the year ended December 31, 2020.

Proforma information has not been presented as it has been deemed to be immaterial.

Note 4 - GTX Acquisition

On June 27, 2019, the Company completed its acquisition of certain assets of GTX, consisting of a portfolio of GPS technologies and intellectual property (the “Assets”) that allow Inpixon to provide positioning and positioning solutions for assets and devices homogenously from the indoors to the outdoors.

Prior to this asset acquisition, the Company was only providing indoor location.

The Assets were acquired for aggregate consideration consisting of (i) $ 250,000 in cash delivered at the closing and (ii) 22,223 shares of Inpixon’s restricted common stock.

The total recorded purchase price for the transaction was $ 900,000 , which consisted of the cash paid of $ 250,000 and $ 650,000 representing the value of the stock issued upon closing.

The purchase price was allocated based on the receipt of a final valuation report as follows (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Fair Value Allocation

Assets Acquired:

Developed technology $ 830

Non-compete agreements 68

Total Purchase Price $ 900

On September 16, 2019, the Company loaned GTX $ 50,000 in accordance with the terms of the asset purchase agreement.

The note began to accrue interest at a rate of 5 % per annum beginning on November 1, 2019.

The note was amended on May 11, 2020 to extend the maturity date from April 13, 2020 to September 13, 2020 and require monthly payments against the outstanding balance of the note.

The note was amended on October 28, 2020 to extend the maturity date from September 13, 2020 to December 31, 2020 and waive the requirement for the monthly repayment installment obligation provided for in the May 11, 2020 amendment.

This note is included as part of other receivables in the Company’s consolidated financial statements.

As of December 31, 2020, the balance of the note including interest was approximately $ 53,000 .

Proforma information has not been presented as it has been deemed to be immaterial

Note 5 - Jibestream Acquisition

On August 15, 2019, the Company, through its wholly owned subsidiary, Inpixon Canada as purchaser (the “Purchaser”), completed its acquisition of Jibestream, a provider of indoor mapping and location technology, for consideration consisting of:

(i) CAD $ 5,000,000 , plus an amount equal to all cash and cash equivalents held by Jibestream at the closing, minus, if a negative number, the absolute value of the Estimated Working Capital Adjustment (as defined in the acquisition agreement), minus any amounts loaned by the Purchaser to Jibestream to settle any Indebtedness (as defined in the Purchase Agreement (the "Purchase Agreement")) or other fees, minus any cash payments to the holders of outstanding options to settle any in-the-money options, minus the deferred revenue costs of CAD $ 150,000 , and minus the costs associated with the audit and review of the financial statements of Jibestream required by the Purchase Agreement (collectively, the “Estimated Cash Closing Amount”);

plus (ii) 176,289 shares of the Company’s common stock which was equal to CAD $ 3,000,000 , converted to U.S.

dollars based on the exchange rate at the time of the closing, divided by $ 12.4875 which was the price per share at which shares of the Company’s common stock are issued in of the Company’s common stock the Offering on August 12, 2019 (“Inpixon Shares”).

Jibestream, provided a dynamic interactive map that allowed customers to put their digitized map into their mobile app or provide the map on a kiosk or other interface.

Inpixon can now utilize the Jibestream map to offer a more intuitive interface to see its locationing data and analytics.

The Nasdaq listing rules required the Company to obtain the approval of the Company’s stockholders for the issuance of 63,645 of the Inpixon Shares (the “Excess Shares”), which was obtained on October 31, 2019 and the shares were issued on November 5, 2019.

A number of Inpixon Shares representing fifteen percent ( 15 %) of the value of the Purchase Price (the “Holdback Amount”) were subject to stop transfer restrictions and forfeiture to secure the indemnification and other obligations of the Vendors in favor of the Company arising out of or pursuant to Article VIII of the Purchase Agreement and, at the option of the Company, to secure the obligation of the Vendors’ to pay any adjustment to the Purchase Price pursuant to Section 2.5 of the Purchase Agreement.

The total recorded purchase price for the transaction was approximately $ 5,062,000 , which consisted of cash at closing of approximately $ 3,714,000 and $ 1,348,000 representing the value of the stock issued upon closing determined based on the closing price of the Company’s common stock as of the closing date on August 15, 2019.

Subsequently, the Company agreed not to enforce any right of setoff resulting from a Working Capital Adjustment.

Note 3 - Disaggregation of Revenue

Disaggregation of Revenue

Revenues consisted of the following (in thousands):

For the Years Ended December 31,

Recurring revenue

Hardware $ 3 $ —

Software 7,152 4,107

Professional services 35 134

Total recurring revenue $ 7,190 $ 4,241

Non-recurring revenue

Hardware $ 3,830 $ 3,144

Software 1,974 523

Professional services 3,001 1,389

Total non-recurring revenue $ 8,805 $ 5,056

Total Revenue $ 15,995 $ 9,297

For the Years Ended December 31,

Revenue recognized at a point in time

Indoor Intelligence (1) $ 4,371 $ 3,345

Saves (1) 1,436 506

Shoom (1) — —

Total $ 5,807 $ 3,851

Revenue recognized over time

Indoor Intelligence (2) (3) $ 6,676 $ 2,715

Saves (3) 1,501 712

Shoom (3) 2,011 2,019

Total $ 10,188 $ 5,446

Total Revenue $ 15,995 $ 9,297

(1) Hardware and Software's performance obligation is satisfied at a point in time where when they are shipped to the customer.

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The purchase price was allocated based on the receipt of a final valuation report and modified for measurement period adjustments due to updated tax provision estimates as follows (in thousands):

Preliminary Allocation Tax Provision Measurement Period Adjustments Adjusted Allocation

Assets Acquired:

Cash $ 5 $ — $ 5

Accounts receivable 309 — 309

Other current assets 138 — 138

Fixed assets 10 — 10

Other assets 430 — 430

Developed technology 3,193 — 3,193

Customer relationships 1,253 — 1,253

Non-compete agreements 420 — 420

Goodwill 2,407 ( 919 ) 1,488

$ 8,165 $ ( 919 ) $ 7,246

Liabilities Assumed:

Accounts payable 51 — 51

Accrued liabilities 94 — 94

Deferred revenue 1,156 — 1,156

Other liabilities 513 — 513

Deferred tax liability 1,289 ( 919 ) 370

3,103 ( 919 ) 2,184

Total Purchase Price $ 5,062 $ — $ 5,062

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.

The deferred revenue included in the financial statements is the expected liability to service the projects.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not deductible for tax purposes.

As part of the acquisition, the Company acquired a lease obligation with an operating lease right of use asset of approximately $ 371,000 and an operating lease obligation of approximately $ 371,000 which are included in other assets and other liabilities, respectively, in the purchase price allocation.

The financial data of Jibestream is included in the Company’s financial statements starting on the acquisition date through the year ended December 31, 2020.

Jibestream was amalgamated into Inpixon Canada on January 1, 2020.

(2) Professional services are also contracted on the fixed fee and time and materials basis.

Fixed fees are paid monthly, in phases, or upon acceptance of deliverables.

The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date, in which revenue is recognized over time.

(3) Software As A Service Revenue's performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized overtime.

Note 4 - Systat Licensing Agreement

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(together the “Systat Parties”) to use, market, distribute, and develop the SYSTAT and SigmaPlot software suite of products (the “License Grant”) pursuant to the terms and conditions of that certain Exclusive Software License and Distribution Agreement, deemed effective as of June 1, 2020 (the “Effective Date”), and amended on June 30, 2020 (as amended, the “License Agreement”).

In accordance with Rule 11-01(d) and ASC 805, the transaction was deemed to be the acquisition of a business and accounted for as a business combination with an acquisition date of June 30, 2020 (the “Closing Date”).

The Company pursued this transaction in order to diversify its product offerings by increasing its software solution offerings, in addition to expanding its cross-selling opportunities across a global customer base in an effort to maintain continued revenue growth and mitigate or offset the risks and uncertainties anticipated with its existing hardware products as a result of the Covid-19 pandemic.

In accordance with ASC 805, the transaction was deemed to be the acquisition of a business and accounted for as a business combination with an acquisition date of June 30, 2020 (the “Closing Date”).

In accordance with the terms of the License Agreement, on the Closing Date, we partitioned a portion of that certain promissory note (the “Sysorex Note”) issued to us by Sysorex, Inc.

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as consideration payable for the rights granted under the license as follows:

(i) $ 1.3 million on the three

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

month anniversary of the Closing Date;

(i) $ 1.3 million on the three month anniversary of the Closing Date;

(ii) $ 1.0 million on the six month anniversary of the Closing Date;

9 unchanged sentences

The total recorded purchase price for the transaction was $ 2.2 million, which consisted of the $ 2.2 million cash consideration as a full valuation allowance was retained against the Sysorex Note.

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Fair Value Allocation

11 unchanged sentences

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not deductible for tax purposes.

The calculated goodwill is deductible for tax purposes.

The financial data of the License Grant is included in the Company’s financial statements as of deemed acquisition date of June 30, 2020.

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

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

These amounts are subject to revision upon the completion of formal studies and valuations, as needed, which the Company expects to occur during the first quarter of 2021.

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 $ 0.9 million.

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.

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

Fair Value Allocation

Intangible assets:

Trademarks $ 296

Webstores & Websites 404

Total net assets acquired $ 900

Proforma information has not been presented as it has been deemed immaterial.

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.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is deductible for tax purposes.

Note 5 - Ten Degrees Acquisition

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(“MCI”), and the holder of a majority of the outstanding capital of TDIL and mCube, Inc., and the sole shareholder of 100 % of the outstanding capital stock of MCI (“mCube,” together with TDI, TDIL, and MCI collectively, the “Transferors”), the Company acquired a suite of on-device “blue-dot” indoor location and motion technologies, including patents, trademarks, software and related intellectual property from the Transferors (collectively, the “TDI Assets”).

In accordance with Rule 11-01(d) and ASC 805, the transaction was deemed to be the acquisition of a group of assets, and not to be accounted for as a business combination, with an asset acquisition date of August 19, 2020.

The acquisition of the blue-dot technology further strengthened and enhanced the Company’s indoor intelligence capabilities allowing it to offer on-device wayfinding capabilities through integration with its mapping technology.

In accordance with ASC 805, the transaction was deemed to be the acquisition of a group of assets, and not to be accounted for as a business combination, with an asset acquisition date of August 19, 2020.

The TDI Assets were acquired for consideration consisting of (i) $ 1.5 million in cash and (ii) 480,000 shares of the Company's common stock.

1 unchanged sentence

In addition, each party agreed to not solicit any employees from the other party for a period of one year from the closing date, subject to certain exceptions.

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 total recorded purchase price for the transaction was $ 2.1 million, which consisted of the cash paid of $ 1.5 million and $ 0.6 million representing the value of the stock issued upon closing.

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

Fair Value Allocation

10 unchanged sentences

Nanotron’s business consists of developing and manufacturing location-aware IoT systems and solutions.

The Company pursued the transaction in order to further strengthen and expand its indoor intelligence platform and capabilities to include real time location services and asset tracking capabilities broadening its industry cover to include the industrial sector, expand its customer, partner and user base and deepen its geographic presence in regions outside of North America.

The total paid to Nanotron was an aggregate purchase price of $ 8.7 million in cash (less the Holdback Funds (as defined below) and certain other closing adjustments) for the outstanding shares of Nanotron.

The price was subject to certain post-Closing adjustments based on actual working capital as of the closing as described in the Purchase Agreement.

Inpixon retained $ 750,000 (the “Holdback Funds”) from the purchase price to secure Nanotron’s obligations under the 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.

Inpixon retained $ 0.8 million (the “Holdback Funds”) from the purchase price to secure Nanotron’s obligations under the 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.

As discussed above, the certain adjustments to the Purchase Price are adjustments for severance payments and calculations of Net Working Capital versus the Working Capital Target (calculation defined as “Net Working Capital Adjustment”).

The adjustment for severance payments includes a $ 214,000 reduction in purchase price for severance payments due after the closing date offset by a return credit of $ 50,000 for severance payments owed by Sensera Limited.

As for Net Working Capital Adjustment, Net Working Capital was determined to be less than the Working Capital Target by an amount of $ 30,000 , resulting in a reduction in the purchase price of $ 30,000 .

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 by Sensera Limited to obtain the release of certain existing security interests on Nanotron’s assets.

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

The adjustment for severance payments includes a $ 0.2 million reduction in purchase price for severance payments due after the closing date offset by a return credit of $ 0.1 million for severance payments owed by Sensera Limited.

As for Net Working Capital Adjustment, Net Working Capital was determined to be less than the Working Capital Target by an amount of $ 0.03

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

million, resulting in a reduction in the purchase price of $ 0.03 million.

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 $ 0.2 million.

In addition, the amount payable was further reduced by $ 0.1 million in connection with a post closing working capital adjustment and the satisfaction of a claim related to a customer dispute.

A balance of $ 0.5 million was paid to the Seller in full satisfaction of the Holdback Funds payable by the Purchaser to the Seller pursuant to the Purchase Agreement.

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

Fair Value Allocation

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tax liability.

Note 7 - Game Your Game Acquisition

On April 9, 2021, the Company acquired Game Your Game, and its wholly owned subsidiary Active Mind to further the Company's strategy to reach the end customer with apps in the growing sports analytics space.

In exchange for a purchase price

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

of $ 3.1 million the Company acquired 522,000 shares of the Company's common stock from Game Your Game, which represent 55.4 % of the outstanding shares of Common Stock of Game Your Game.

The goodwill of $ 0.5 million arising from the acquisition consists of an acquired workforce, as well as synergies and economies of scale expected from combined operations of Inpixon and Game Your Game.

The following table represents the purchase price (in thousands).

Stock ( 1,179,077 number of common stock shares)

Total Purchase Price $ 3,070

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

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

In connection with the acquisition, the Company recorded a non-controlling interest for the 44.6 % ownership from unrelated third parties.

The non-controlling interest was recorded at fair value on the closing date of the Acquisition.

Future net income (loss) attributable to the non-controlling interest will be allocated based on its respective ownership.

The Company has made an allocation of the purchase price of the acquisition to the assets acquired and the liabilities assumed as of the purchase date.

The following table summarizes the purchase price allocations relating to the Acquisition (in thousands):

Fair Value Allocation

Assets acquired:

Cash and cash equivalents $ 1,851

Accounts receivable 36

Inventory 144

Other current assets 37

Property and equipment 105

Other assets 4

Tradename 628

Proprietary technology 2,824

Customer relationship 847

Total assets acquired $ 6,935

Liabilities assumed:

Accounts payable $ 957

Accrued expenses and other liabilities 436

Total liabilities assumed 1,393

Estimated fair value of net assets acquired:

Non Controlling Interest ( 2,472 )

Estimated fair value of net assets acquired attributable to the Company $ 3,070

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not tax deductible for tax purposes.

Total acquisition-related costs for the Acquisition incurred during the period ended December 31, 2021 ended was $ 0.3 million 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):

Professional fees $ 158

Consulting fees 150

Total acquisition costs $ 308

Note 8 - Visualix Acquisition

On April 23, 2021 (the “Closing Date”), the Company entered a certain asset purchase agreement by and among the Company, Visualix GmbH i.L.

(the “Visualix”), Darius Vahdat-Pajouh and Michal Bucko (each, a “Founder,” and collectively, the “Founders”), and Future Energy Ventures Management GmbH (“FEVM”).

Prior to the Closing Date, Visualix owned and operated certain computer vision, robust localization, large-scale navigation, mapping, and 3D reconstruction technologies (collectively, the “Underlying Technology”).

In accordance with the terms of the asset purchase agreement, the Company purchased from Visualix the entirety of its assets consisting primarily of intellectual property including the underlying technology.

Additionally, the Company purchased certain patent applications related to the underlying technology from FEVM.

In consideration of the transactions (the “Consideration”) contemplated by the Asset Purchase Agreement, the Company:

remitted a cash payment in the amount of Fifty Thousand Euros (EUR € 50,000 ) to Visualix

issued 316,768 shares of Common Stock to Visualix;

issued 52,795 to shares of Common Stock to FEVM.

The asset purchase agreement includes customary representations and warranties, as well as certain covenants, including, inter alia, that the Founders are hired as employees of Inpixon GmbH and Visualix and the Founders shall not, for a period of two (2)

years following the Closing Date, directly or indirectly, compete with the Company in the sectors of Mapping and Localization Technology (as defined in the asset purchase agreement).

The following table represents the purchase price (in thousands).

Stock ( 369,563 common stock shares at $ 1.16 per share)

Total Purchase Price $ 490

Assets Acquired (in thousands):

Developed Technology $ 429

Non-compete Agreements 61

Total Purchase Price $ 490

Note 9 - CXApp Acquisition

On April 30, 2021, the Company acquired Design Reactor, Inc.

(“CXApp”) which enables corporate enterprise organizations to provide a custom-branded, location-aware employee app focused on enhancing the workplace experience and hosting virtual and hybrid events.

An important aspect of the Company’s strategy towards delivering a comprehensive indoor intelligence

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

offering required direct engagement with the end-user through an app.

With the CXApp acquisition, the Company was able to establish that direct engagement, eliminating the need for a third part app developer partner.

The transaction was attractive to the Company because it would complete its strategic vision to have the most comprehensive suite of indoor intelligence solutions, was anticipated to be accretive to earnings and revenue, increase the Company’s average selling price and result in the acquisition of several marquee customers.

In exchange for the aggregate purchase price of $ 32.1 million, the Company acquired all of the outstanding capital of the CXApp, incorporated in the State of California.

The price was subject to certain post-closing adjustments based on actual working capital as of the closing as described in the stock purchase agreement.

The goodwill of $ 15.3 million arising from the acquisition consists of an acquired workforce, as well as synergies and economies of scale expected from combined operations of Inpixon and the CXApp.

The following table represents the purchase price (in thousands).

Cash $ 22,132

Stock ( 8,849,538 common stock shares at $ 1.13 per share)

Total Purchase Price $ 32,132

In relation to the cash payment, Inpixon retained $ 4.9 million 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 third parties on the Seller's behalf.

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

The Company retained cash for these future payments and recorded these future payments in Acquisition Liability on the closing date of the Acquisition.

During the measurement period the holdback funds was adjusted by $ 0.2 million to account for work capital adjustments.

The following represents the amounts that were recorded to Acquisition Liability (in thousands):

Acquisition Liability

Option payout $ 296

Bonus payout 34

Seller transaction expenses 72

Miscellaneous accrued expenses 174

Total current $ 576

Option payout $ 493

Bonus payout 57

Holdback funds 4,875

Total noncurrent 5,425

Less adjustment to holdback funds due to measurement period adjustment ( 209 )

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

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

Less payments made during the three months ended December 31, 2021 $ ( 220 )

Total acquisition liability $ 5,332

In connection with the Acquisition, the Company is to pay an additional amount up to $ 12.5 million 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 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

On December 30, 2021, the Company entered into an Amendment to Stock Purchase Agreement (the "Amendment"), with the sellers' representative, pursuant to which the parties to the Purchase Agreement agreed to (i) amend the amount of the earnout target from $ 8.3 million to $ 4.2 million;

(ii) amend the duration of the earnout period from the period of the closing date through twelve month anniversary to the cclosing date to the period from the closing date through December 31, 2021;

and (iii) eliminate the sellers' representative's right to accelerate the Earnout Payment upon a sale or change of control of the Company.

The Company evaluated the Amendment noting the Amendment accelerated expense related to the Earnout Payment.

The Company recorded $ 6.5 million of this expense for the year ended December 31, 2021 which is included in the General and Administrative costs of the consolidated statements of operations.

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

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Acquisition to the assets acquired and the liabilities

assumed as of the purchase date.

The following table summarizes the preliminary purchase price allocations relating to the Acquisition (in thousands):

Fair Value Allocation

Assets acquired:

Cash and cash equivalents $ 1,153

Trade and other receivables 1,626

Prepaid expenses and other current assets 68

Property, plant, and equipment 6

Tradename 2,170

Proprietary technology 8,350

Customer relationships 5,020

Non-compete agreements 2,690

Goodwill 15,306

Total assets acquired $ 36,389

Liabilities assumed:

Accounts payable $ 203

Deferred revenue 1,319

Accrued expenses and other liabilities 116

Deferred tax liability 2,591

Other tax liability, noncurrent 28

Total liabilities assumed 4,257

Estimated fair value of net assets acquired:

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.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not tax deductible for tax purposes.

Total acquisition-related costs for the Acquisition incurred during the year ended December 31, 2021 was $ 0.5 million 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):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Accounting fees $ 115

Legal fees 389

Total acquisition costs $ 504

Note 10 - IntraNav Acquisition

On December 9, 2021, the Company, through its wholly owned subsidiary, Inpixon Germany, through its wholly owned subsidiary, Nanotron Technologies acquired IntraNav GmbH.

IntraNav will bring new, comprehensive products and technologies, and a broad IP portfolio to strengthen the Company's established RTLS product line.

In exchange for a Purchase Price of $ 1.1 million, the Purchaser acquired all the outstanding shares of IntraNav.

The goodwill of $ 0.5 million arising from the Acquisition consists of an acquired workforce, as well as synergies and economies of scale expected from combined operations of Nanotron and IntraNav.

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

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Acquisition to the assets acquired and the liabilities assumed as of the purchase date.

The following table summarizes the provisional purchase price allocations relating to the Acquisition:

Cash Considerations (EUR) € 1,000,000

IntraNav's indebtedness in excess of EUR 150,000

Total Purchase Price (EUR) € 1,000,000

Total Purchase Price (USD) - at 1.13249 USD per EUR

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Fair Value Allocation

Assets acquired:

Cash and cash equivalents $ 109

Accounts receivable 110

Prepaid expenses and other current assets 135

Inventory 844

Right of use asset 312

Property, plant, and equipment 30

Other assets 113

Tradename & trademarks 168

Proprietary technology 507

Customer relationships 197

Total assets acquired $ 3,007

Liabilities assumed:

Accounts payable 2

Accrued liabilities 413

Lease liabilities – current 54

Lease liabilities - noncurrent 231

Payable to new parent 391

Deferred revenue 784

Total liabilities assumed 1,875

Estimated fair value of net assets acquired:

Total acquisition-related costs for the Acquisition incurred during the year ended December 31, 2021, was $ 209,036 , and is included in selling, general and administrative expense in the Company's consolidated statements of operations.

The following table details the acquisition related costs for the Acquisition:

Accounting fees $ 10

Legal fees 199

Total acquisition costs $ 209

Note 11 - Proforma Financial Information

Jibestream Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company and Jibestream for the years ended December 31, 2020 and 2019, as if the acquisition had occurred as of the beginning of the first period presented instead of on August 15, 2019.

Nanotron Proforma and CXApp Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company, Nanotron and CXApp for the years ended December 31, 2021 and 2020, as if the acquisitions had occurred as of the beginning of the first period presented instead of on October 5, 2020 for Nanotron and on April 30, 2021 for CXApp.

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 proforma financial information for the Company and Jibestream is as follows (in thousands):

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

For the Years Ended December 31,

Revenues $ 9,297 7,558

Net loss attributable to common stockholders $ ( 29,229 ) ( 36,513 )

Net loss per basic and diluted common share ( 1.01 ) ( 36.59 )

Weighted average common shares outstanding:

Basic and Diluted 28,800,493 997,856

Nanotron Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company and Nanotron for the years ended December 31, 2020 and 2019, 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 proforma financial information for the Company and Nanotron is as follows (in thousands):

The proforma financial information for Systat, Ten Degrees, Game Your Game, Visualix and IntraNav have not been presented as it is deemed immaterial.

The proforma financial information for the Company, Nanotron and CXApp is as follows (in thousands):

For the Years Ended December 31,

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

As of December 31,

Raw materials $ 463 $ 211

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Finished goods 1,412 1,033

Subtotal 2,414 1,381

Inventory obsolescence reserve ( 438 ) ( 138 )

Total Inventory $ 1,976 $ 1,243

Note 11 - Property and Equipment, net

Property and equipment as of December 31, 2020 and 2019 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 13 - Property and Equipment, net

Property and equipment as of December 31, 2021 and 2020 consisted of the following (in thousands):

As of December 31,

6 unchanged sentences

Total Property and Equipment, Net $ 1,442 $ 1,445

Depreciation and amortization expense were approximately $ 128,000 and $ 98,000 for the years ended December 31, 2020 and 2019, respectively.

Depreciation and amortization expense were approximately $ 0.4 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively.

Note 14 - Investment in Equity Securities

Investment securities—fair value consist of investments in the Company’s investment in shares and rights of equity securities.

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

December 31, 2021 Cost Fair Value

Investments in equity securities -fair value

Equity shares $ 47,841 $ 1,493

Equity rights 11,064 345

Total investments in equity securities - fair value $ 58,905 $ 1,838

For the year ended December 31, 2021, the Company recognized a net unrealized loss of $ 57.1 million on the statement of operations.

There were no realized gains and losses on equity securities for the year ended December 31, 2021.

Note 15 - Software Development Costs, net

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The weighted average remaining amortization period for the Company’s software development costs is 3.0 years.

Amortization expense for capitalized software development costs was $ 0.7 million and $ 1.03 million for each of the years ended December 31, 2020 and 2019.

Amortization expense for capitalized software development costs was approximately $ 0.9 million and $ 0.7 million for each of the years ended December 31, 2021 and 2020.

Future amortization expense on the computer software is anticipated to be as follows (in thousands):

For the Years Ending December 31, Amount

2025 and thereafter —

Total $ 1,721

Note 13 - Intangible Assets

Intangible assets at December 31, 2020 and 2019 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Gross Carrying Amount December 31, Accumulated Amortization December 31, Remaining Weighted Average Useful Life

2020 2019 2020 2019

Trade Name/Trademarks $ 1,112 $ 780 $ ( 854 ) $ ( 724 ) 0.03

Customer Relationships 5,590 4,070 ( 2,972 ) ( 2,574 ) 1.10

Developed Technology 26,216 21,422 ( 16,647 ) ( 14,996 ) 6.52

Non-compete Agreements 2,485 923 ( 902 ) ( 501 ) 0.37

IP Agreement 186 — ( 12 ) — 0.05

Totals $ 35,589 $ 27,195 $ ( 21,386 ) $ ( 18,795 )

Aggregate Amortization Expense:

Aggregate amortization expense for the years ended December 31, 2020 and 2019 were $ 2.3 million and $ 3.6 million, respectively.

Future amortization expense on intangibles assets is anticipated to be as follows (in thousands):

For the Years Ending December 31, Amount

1 unchanged sentence

Total $ 1,792

Note 14 - Goodwill

The Company has recorded goodwill and other indefinite-lived assets in connection with its acquisition of Shoom, Locality, GTX, Jibestream, Systat, and Nanotron.

Note 16 - Goodwill and Intangible Assets

The Company has recorded goodwill and other indefinite-lived assets in connection with its acquisition of Systat, GTX Nanotron, Locality, Jibestream, CXApp, Game Your Game, and IntraNav.

Goodwill, which represents the excess of acquisition cost over the fair value of the net tangible and intangible assets of the acquired company, is not amortized.

Indefinite-lived intangible assets are stated at fair value as of the date acquired in a business combination.

The Company’s goodwill balance and other assets with indefinite lives were evaluated for potential impairment during the years ended December 31, 2020 and 2019, as certain indications on a qualitative and quantitative basis were identified that an impairment exists as of the reporting date.

During the years ended December 31, 2020 and 2019, the Company did not recognize any impairment on the balance of goodwill.

The Company’s goodwill balance and other assets with indefinite lives were evaluated for potential impairment on a reporting unit level during the years ended December 31, 2021 and 2020, as certain indications on a qualitative and quantitative basis were identified that an impairment exists as of the reporting date as of December 31, 2021.

During the year ended December 31, 2021, the Company recognized approximately $ 14.8 million of goodwill impairment on GTX, Nanontron, Locality, Jibestream, CXApp, Game Your Game and IntraNav.

During the year ended December 31, 2020, the Company did no t recognize any goodwill impairment.

The Company utilized qualitative factors in determining if the carrying amounts of the Company’s reporting units exceeded the fair value of the Company, and noted that no such factors indicated impairment on any of its goodwill.

During the year ended December 31, 2019, the corporate income tax returns were filed for the periods ending as of the acquisition dates of Locality and Jibestream.

After reviewing those tax returns, it was determined that there were additional tax benefits the Company would receive primarily related to net operating losses and research tax credits.

As a result, the deferred tax asset of Jibestream was increased by approximately $ 1,023,000 and the deferred tax asset of Locality was increased by $ 48,000 with a corresponding decrease to goodwill.

Additionally, during the year ended December 31, 2019, upon receipt of the Locality valuation report, the values of the intangibles were updated with a corresponding $ 80,000 increase to goodwill.

INPIXON AND SUBSIDIARIES

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The following table summarizes the changes in the carrying amount of Goodwill for the year ended December 31, 2021 (in thousands):

Locality Jibestream GTX Systat Nanotron Total

Segments Saves Indoor Intelligence

Acquisition Systat GTX Nanotron Locality Jibestream CXApp Game Your Game IntraNav Total

Balance as of January 1, 2020 $ — $ — $ — $ 672 $ 1,398 $ — $ — $ — $ 2,070

Goodwill additions through acquisitions 520 2 3,755 — 15 — — — 4,292

Valuation Measurement Period Adjustments 80 — $ — — — 80

Tax Provision Measurement Period Adjustments ( 46 ) ( 919 ) — — — ( 965 )

Adjusted Allocation 653 1,488 — — — 2,141

Exchange rate fluctuation at December 31, 2020 — — 176 — 50 — — — 226

Balance as of December 31, 2019 672 1,398 — — — 2,070

Balance as of January 1, 2021 $ 520 $ 2 $ 3,931 $ 672 $ 1,463 $ — $ — $ — $ 6,588

Goodwill additions through acquisitions 200 — — — — 17,432 286 482 18,400

Goodwill impairment — ( 1 ) ( 2,263 ) ( 689 ) ( 967 ) ( 10,239 ) ( 307 ) ( 323 ) ( 14,789 )

Valuation Measurement Period Adjustments ( 25 ) — ( 255 ) — — ( 2,127 ) 173 — ( 2,234 )

Exchange rate fluctuation at December 31, 2021 — — ( 294 ) 17 ( 16 ) — — — ( 293 )

Balance as of December 31, 2021 $ 695 $ 1 $ 1,119 $ — $ 480 $ 5,066 $ 152 $ 159 $ 7,672

As of December 31, 2021 and 2020 there was no goodwill allocated for the Shoom segment.

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

Gross Carrying Amount December 31, Accumulated Amortization December 31, Remaining Weighted Average Useful Life

2021 2020 2021 2020

IP Agreement $ 172 $ 186 $ ( 54 ) $ ( 12 ) 2.75

Trade Name/Trademarks $ 3,602 $ 1,112 $ ( 662 ) $ ( 854 ) 4.25

Webstores & Websites 404 — ( 123 ) — 2.08

Customer Relationships 9,294 5,590 ( 1,440 ) ( 2,972 ) 5.74

Developed Technology 22,175 26,216 ( 3,010 ) ( 16,646 ) 8.45

Non-compete Agreements 4,786 2,485 ( 1,666 ) ( 902 ) 2.44

Totals $ 40,433 $ 35,589 $ ( 6,955 ) $ ( 21,386 )

Aggregate Amortization Expense:

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Aggregate amortization expense for the years ended December 31, 2021 and 2020 were $ 5.1 million and $ 2.5 million, respectively.

Future amortization expense on intangibles assets is anticipated to be as follows (in thousands):

For the Years Ending December 31, Amount

2026 and thereafter 11,897

Total $ 33,478

Note 17 - Other Long Term Investments

During the fourth quarter, the Company purchased $ 2.5 million of Cardinal Ventures Holdings LLC, (“CVH”) for 600,000 Class A Units and 2,500,000 Class B Units.

In 2020, the Company paid $ 1.8 million for 600,000 Class A Units and 2,500,000 Class B Units of Cardinal Ventures Holdings LLC, (“CVH”).

CVH is a Delaware limited liability company formed to conduct any business, enterprise or activity permitted to owning certain interests in a sponsor of a special purpose acquisition company (“SPAC”).

CVH will receive distributions from the sponsor to the extent there is activity at the SPAC.

The $ 1.8 million purchase price was paid on October 12, 2020 and therefore is the date the purchase of the Units was closed.

On December 16, 2020, the Company increased its capital contribution by $ 0.7 million in exchange for an additional 700,000 Class B Units.

It is anticipated that the Contribution will be used by CVH to fund the Sponsor's purchase of securities in the SPAC.

The agreement provides that each Class A Unit and each Class B Unit represents the right of the Company to receive any distributions made by the Sponsor on account of the Class A Interests and Class B Interests, respectively, of the Sponsor.

As described in Note 1, the Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income.

During the period October 6, 2020 through December 31, 2020, CVH had no operating results, as such, there were no share of earnings recognized by the Company in its statement of operations on its proportional equity investment.

During the period January 1, 2021 to December 31, 2021, CVH had no operating results as CVH is a holding company.

CVH only contains units and has not been allocated shares of the SPAC, therefore CVH is not allocating any portion of income or expense incurred by the SPAC.

As such, there was no share of earnings recognized by the Company in its statement of operations on its proportional equity investment.

The following component represents components of Other long-term investments as of December 31, 2021:

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CVH LLC Class B 38.4 % Units

The following table presents summarized financial information for Inpixon’s investment in equity method eligible entities:

As of December 31,

Balance Sheet Data

Total assets $ 6,508

Total liabilities $ —

Inpixon’s investment in equity method eligible entities are represented on balance sheet as an asset of $ 2.5 million as of December 31, 2021 and December 31, 2020.

Ownership interest in equity method eligible entities did not change from the year ended December 31, 2020 to December 31, 2021.

Note 18 - Deferred Revenue

Deferred revenue as of December 31, 2021 and 2020 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

For the period from October 6 through December 31,

Income Statement Data

Note 16 - Deferred Revenue

Deferred revenue as of December 31, 2020 and 2019 consisted of the following (in thousands):

As of December 31,

Deferred Revenue, Current

Deferred Revenue

Maintenance agreements $ 4,183 $ 1,775

Service agreements 622 147

Deferred revenue assumed from Systat agreement 883 —

Total Deferred Revenue, Current 1,922 912

Total Deferred Revenue $ 4,805 $ 1,922

3 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 19 - Accrued Liabilities

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

As of December 31,

Accrued compensation and benefits $ 8,027 $ 1,266

Accrued interest expense 1,012 536

Accrued bonus and commissions 597 426

Accrued other 707 497

Accrued sales and other indirect taxes payable 322 14

$ 10,665 $ 2,739

Note 20 - Debt

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

Short-Term Debt Maturity Principal Unamortized Debt Discount 2020 2019

Short-Term Debt Interest Rate Maturity 2021 2020

March 2020 10 % Note

10 % 3/18/2022 $ 3,251 5,655

November 2019 10 % Note

September 2019 10 % Note

August 2019 10 % Note

June 2019 10 % Note

May 2019 10 % Note

December 2018 10 % Note

Debt discount — — — ( 628 )

Revolving line of credit — — — 150

Other short term debt — — — 74

Third party note payable 8 % 12/31/2022 239 —

Unamortized Debt Discount — ( 254 )

Total Short-Term Debt $ 3,490 $ 5,401

Interest expense on the short-term debt totaled approximately $ 0.5 million and $ 0.7 million and approximately $ 0.2 million and $ 1.6 million was amortized to interest expense from the combined amortization of deferred financing costs and note discounts recorded at issuance for the Short Term Debt for the periods ending December 31, 2021 and 2020, respectively.

(A) Notes Payable

Notes Payable

March 2020 10 % Note Purchase Agreement and Promissory Note

On March 18, 2020, the Company entered into a note purchase agreement with Iliad, pursuant to which the Company agreed to issue and sell to the holder an unsecured promissory note (the “March 2020 10 % Note”) in an aggregate initial principal amount of $ 6,465,000 , which is payable on or before the date that is 12 months from the issuance date.

The initial principal amount includes an original issue discount of $ 1,450,000 and $ 15,000 that the Company agreed to pay to the holder to cover the holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the March 2020 Note, the holder paid an aggregate purchase price of $ 5,000,000 .

On March 18, 2020, the Company entered into a note purchase agreement with Iliad, pursuant to which the Company agreed to issue and sell to the holder an unsecured promissory note (the “March 2020 10 % Note”) in an aggregate initial principal amount of $ 6.5 million, which is payable on or before the date that is 12 months from the issuance date.

The initial principal amount includes an original issue discount of $ 1.5 million and $ 0.02 million that the Company agreed to pay to the holder to cover the holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the March 2020 Note, the holder paid an aggregate purchase price of $ 5.0 million.

Interest on the March 2020 Note accrues at a rate of 10 % per annum and is payable on the maturity date or otherwise in accordance with the March 2020 Note.

3 unchanged sentences

provided, however, that if the holder does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the holder to redeem in any future month in addition to such future month’s monthly redemption amount.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Upon receipt of any monthly redemption notice, the Company shall pay the applicable monthly redemption amount in cash to the holder within five business days of the Company’s receipt of such Monthly Redemption Notice.

3 unchanged sentences

On September 17, 2020, we amended the one time monitoring fee applicable in the event the note was outstanding on the date that was 6 months from the issuance date, from ( 10 %) to 5 % which was added to the March 2020 10 % Note balance.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

November 2019 10 % Note Purchase Agreement and Promissory Note

On November 22, 2019, we issued a promissory note to St.

George Investments LLC (“St.

George”), an affiliate of Iliad and Chicago Venture, pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note (the “November 2019 10 % Note”) in the initial principal amount of $ 952,500 , which is payable on or before the date that is 6 months from the issuance date, subject to extension in accordance with the terms of the note.

The initial principal amount includes an original issue discount of $ 187,500 and $ 15,000 that the Company agreed to pay to St.

George to cover its legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the note, St.

George paid an aggregate purchase price of $ 750,000 .

Under the terms of the note, since it was still outstanding on February 22, 2020, a one-time monitoring fee equal to ten percent ( 10 %) of the then-current outstanding balance, or approximately $ 97,688 , was added to the note.

As of December 31, 2020 this note was re-paid in full.

September 2019 10 % Note Purchase Agreement and Promissory Note

On September 17, 2019, the Company entered into a note purchase agreement with Iliad, pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note (the “September 2019 10 % Note”) in an aggregate principal amount of $ 952,500 , which is payable on or before the date that is 9 months from the issuance date.

The Initial Principal Amount includes an original issue discount of $ 187,500 and $ 15,000 that the Company agreed to pay to the Holder to cover the Holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the Note, the Holder paid an aggregate purchase price of $ 750,000 .

Under the terms of the September 2019 Note, since it was still outstanding on December 17, 2019, a one-time monitoring fee equal to ten percent ( 10 %) of the then outstanding balance, or $ 97,661 , was added to the September 2019 Note.

As of December 31, 2020 this note was re-paid in full.

August 2019 10 % Note Purchase Agreement and Promissory Note

On August 8, 2019, the Company entered into a note purchase agreement with Chicago Venture, pursuant to which the Company agreed to issue and sell to the holder an unsecured promissory note (the “August 2019 10 % Note”) in an aggregate principal amount of $ 1,895,000 , which is payable on or before the date that is 9 months from the issuance date.

The Initial Principal Amount includes an original issue discount of $ 375,000 and $ 20,000 that the Company agreed to pay to the holder to cover the holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the August 2019 Note, the holder paid an aggregate purchase price of $ 1,500,000 .

As of December 31, 2020 this note was re-paid in full.

June 2019 10 % Note Purchase Agreement and Promissory Note

On June 27, 2019, the Company entered into a note purchase agreement (the “Purchase Agreement”) with Chicago Venture, pursuant to which the Company agreed to issue and sell to the holder an unsecured promissory note (the “June 2019 10 % Note”) in an aggregate principal amount of $ 1,895,000 , which is payable on or before the date that is 9 months from the issuance date.

The initial principal amount includes an original issue discount of $ 375,000 and $ 20,000 that the Company agreed to pay to the holder to cover the holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the June 2019 Note, the holder paid an aggregate purchase price of $ 1,500,000 .

Effective as of August 12, 2019, the Company and Chicago Venture entered into an amendment agreement, dated as of August 14, 2019, to provide that the Company’s obligation to repay all or a portion of the outstanding balance of the June 2019 Note upon the completion of any offering of equity securities of the Company would not apply or be effective until December 27, 2019.

As consideration for the amendment, a fee of $ 191,883 was added to the outstanding balance of the June 2019 Note.

As of December 31, 2020 this note was re-paid in full.

May 2019 10 % Note Purchase Agreement and Promissory Note

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

On May 3, 2019, the Company entered into a note purchase agreement (the “Purchase Agreement”) with Chicago Venture, pursuant to which the Company agreed to issue and sell to the investor an unsecured promissory note (the “May 2019 Note”) in an aggregate principal amount of $ 3,770,000 , which is payable on or before the date that is 10 months from the issuance date.

The initial principal amount includes an original issue discount of $ 750,000 and $ 20,000 that the Company agreed to pay to the holder to cover the holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the May 2019 Note, the holder paid an aggregate purchase price of $ 3,000,000 .

As of December 31, 2020 this note was re-paid in full.

December 2018 10 % Note Purchase Agreement and Promissory Note

On December 21, 2018, the Company entered into a note purchase agreement with Iliad, pursuant to which the Company agreed to issue and sell to Iliad an unsecured promissory note (the “December 2018 10 % Note”) in an aggregate principal amount of $ 1,895,000 , which is payable on or before December 31, 2019 (as provided in the Exchange Agreement, dated October 24, 2019, described below (the “October 24 th Exchange Agreement”)).

The initial principal amount includes an original issue discount of $ 375,000 and $ 20,000 that the Company agreed to pay to the Holder to cover its legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the December 2018 Note, the Holder paid an aggregate purchase price of $ 1,500,000 .

On February 8, 2019, the Company entered into a global amendment (the “Global Amendment”) to the note purchase agreements entered into on October 12, 2018 and December 21, 2018, in connection with the notes issued as of such dates, to delete the phrase “by cancellation or exchange of the Note, in whole or in part” from Section 8.1 of those agreements.

The Company also agreed to pay Iliad’s fees and other expenses in an aggregate amount of $ 80,000 (the “Fee”) in connection with the preparation of the Global Amendment by adding $ 40,000 of the Fee to the outstanding balance of each of the notes.

On August 8, 2019, the Company and Iliad entered into a standstill agreement with respect to the December 2018 Note (the “Standstill Agreement”).

Pursuant to the Standstill Agreement, Iliad agreed that it will not redeem all or any portion of the December 2018 Note for a period beginning on August 8, 2019, and ending on the date that is 90 days from August 8, 2019.

As consideration for this, the outstanding balance of the December 2018 Note was increased by $ 206,149 .

As of December 31, 2020 this note was re-paid in full.

November 2017 10 % Note Purchase Agreement and Promissory Note

On January 29, 2019, the Company and Chicago Venture Partners, L.P., the holder convertible promissory note (“Chicago Venture” or the “Note Holder”), issued on November 17, with an outstanding balance of $ 383,768 entered into an exchange agreement (the “Exchange Agreement”), pursuant to which the Company and the Note Holder agreed to (i) partition a new convertible promissory note in the form of the Original Note (the “Partitioned Note”) in the original principal amount equal to the Remaining Balance (the “Exchange Amount”) and then cause the Remaining Balance to be reduced by the Exchange Amount;

and (ii) exchange the Partitioned Note for the delivery of 3,842 shares of the Company’s common stock at an effective price share equal to $ 99.90 .

Following such partition of the Original Note, the Original Note was deemed paid in full, was automatically deemed cancelled, and shall not be reissued.

As of December 31, 2020 this note was re-paid in full.

Note Exchanges

The following table summarizes the Company’s exchanges of outstanding principal and interest for shares of common stock The Company analyzed the exchanges of principal as an extinguishment and compared the net carrying value of the debt being extinguished to the re-acquisition price (shares of common stock being issued) and recorded a 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.

As of and for the year ended December 31, 2020 (in thousands, except number of shares):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Short-Term Debt Principal and Interest Shares Exchange Price Loss on Exchange

March 2020 10 % Note

$ 1,150 1,076,676 $ 1.03 to $ 1.09 $ 78

November 2019 10 % Note

1,215 894,549 1.35 to 1.36 —

September 2019 10 % Note

1,120 975,704 1.14 to 1.17 22

August 2019 10 % Note

2,034 1,832,220 1.09 to 1.13 25

June 2019 10 % Note

2,236 1,372,417 1.12 to 3.05 33

May 2019 10 % Note

1,958 524,140 3.65 to 4.05 52

December 2018 10 % Note

223 187,517 1.19 to 1.19 —

Total Short-Term Debt $ 9,936 6,863,223 $ 210

As of and for the year ended December 31, 2019 (in thousands, except number of shares):

Short-Term Debt Principal and Interest Shares Exchange Price Loss on Exchange

May 2019 10 % Note

$ 2,076 738,891 $ 1.80 to $ 3.51 $ 96

October 2018 10 % Note

2,729 92,831 $ 22.95 to $ 40.45 188

December 2018 10 % Note

2,112 707,078 $ 1.80 to $ 4.95 10

Total Short-Term Debt $ 6,917 1,538,800 $ 294

(B) Revolving Line of Credit

Payplant Accounts Receivable Bank Line

In accordance with the Payplant Loan and Security Agreement, dated as of August 14, 2017 (the “Loan Agreement”), the Loan Agreement allows the Company to request loans from the Lender (in the manner provided therein) with a term of no greater than 360 days days in amounts that are equivalent to 80 % of the face value of purchase orders received.

The Lender is not obligated to make the requested loan, however, if the Lender agrees to make the requested loan, before the loan is made, the Company must provide Lender with (i) one or more promissory notes for the amount being loaned in favor of Lender, (ii) one or more guaranties executed in favor of Lender and (iii) other documents and evidence of the completion of such other matters as Lender may request.

The principal amount of each loan shall accrue interest at a 30 day rate of 2 % (the “Interest Rate”), calculated per day on the basis of a year of 360 days days and, when combined with all fees that may be characterized as interest will not exceed the maximum rate allowed by law.

Upon the occurrence and during the continuance of any event of default, interest shall accrue at a rate equal to the Interest Rate plus 0.42 % per 30 days.

All computations of interest shall be made on the basis of a year of 360 days.

The promissory note is subject to the interest rates described in the Loan Agreement and is secured by the assets of the Company pursuant to the Loan Agreement and will be satisfied in accordance with the terms of the Payplant Client Agreement.

On August 31, 2018, Inpixon, Sysorex, SGS, and Payplant executed Amendment 1 to Payplant Client Agreement (the “Amendment”).

Pursuant to the Amendment, Sysorex and SGS are no longer parties to the Payplant Client Agreement, originally entered into on August 14, 2017, and have been released from any and all obligations and liabilities arising under the Payplant Client Agreement, whether such obligations and liabilities were in existence prior to or on the date of the Amendment or arise after the date of the Amendment.

On August 13, 2020, we provided Payplant a Notice of Termination (the “Notice”) of (i) that certain Loan and Security Agreement, dated as of August 14, 2017 (the “Loan Agreement”), by and among the Company, Payplant and Lender and (ii) that certain Payplant Client Agreement, dated as of August 14, 2017, as amended (the “Client Agreement”), by and between the Company and Payplant, pursuant to which we are able to request loans from the Lender.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

As of December 31, 2020, the Company paid the remaining $ 74,065 to the pre-acquisition stockholders of Shoom and the outstanding balance owed is $ 0 .

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

On February 11, 2021, the Company entered into an exchange agreement with Iliad, 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 $ 1.5 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 1.5 million;

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 $ 0.03 million 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 year ended December 31, 2021.

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 .

Third Party Note Payable

On October 29, 2021, Game Your Game entered into a promissory note with an individual whereby it received $ 0.3 million for funding of outside liabilities and working capital needs.

The promissory note has a interest rate of 8 % and is due on or before December 31, 2022.

As of December 31, 2021 the balance owed under the note was $ 0.3 million.

Note 21 - Capital Raises

January 2019 Capital Raise

On January 15, 2019, the Company closed a rights offering whereby it sold an aggregate of 12,000 units consisting of an aggregate of 12,000 shares of Series 5 Convertible Preferred Stock and 80 warrants to purchase common stock exercisable for one share of common stock at an exercise price of $ 149.85 per share in accordance with the terms and conditions of a warrant agency agreement, resulting in gross proceeds to the Company of approximately $ 12 million, and net proceeds of approximately $ 10.77 million after deducting expenses relating to dealer-manager fees and expenses, and excluding any proceeds received upon exercise of any warrants.

Following the rights offering, the conversion price of the Series 4 Convertible Preferred Stock was reduced to the floor price of $ 223.20 , the exercise price of the warrants issued in the April 2018 public offering were also reduced to the floor price of $ 223.20 and the number of shares issuable upon exercise of such warrants was increased to 61,562 shares of common stock.

The maximum deemed dividend under the Series 4 Convertible Preferred Stock has been recognized so there is no accounting effect from the conversion price reduction of the Series 4 Convertible Preferred Stock.

However, the Company recorded a $ 1.3 million deemed dividend for the reduction to the exercise price of the April 2018 warrants.

As of December 31, 2020, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

August 2019 Financing

On August 12, 2019, the Company sold an aggregate of (i) 144,387 shares of our common stock, (ii) 2,997 shares of our Series 6 Convertible Preferred Stock, with a stated value $ 1,000 per share, convertible into shares of our common stock (the “Series 6 Preferred Stock”), and (iii) Series A warrants to purchase up to an aggregate of 384,387 shares of common stock at an exercise price per share of $ 12.4875 , resulting in gross proceeds to the Company of approximately $ 4.8 million, and net proceeds of approximately $ 4 million after deducting the underwriting discounts and offering expenses.

As of December 31, 2020, there were 0 shares of Series 6 Convertible Preferred Stock outstanding.

March 2020 Distribution Agreement

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The Company is not obligated to make any sales of the shares under the EDA and no assurance can be given that the Company will sell any shares under the EDA, or if it does, as to the price or amount of shares that the Company will sell, or the dates on which any such sales will take place.

The EDA will continue until the earliest of (i) December 3, 2021, (ii) the sale of shares having an aggregate offering price of $ 150 million, and (iii) the termination by either Maxim or the Company upon the provision of 15 days written notice or otherwise pursuant to the terms of the EDA.

The EDA was mutually terminated by the parties on February 12, 2021.

INPIXON AND SUBSIDIARIES

2 unchanged sentences

Note 21 - Capital Raises (continued)

During the year ended December 31, 2020 under an at-the-market (“ATM”) program, we sold an aggregate of 33,416,830 shares of common stock, at a weighted average price of approximately $ 1.45 per share resulting in net proceeds of approximately $ 46.1 million to us after deduction of sales commissions equal to 4.0 % of the gross sales and other offering expenses.

We raised total aggregate gross proceeds of approximately $ 48.5 million in connection with the ATM program as of December 31, 2020.

Registered Direct Offering

provision of 15 days written notice or otherwise pursuant to the terms of the EDA.

The EDA was mutually terminated by the parties on February 12, 2021.

During the year ended December 31, 2020 under an at-the-market (“ATM”) program, the Company sold an aggregate of 33,416,830 shares of common stock, at a weighted average price of approximately $ 1.45 per share resulting in net proceeds of approximately $ 46.1 million to us after deduction of sales commissions equal to 4.0 % of the gross sales and other offering expenses.

Registered Direct Offerings

1 unchanged sentence

On December 23, 2020, the 2020 Pre-funded Warrants were exercised in full.

Note 19 - Common Stock

On January 29, 2019, the Company issued 3,842 shares of common stock under an exchange agreement to settle the outstanding balance of $ 383,768 under a partitioned note.

(see Note 17)

On February 20, 2019, the Company issued 16,655 shares of common stock under a settlement agreement for an arbitration proceeding.

During the three months ended March 31, 2019, the Company issued 306 shares of common stock in connection with the exercise of 306 warrants at $ 149.85 per share.

During the three months ended March 31, 2019, the Company issued 27,741 shares of common stock in connection with the exercise of 46,235 warrants through cashless exercises.

During the three months ended March 31, 2019, 10,062 shares of Series 5 Convertible Preferred Stock were converted into 67,149 shares of the Company’s common stock.

During the three months ended March 31, 2019, the Company issued 4,445 shares of common stock for services, which were fully vested upon grant.

The Company recorded an expense of approximately $ 242,000 .

During the three months ended June 30, 2019, the Company issued 61,636 shares of common stock under an exchange agreement to settle the outstanding balance of $ 2,005,000 under a partitioned note (See Note 17).

During the three months ended June 30, 2019, the Company issued 18,572 shares of common stock in connection with the exercise of 30,954 warrants through cashless exercises.

During the three months ended June 30, 2019, 1,812 shares of Series 5 Convertible Preferred Stock were converted into 12,093 shares of the Company’s common stock.

On May 21, 2019, the Company issued 14,445 shares of common stock to Locality as part of an acquisition (See Note 3).

On June 27, 2019, the Company issued 22,223 shares of common stock to GTX as part of an acquisition (See Note 4).

On August 12, 2019, the Company issued 144,387 shares of common stock as part of a public offering (See Note 18).

On January 24, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which it sold and issued in a registered direct offering, 5,800,000 shares of its common stock, and warrants to purchase up to 19,354,838 shares of common stock at an exercise price of $ 1.55 per share (the “January 2021 Purchase Warrants”) for a combined purchase price of $ 1.55 per share and pre-funded warrants to purchase up to 13,554,838 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 1.549 per share.

At closing, the Company received approximately $ 27.8 million in net proceeds after deducting placement agent commissions and offering expenses.

The January 2021 Purchase Warrant and January 2021 Pre-funded Warrant is or was immediately exercisable for one share of common stock for a period until the five year anniversary of the issuance date.

The January 2021 Pre-funded Warrants were exercised in full as of February 8, 2021.

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 and issued 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.

At closing, the Company received approximately $ 27.8 million in net proceeds after deducting placement agent commissions and offering expenses.

The First February 2021 Purchase Warrant and First February 2021 Pre-funded Warrant is or was immediately exercisable for one share of common stock for a period until the five year anniversary of the issuance date.

The First February 2021 Pre-funded warrants were exercised in full as of February 18, 2021.

On February 16, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company sold and issued in a registered direct offering, 3,000,000 shares of its common stock, and warrants to purchase up to 9,950,250 shares of common stock at an exercise price of $ 2.01 per share (the “Second February 2021 Purchase Warrants”) for a combined purchase price of $ 2.01 per share and pre-funded warrants to purchase up to 6,950,250 shares of common stock ("Second February 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 2.009 per share.

At closing the Company received approximately $ 18.5 million in net proceeds after deducting placement agent commissions and offering expenses.

Each Second February 2021 Purchase Warrant and Second February 2021 Pre-funded Warrant is or was immediately exercisable for one share of common stock for a period until the, five year anniversary of the issuance date.

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

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 19 - Common Stock (continued)

On August 15, 2019, the Company issued 112,644 shares of common stock to security holders of Jibestream as part of an acquisition (See Note 5).

During the three months ended September 30, 2019, the Company issued 31,195 shares of common stock under an exchange agreement to settle the outstanding balance of approximately $ 725,000 under a partitioned note (See Note 17).

During the three months ended September 30, 2019, the Company issued 310,154 shares of common stock in connection with the exercise of 310,154 warrants through cashless exercises.

During the three months ended September 30, 2019, 2,997 shares of Series 6 Convertible Preferred Stock were converted into 240,001 shares of the Company’s common stock.

On November 5, 2019, the Company issued 63,645 shares of common stock to security holders of Jibestream as part of an acquisition (See Note 5).

During the three months ended December 31, 2019, the Company issued 1,470,900 shares of common stock as part of an ATM program (See Note 18).

During the three months ended December 31, 2019, the Company issued 1,445,960 shares of common stock under an exchange agreement to settle the outstanding balance of approximately $ 4.2 million under a partitioned note (See Note 17).

During the three months ended December 31, 2019, the Company issued 69,485 shares of common stock in connection with the exercise of 69,485 warrants through cashless exercises.

During the three months ended December 31, 2019, the Company issued 14 shares of common stock in connection with the exercise of 14 employee stock options.

During the three months ended March 31, 2020, the Company issued 1,896,557 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 4,194,000 under partitioned notes.

During the three months ended March 31, 2020, the Company issued 937,010 shares of common stock in connection with the ATM at per share prices between $ 1.23 and $ 2.11 , resulting in net proceeds to the Company of approximately $ 1.25 million after subtracting sales commissions and other offering expenses (See Note 18 ).

During the three months ended June 30, 2020, the Company issued 3,889,990 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 4,592,000 under partitioned notes.

Note 21 - Capital Raises (continued)

of $ 54.1 million.

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 December 31, 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 $ 4.7 million.

See Note 23 for Preferred Stock and Note 26 for Warrant details.

Note 22 - Common Stock

During the three months ended March 31, 2020, the Company issued 937,010 shares of common stock in connection with the ATM at per share prices between $ 1.23 and $ 2.11 , resulting in net proceeds to the Company of approximately after subtracting sales commissions and other offering expenses (See Note 21).

During the three months ended June 30, 2020, the Company issued 29,033,036 shares of common stock in connection with the ATM at per share prices between $ 1.13 and $ 2.02 , resulting in net proceeds to the Company of approximately $ 40.52 million after subtracting sales commissions and other offering expenses (See Note 21).

During the three months ended June 30, 2020, the Company issued 183,486 shares of common stock for the extinguishment of liability totaling approximately $ 200,000 .

During the three months ended June 30, 2020, the Company issued 183,486 shares of common stock for the extinguishment of liability totaling approximately $ 0.2 million.

On August 19, 2020, the Company issued 480,000 shares of common stock to the security holders of Ten Degrees as part of an acquisition (See Note 5).

9 unchanged sentences

During the three months ended December 31, 2020, the Company issued 3,000,000 shares of common stock in connection with the exchange of Pre-Funded Warrants (as defined in Note 26) offered under the Securities Purchase Agreement, resulting in net proceeds of $ 3,000 .

See Note Note 18 and Note 23 for further details.

See Note 21 and Note 26 for further details.

During the three months ended March 31, 2021, the Company issued 893,921 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.5 million under partitioned notes.

(See Note 20 ).

During the three months ended March 31, 2021, the Company issued 15,800,000 shares of common stock in connection with registered direct offerings at per share prices between $ 1.55 and $ 2.01 , resulting in net proceeds to the Company of approximately $ 74.1 million after subtracting sales commissions and other offering expenses (See Note 21).

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

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 26) offered under the Securities Purchase Agreement, resulting in net proceeds of $ 3.7 million.

See Note 21 for further details.

During the three months ended June 30, 2021, the Company issued 1,179,077 shares of common stock in connection with the Game Your Game acquisition with a fair value of approximately $ 1.4 million.

(See Note 7).

During the three months ended June 30, 2021, the Company issued 369,563 shares of common stock in connection with the Visualix asset purchase with a fair value of approximately $ 0.4 million .

( See Note 8)

During the three months ended June 30, 2021, the Company issued 8,849,538 shares of common stock in connection with the CXApp acquisition with a fair value of approximately $ 10 million.

(See Note 9 ).

During the three months ended June 30, 2021, the Company issued 4,672,988 shares of common stock net of 921,838 shares withheld for employee taxes for restricted stock granted in February 2021 at a par value of $ 0.001 per share.

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 20) .

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 23).

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.

During the three months ended December 31, 2021, 152,796 shares of common stock issued in connection with restricted stock grants were forfeited for employee taxes.

Note 23 - Preferred Stock

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 23 - Preferred Stock (continued)

The Company is authorized to issue up to 5,000,000 shares of preferred stock with a par value of $ 0.001 per share with rights, preferences, privileges and restrictions as to be determined by the Company’s Board of Directors.

2 unchanged sentences

The Series 4 Preferred is non-voting (except to the extent required by law) and was convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 4 Preferred of $ 1,000 per share to be converted by $ 828.00 .

As of December 31, 2020, there was one share of Series 4 Preferred outstanding.

As of December 31, 2021, there was 1 share of Series 4 Preferred outstanding.

Series 5 Convertible Preferred Stock

3 unchanged sentences

As of December 31, 2021, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

Series 7 Convertible 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 (see Note 26) 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 $ 54.1 million.

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.

The Company has elected to accrete the issuance costs, discount, and freestanding warrants through the date shares can be first be redeemed at the option of the holders, which is the sixth month anniversary of the Original Issuance Date using the effective interest method.

During the year ended December 31, 2021, 9,500 shares of Series 7 Convertible Preferred Stock were converted into 7,600,000 shares of the Company's common stock.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 23 - Preferred Stock (continued)

As of December 31, 2021 there was 49,250 shares of Series 7 Convertible Preferred stock outstanding.

Note 24 - Authorized Share Increase and Reverse Stock Split

1 unchanged sentence

The consolidated financial statements and accompanying notes give effect to the 1-for-45 reverse stock split and increase in authorized shares as if they occurred at the first period presented.

Note 22 - Stock Options

On November 18, 2021, the Company filed a certificate of amendment to the Company’s articles of incorporation, as amended, with the Secretary of State of the State of Nevada to increase the number of authorized shares of Common Stock from 250,000,000 to 2,000,000,000 shares effective as of November 18, 2021.

Note 25 - 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Note 22 - Stock Options (continued)

The plan was terminated by its terms on August 31, 2021 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 will be utilized with the 2011 Plan for employees, corporate officers, directors, consultants and other key persons employed.

3 unchanged sentences

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

On August 10, 2020, our Board of Directors approved an amendment to the Company’s 2018 Plan to remove the limit on the amount of non-qualified stock options that can be issued under the 2018 Plan to any one individual.

The aggregate number of shares that may be awarded under the 2011 Plan as of December 31, 2020 is 417,270 and awarded under the 2018 Plan as of December 31, 2020 is 14,230,073 .

As of December 31, 2020, 5,450,057 of options were granted to employees, directors and consultants of the Company (including one share outside of our plan) and 9,197,287 options were available for future grant under the Option Plans.

The aggregate number of shares that may be awarded under the 2018 Plan as of December 31, 2021 is 40,000,000 .

As of December 31, 2021, 18,882,303 of options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 73 shares under our 2011 Plan), 4,182,692 of restricted stock grants were granted to employees of the Company under the 2018 Plan, and 16,935,079 options were available for future grant under the Option Plans.

Employee Stock Options

During the year ended December 31, 2020, the Company granted options under the 2018 Plan for the purchase of 5,567,500 shares of common stock to employees and consultants of the Company.

These options are 100 % vested or vest pro-rata over 12 , 24 , 36 , 40 or 48 months, have a life of ten years and an exercise price between $ 6.30 and $ 101.70 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 $ 4,364,000 .

These options are 100% vested or vest pro-rata over 24 , 36 or 48 months, have a life of 10 years and an exercise price between $ 1.10 and $ 1.29 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 between $ 1.10 and $ 1.29 per share.

During the year ended December 31, 2021, the Company granted options under the 2018 Plan for the purchase of 14,285,629 shares of common stock to employees and consultants of the Company.

These options are 100 % vested or vest pro-rata over 24 , 36 or 48 months, have a life of ten years and an exercise price between $ 1.10 and $ 1.29 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 $ 1,911,000 .

These options are 100% vested or vest pro-rata over 12 , 24 or 36 months, have a life of 10 years and an exercise price between $ 0.69 and $ 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 $ 4.6 million.

The fair value of the common stock as of the grant date was determined to be between $ 0.69 and $ 1.83 per share.

During the year ended December 31, 2020 and 2019, the Company recorded a charge of $ 1,194,000 and $ 3,247,000 , respectively, for the amortization of employee stock options.

As of December 31, 2020, the fair value of non-vested options totaled approximately $ 1,626,000 , which will be amortized to expense over the weighted average remaining term of 0.86 years.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 25 - Stock Award Plans and Stock-Based Compensation (continued)

On February 5, 2021, the Company issued 4,977 shares of common stock in connection with the cashless exercise of 14,583 employee stock options.

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 year ended December 31, 2021 and 2020, the Company recorded a charge of approximately $ 2.3 million and $ 1.2 million, respectively, for the amortization of employee stock options (not including restricted stock awards), which is included in the general and administrative section of the condensed consolidated statement of operations.

As of December 31, 2021, the fair value of non-vested options totaled approximately $ 4.5 million, which will be amortized to expense over the weighted average remaining term of 1.33 years.

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

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Expected volatility of underlying stock 37.21 % - 38.15 %

49.48 - 106.16 %

Dividends assumption $ — $ —

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The dividends assumptions was $ 0 as the Company historically has not declared any dividends and does not expect to.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Note 22 - Stock Options (continued)

The following table summarizes the changes in options outstanding during the years ended December 31, 2020 and 2019:

Options Weighted

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

2011 Plan 2018 Plan Non Plan Total Weighted

Price Aggregate

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Exercisable at December 31, 2021 73 7,235,382 1 7,235,456 $ 15.19 $ —

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 25 - Stock Award Plans and Stock-Based Compensation (continued)

Restricted Stock Awards

On February 19, 2021, the Company granted 5,250,000 restricted stock awards to employees of the Company.

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.

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.

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

On December 23, 2021, 152,796 of restricted stock award grants were forfeited to satisfy the employee portion of the payroll taxes required to be paid in connection with the grant of such awards.

During the years ended December 31, 2021 and 2020 the Company recorded a charge of approximately $ 8.6 million and — , respectively,for the amortization of vested restricted stock awards.

The following table summarizes restricted stock-based award activity granted:

Number of Shares Weighted Average Grant Date Fair Value

Balance, January 1, 2021 — $ —

Granted 5,594,826 $ 1.79

Forfeited ( 1,412,134 ) $ 1.76

Balance, December 31, 2021 4,182,692 $ 1.80

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.

The compensation expense is being amortized over the respective vesting periods.

Note 26 - Warrants

On January 15, 2019, the Company issued warrants for the purchase of 80,000 shares of common stock in connection with a rights offering more fully described in Note 18.

The warrants are exercisable for 5 years at an exercise price of $ 149.85 per share.

Following the rights offering on January 15, 2019, the exercise price of the warrants issued in the April 2018 public offering were reduced to the floor price of $ 223.20 and the number of shares issuable upon exercise of such warrants was increased by 33,366 shares of common stock.

On August 12, 2019, the Company issued Series A warrants to purchase up to an aggregate of 384,387 shares of common stock in connection with the August 2019 capital raise more fully described in Note 18.

The warrants are exercisable for five years at an exercise price per share of $ 12.4875 .

During the three months ended March 31, 2019, the Company issued 306 shares of common stock in connection with the exercise of 306 warrants at $ 149.85 per share.

During the twelve months ended December 31, 2019, the Company issued 425,952 shares of common stock in connection with the exercise of 456,826 warrants through cashless exercises.

On November 25, 2020, 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, 5,000,000 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 8,000,000 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 1.25 per share.

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Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 3,000,000 shares of common stock (the “Pre-Funded Warrants” and, together with the 5,000,000 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

Each Pre-Funded Warrant is exercisable for one share of common stock.

The purchase price of each Pre-Funded Warrant is $ 1.249 , and the exercise price of each Pre-Funded Warrant is $ 0.001 per share.

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 three months ended December 31, 2020, the Company issued 3,000,000 shares of common stock in connection with the exercise of 3,000,000 warrants at 0.001 per share.

On January 24, 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, 5,800,000 shares of the

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 19,354,838 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 1.55 per share.

The Purchase Warrants have an exercise price of $ 1.55 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 3,000,000 shares of common stock (the “Pre-Funded Warrants” and, together with the 5,800,000 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

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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 three months ended December 31, 2020, the Company issued 3,000,000 shares of common stock in connection with the exercise of 3,000,000 warrants at $ 0.001 per share .

During the year ended December 31, 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.

The Purchase Warrants have an exercise price of $ 2.00 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 8,000,000 shares of common stock (the “Pre-Funded Warrants” and, together with the 7,000,000 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

Each Pre-Funded Warrant is exercisable for one share of common stock.

The purchase price of each Pre-Funded Warrant is $ 1.999 , and the exercise price of each Pre-Funded Warrant is $ 0.001 per share.

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 year ended December 31, 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.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire 5 years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 6,950,250 shares of common stock in lieu of shares of common stock at the Investor’s election.

Each Pre-Funded Warrant is exercisable for one share of common stock.

The purchase price of each Pre-Funded Warrant is $ 2.009 , and the exercise price of each Pre-Funded Warrant is $ 0.001 per share.

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 year ended December 31, 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

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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.

The following table summarizes the changes in warrants outstanding during the years ended December 31, 2021 and 2020:

Options Weighted

Warrants Weighted

Price Aggregate

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The income tax benefit for the years ended December 31, 2020 and 2019 consists of the following (in thousands):

The income tax provision (benefit) for the years ended December 31, 2021 and 2020 consists of the following (in thousands):

For the Years Ended December 31,

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Deferred 2,376 ( 1,815 )

Current 929 —

Deferred ( 9,345 ) ( 5,367 )

State and local

Current 217 3

Deferred ( 66 ) ( 1,181 )

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Incentive stock options ( 0.18 ) % ( 0.4 ) %

162(m) Compensation Limit ( 0.47 ) % — %

Goodwill impairment loss ( 4.76 ) % — %

US-Foreign income tax rate difference 1.20 % 1.0 %

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Fixed assets 393 471

Unrealized gain 12,876 —

Other 260 3,349

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Net Deferred Tax Asset (Liability) $ — $ —

The transition tax is based on total post-1986 earnings and profits which were previously deferred from U.S.

income taxes.

At December 31, 2021, the Company did not have any undistributed earnings of our foreign subsidiaries.

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The Company performed an analysis to determine the annual limitation as a result of the changes in ownership that occurred during 2020 and 2021.

Based on the Company’s analysis, the NOL available to offset future taxable income after these ownership changes was approximately $ 16.3 million and $ 35.2 million, respectively.

Based on the Company’s analysis, no ownership changes occurred during 2021.

The NOL available to offset future taxable income after 2020 ownership change is approximately $ 31.6 million.

The NOLs generated in 2017, $ 1.5 million, will expire beginning in December 31, 2037 if not utilized.

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

As of December 31, 2020, Nanotron GmbH, which was acquired on October 5, 2020, had approximately $ 53.1 million German NOL carryovers available to offset future taxable income.

As of December 31, 2021 and 2020, Nanotron GmbH, which was acquired on October 5, 2020, had approximately $ 44.3 million and $ 53.1 million, respectively, of German NOL carryovers available to offset future taxable income.

Although these NOLs do not expire, minimum taxation restrictions apply such that only a percentage of taxable income may be offset by NOL carryovers.

As of December 31, 2021, Intranav GmbH, which was acquired on December 8, 2021, had approximately $ 7.1 million German NOL carryovers available to offset future taxable income.

Although these NOLs do not expire, minimum taxation restrictions apply such that only a percentage of taxable income may be offset by NOL carryovers.

As of December 31, 2021, Active Mind Technology LTD, which was acquired on April 9, 2021 as part of the acquisition of Game Your Game Inc., had approximately $ 11.6 million Irish NOL carryovers available to offset future taxable income.

These NOLs have an indefinite life and do not expire.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to Inpixon, Inpixon Canada and Nanotron GmbH and has, therefore, established a full valuation allowance as of December 31, 2020 and 2019.

After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to Inpixon, Inpixon Canada, Nanotron GmbH, Intranav GmbH and Active Mind Technology LTD and has, therefore, established a full valuation allowance as of December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the change in valuation allowance was $ 4.4 million and $ 9.1 million, respectively.

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ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company is required to file income tax returns in the United States (federal), Canada, India, Germany, United Kingdom and in various state jurisdictions in the United States.

The Company is required to file income tax returns in the United States (federal), Canada, India, Germany, United Kingdom, Ireland, and in various state jurisdictions in the United States.

Based on the Company’s evaluation, it has been concluded that there are no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements for the years ended December 31, 2021 and 2020.

The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component of selling, general and administrative expense, respectively.

There were no amounts accrued for interest or penalties for the years ended December 31, 2021 and 2020.

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The tax years that remain open and subject to India reassessment are tax years beginning March 31, 2016.

The German tax authorities may reassess taxes four years generally four years from the end of the calendar year in which the return is filed.

The German tax authorities may reassess taxes generally four years from the end of the calendar year in which the return is filed.

The tax years that remain open and subject to German reassessment are 2015 – 2021.

In Ireland, assessments must generally be made within four years when returns are filed.

The tax years that remain open and subject to Irish reassessment are 2017 – 2021.

On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic.

Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted.

The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019 and 2020 to permit additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits.

The CARES Act did not have a material impact on the Company.

Note 25 - Credit Risk and Concentrations

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 25 - Credit Risk and Concentrations (continued)

qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits.

The CARES Act did not have a material impact on the Company

Note 28 - Credit Risk, Concentrations, and Segment Reporting

Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash and cash equivalents.

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Customer B — — % 1,221 13 %

As of December 31, 2021, no customer accounted for at least 10% of total accounts receivable.

As of December 31, 2020, Customer C represented approximately 18 % and Customer D represented approximately 11 % of total accounts receivable.

As of December 31, 2019, Customer D represented approximately 29 %, Customer A represented approximately 14 %, and Customer E represented approximately 10 % of total accounts receivable.

As of December 31, 2021, one vendor represented approximately 33 % of total gross accounts payable.

Purchases from this vendor during the year ended December 31, 2020 was $ 154,000 .

As of December 31, 2019, three vendors represented approximately 36 %, 12 %, and 10 % of total gross accounts payable.

Purchases from these vendors during the year ended December 31, 2019 was $ 0 .

Purchases from this vendor during the year ended December 31, 2021 was $ 0.4 million.

As of December 31, 2020, one vendor represented approximately 20 % of total gross accounts payable.

Purchases from this vendor during the year ended December 31, 2020 was $ 0.2 million.

For the year ended December 31, 2021, three vendors represented approximately 21 %, 18 %, and 17 % of total purchases.

For the year ended December 31, 2020, three vendors represented approximately 30 %, 14 %, and 13 % of total purchases.

The Company’s operations consist of three reportable segments based on similar economic characteristics, the nature of products and production processes, end-use markets, channels of distribution, and regulatory environments:

Indoor Intelligence, Saves, and Shoom.

During the second quarter of 2021, the Company changed the level of detail at which its Chief Executive Officer (“CEO”) acting as the Chief Operating Decision Maker, or “CODM”) regularly reviews and manages certain of its businesses, resulting in the bifurcation of its former one segment into three standalone reportable segments:

Indoor Intelligence, Saves, and Shoom.

The Company now manages and reports its operating results through these three reportable segments.

This change allows the Company to enhance its customer focus and better align its business models, resources, and cost structure to the specific current and future growth drivers of each business, while providing increased transparency to the Company’s shareholders.

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

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 28 - Credit Risk and Concentration (continued)

Gross profit and income (loss) from operations are the primary measures of segment profitability used by the Company’s CODM.

Revenue, gross profit, and income (loss) from operations by segment consisted of the following (in thousands):

For the Years Ended December 31,

Revenue by Segment

Indoor Intelligence $ 11,046 $ 6,060

Saves 2,938 1,218

Shoom 2,011 2,019

Total segment revenue $ 15,995 $ 9,297

Gross profit by Segment

Indoor Intelligence $ 7,833 $ 4,108

Saves 2,072 884

Shoom 1,716 1,692

Gross profit by Segment $ 11,621 $ 6,684

Income (loss) from operations by Segment

Indoor Intelligence $ ( 72,054 ) $ ( 23,976 )

Saves ( 1,509 ) ( 807 )

Shoom 946 989

Income (loss) from operations by Segment $ ( 72,617 ) $ ( 23,794 )

The reporting package provided to the Company's CODM does not include the measure of assets by segment as that information isn't reviewed by the CODM when assessing segment performance or allocating resources.

Note 29 - Fair Value of Financial Instruments

The Company's estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820.

The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available.

The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable.

In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.

We classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 29 - Fair Value of Financial Instruments (continued)

Fair Value at December 31, 2021

Total Fair Value Level 1 - Quoted Prices in Active Markets for Identical Assets Level 2 - Significant Other Observable Inputs Level 3 - Significant Unobservable Inputs

Short-term investments 43,125 43,125 — —

Investments in equity securities 1,838 — — 1,838

Total assets $ 44,963 $ 43,125 $ — $ 1,838

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value.

Short-term investments represent U.S.

treasury bills with maturities greater than three months.

The fair values of the U.S.

treasury bills are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy.

The market for U.S.

treasury bills is an actively traded market given the high level of daily trading volume.

Investments in equity securities are marked to market based on the respective publicly quoted market prices of the equity securities adjusted for liquidity.

The fair value was determined using a pricing model with certain significant unobservable market data inputs.

The Company had no Level 3 investments for the year 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 year ended December 31, 2021 (in thousands):

Level 3 Investments

Balance at beginning of year $ —

Transfers in- Sysorex Securities Settlement Agreement

Benefit (provision) for valuation allowance on related party loan - held for sale 7,461

Interest income (expense), net 1,627

Gain on related party loan held for sale 49,817

Unrealized loss on equity securities ( 57,067 )

Balance at end of year $ 1,838

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 30 - Foreign Operations

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The financial data by geographic area are as follows (in thousands):

States Canada India Germany United Kingdom Eliminations Total

States Canada India Germany United Kingdom Ireland Eliminations Total

For the Year Ended December 31, 2021:

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Sysorex Note Purchase Agreement

Nadir Ali, the Company’s Chief Executive Officer and a member of its Board of Directors, is also a member of the Board of Directors of Sysorex.

Nadir Ali, the Company’s Chief Executive Officer and a member of its Board of Directors, was previously a member of the Board of Directors of Sysorex (resigned on May 14, 2021).

In addition, Nadir Ali entered into a consulting agreement with Sysorex, pursuant to which he agreed to provide certain business services specified in the agreement for the benefit of Sysorex in exchange for shares of Sysorex's common stock.

On December 31, 2018, the Company and Sysorex entered into a note purchase agreement (the “Note Purchase Agreement”) pursuant to which the Company agreed to purchase from Sysorex at a purchase price equal to the Loan Amount (as defined below), a secured promissory note (the “Secured Note”) for up to an aggregate principal amount of $ 3 million (the “Principal Amount”), including any amounts advanced through the date of the Secured Note (the “Prior Advances”), to be borrowed and disbursed in increments (such borrowed amount, together with the Prior Advances, collectively referred to as the “Loan Amount”), with interest to accrue at a rate of 10 % percent per annum on all such Loan Amounts, beginning as of the date of disbursement with respect to any portion of such Loan Amount.

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During the year ended December 31, 2020, an additional amount of approximately $ 2.6 million was advanced under the Secured Note and approximately $ 200,000 was repaid.

The amount owed for principal as of December 31, 2020 and accrued interest through September 30, 2019 by Sysorex to the Company as of December 31, 2020 and 2019 was approximately $ 7.7 million and $ 10.6 million, respectively.

The amount owed for principal as of December 31, 2020 and accrued interest through September 30, 2019 by Sysorex to the Company as of December 31, 2020 was approximately $ 7.7 million.

These amounts exclude $ 275,000 of additional interest that the Company is contractually entitled to accrue from October 1, 2019 through December 31, 2019 and approximately $ 1.1 million of additional interest from January 1, 2020 through December 31, 2020 in accordance with the terms of the Sysorex Note, but did not accrue due to the uncertainty of repayment.

An additional $ 1 million of the principal balance under the Secured Note was assigned to Systat on March 19, 2021, as the final portion of the total consideration due in connection with the license.

The Secured Note has been classified as “held for sale” and the Company, with the assistance of a third party valuation firm, the Company estimated the fair value of the Secured Note as of December 31, 2019, using Sysorex financial projections, a discounted cash flow model and a 12.3 % discount rate.

Following such valuation, the Company established a $ 10.6 million valuation allowance as of December 31, 2019 due to the uncertainty of repayment.

During the year ended December 31, 2020, the Company re-evaluated the carrying value of the note and established an additional valuation allowance of approximately $ 2.4 million for the net increase to the note during the year.

We are required to periodically re-evaluate the carrying value of the note and the related

During the three months ended March 31, 2020 an additional 117,000 was advanced under the Secured Note and the Company was entitled to an additional 251,806 of interest in accordance with the terms of the Note, but did not accrue due to the uncertainty of repayment.

An additional $ 1 million of the principal balance under the Secured Note was assigned to Systat on March 19, 2021, as the final portion of the total consideration due in connection with the license.

INPIXON AND SUBSIDIARIES

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FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

valuation allowance based on various factors, including, but not limited to, Sysorex’s performance and collectability of the note.

Sysorex’s performance against those financial projections will directly impact future assessments of the fair value of the note.

As of April 14, 2021 , the Sysorex Note Purchase Agreement was settled, see Sysorex Securities Settlement Agreement below.

Sysorex Receivable

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The Company and Sysorex each agreed pursuant to the terms and conditions of that certain Separation and Distribution Agreement, dated August 7, 2018, as amended, that 50 % of the costs and liabilities related to the arbitration action would be shared by each party following the Spin-off.

As a result, Sysorex owes the Company $ 559,121 for the settlement plus the interest accrued during the fiscal year ended December 31, 2019 of $ 57,238 and interest accrued during the fiscal year ended December 31, 2020 of $ 31,824 .

The total owed to the Company for this settlement as of December 31, 2020 and 2019 was $ 648,183 and $ 616,359 , respectively.

As a result, Sysorex owes the Company $ 0.6 million for the settlement plus the interest accrued during the fiscal year ended December 31, 2020 of $ 0.1 million..

The total owed to the Company for this settlement as of December 31, 2021 and 2020 was $ 0 and $ 0.6 million, respectively.

The Company established a full valuation allowance against this balance as of December 31, 2020.

As of April 14, 2021, the Sysorex Receivable was settled, see Sysorex Securities Settlement Agreement below.

Sysorex Securities Settlement Agreement

On April 14, 2021, the Company entered into a Securities Settlement Agreement (the “SSA”) and a Rights Letter Agreement (the “RLA”), each with Sysorex, whereby Sysorex agreed to satisfy in full its outstanding debt, in the aggregate amount of $ 9,088,176 as of March 31, 2021, owed to the Company under that certain secured promissory note, originally dated December 31, 2018, as amended from time to time, and in connection with that certain settlement agreement, dated February 20, 2019, by and among the Company, Sysorex and Atlas Technology Group, LLC (the “Debt Settlement”).

To effect the Debt Settlement, Sysorex agreed to issue to the Company (i) pursuant to the terms of the SSA, 12,972,189 shares of its common stock, $ 0.00001 par value per share, and (ii) rights to acquire 3,000,000 additional shares of its common stock pursuant to the terms of the RLA.

The Debt Settlement was entered into in connection with Sysorex’s closing of a reverse triangular merger with TTM Digital Assets & Technologies, Inc.

The Company recorded $ 7.5 million for the release of the previously recorded valuation allowance, $ 1.6 million of interest income, and a gain on settlement of $ 49.8 million equal to the difference in the carry value of the promissory note, including interest and value of the common stock and rights to acquire additional shares received in the settlement.

In connection with the Debt Settlement, the Company also entered into a Registration Rights Agreement, dated as of April 14, 2021 (the “RRA”), with Sysorex and certain other shareholders of Sysorex (the “Holders”).

Pursuant to the terms of the RRA, Sysorex must, subject to certain limitations, register the resale of the shares of common stock held by the Company and the Holders, with the U.S.

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 following the date of such failure 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.

Systat License Agreement

2 unchanged sentences

(See Note 4).

Jibestream 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Inpixon Canada Promissory Note

As of December 31, 2021, Inpixon Canada owed the Company $ 16.8 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 December 31, 2020, the balance of the note including principal and interest was approximately $ 151,000 .

Cardinal Health Ventures Investment

5 unchanged sentences

(See Note 17).

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.

INPIXON AND SUBSIDIARIES

2 unchanged sentences

Note 32 - Leases

The Company has an operating lease for its administrative office in Palo Alto, California, effective October 1, 2014, for 8.3 years.

The initial lease rate was $ 14,225 per month with escalating payments.

In connection with the lease, the Company is obligated to pay $ 8,985 monthly for operating expenses for building repairs and maintenance.

The Company also has an operating lease for its administrative office in Encino, CA.

This lease was effective June 1, 2014 and will end on July 31, 2021.

The current lease rate is $ 6,984 per month and $ 276 per month for the common area maintenance.

Additionally, the Company has an amended operating lease for its administrative office in Coquitlam, Canada, from May 1, 2020 through September 30, 2022.

The initial lease rate was CAD $ 4,479 per month with escalating payments.

In connection with the lease, the Company is obligated to pay CAD $ 2,566 monthly for operating expenses for building repairs and maintenance.

The Company has an operating lease for its administrative office in Toronto, Canada, from August 15, 2019 through July 31, 2021.

The monthly lease rate is CAD $ 24,506 per month with no escalating payments.

In connection with the lease, the Company is obligated to pay CAD $ 9,561 monthly for operating expenses for building repairs and maintenance.

Starting in January 2021, the lease rate for the Toronto office space will be reduced due to a smaller leased office space.

The extension agreement for the reduced office space is through June 30, 2026 with escalating payments.

Additionally, the Company has an operating lease for its administrative office in New Westminster, Canada, from August 1, 2019 through July 31, 2021.

The initial lease rate was CAD $ 575 per month.

The Company has an operating lease for its administrative office in Hyderabad, India, from January 1, 2019 through February 28, 2024.

The monthly lease rate is 482,720 INR per month with 5 % escalating payments.

In connection with the lease, the Company is obligated to pay 68,960 INR monthly for operating expenses for building repairs and maintenance.

The Company has an operating lease for its administrative office in Ratingen, Germany, from July 1, 2020 through June 30, 2022 with an initial lease rate of 641 EUR per month.

The Company has an operating lease for its administrative office in Slough, United Kingdom, from July 1, 2020 through October 31, 2021.

The monthly lease rate is 1,600 GBP per month with 4 % escalating payments.

As part of the acquisition of Nanotron on October 5, 2020, the Company acquired right-of-use assets and lease liabilities related to an operating lease for an office suite (the Nanotron office) located in Berlin, Germany.

The office space leased by Nanotron occupies one floor of the building with a predetermined fixed annual increase to the monthly payment, effective on June 1 of every year.

The initial lease rate was € 7,118 per month for the first year prior to annual rent increases.

The lease was effective on June 1, 2020, and expires May 31, 2026.

There are three lease extension options, on June 1, 2023, June 1, 2024 and June 1, 2025.

The Company anticipates extending the lease on each date.

As a result, the Company will evaluate the lease under the expected lease term through May 31, 2026.

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 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.

The monthly lease rate is approximately $ 2,843 and $ 1,144 per month.

As part of the acquisition of IntraNav on December 9, 2021.

the Company acquired right-of-use assets and lease liabilities related to an operating lease for an office space (the IntraNav office) located in Frankfurt, Germany.

This lease expires on January 6, 2025 and the current lease rate is approximately $ 9,753 per month.

The Company has no other operating or financing leases with terms greater than 12 months.

The Company adopted ASC Topic 842, Leases (“ASC Topic 842”) effective January 1, 2019 using the modified-retrospective method, and thus, the prior comparative period continues to be reported under the accounting standards in effect for that period.

The Company elected to use the package of practical expedients permitted which allows (i) an entity not to reassess whether any expired or existing contracts are or contain leases;

(ii) an entity need not reassess the lease classification for any expired or existing leases;

and (iii) an entity need not reassess any initial direct costs for any existing leases.

At the time of adoption, the Company did not have any leases with terms of 12 months or less, which would have resulted in short-term lease payments being recognized in the consolidated statements of income on a straight-line basis over the lease term.

All of the Company’s leases were previously classified as operating and are similarly classified as operating lease under the new standard.

On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use asset of $ 641,992 , lease liability of $ 683,575 and eliminated deferred rent of $ 41,583 .

The adoption of ASC 842 did not have a material impact to prior year comparative periods and a result, a cumulative-effect adjustment was not required.

The Company determined the lease liability using the Company’s estimated incremental borrowing rate of 8.0 % to estimate the present value of the remaining monthly lease payments.

With the Locality acquisition, the Company adopted ASC Topic 842 effective May 21, 2019 for the Westminster, Canada office operating lease.

With the Jibestream acquisition, the Company adopted ASC Topic 842 effective August 15, 2019 for the Toronto, Canada office operating lease.

With the India acquisition, the Company adopted ASC Topic 842 effective January 1, 2019 for the Hyderabad, India office operating lease.

With the Systat license agreement, the Company adopted ASC Topic 842 effective July 1, 2020 for the Ratingen, Germany and Slough, United Kingdom office operating leases.

In regards to the Nanotron acquisition, Nanotron had adopted IFRS 16, which is the new leasing standard that parallels ASC 842, effective January 1, 2019.

Per ASC 805 - " Business Combinations", lease assets and liabilities acquired as part of a business combination should be remeasured at their present value, as if the lease were a new lease as of the acquisition date.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Note 28 - Leases (continued)

a result, the Company recalculated the present value of the lease as of the acquisition date, which will represent the balance of the operating lease right-of-use asset and operating lease liability moving forward.

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

10 unchanged sentences

Slough, United Kingdom Office 34 34

Frankfurt, Germany Office 312 —

Less accumulated amortization ( 1,282 ) ( 802 )

1 unchanged sentence

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 period ended December 31, 2020 was $ 1.1 million.

During the year ended December 31, 2020, the Company recorded $ 656,110 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 period ended December 31, 2021 and 2020 was $ 1.2 million and $ 5.4 million, respectively.

During the years ended December 31, 2021 and 2020 , the Company recorded $ 0.7 million each year as rent expense to the right-of-use assets.

Lease liability is summarized below (in thousands):

3 unchanged sentences

Long term portion $ 1,108 $ 1,457

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 32 - Leases (continued)

Maturity analysis under the lease agreement is as follows (in thousands):

4 unchanged sentences

Year ending December 31, 2026 103

Year ending December 31, 2026 109

Total $ 1,943

2 unchanged sentences

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term.

In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Note 28 - Leases (continued)

available at the date of adoption of Topic 842.

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 Topic 842.

As of December 31, 2021, the weighted average remaining lease term is 3.35 and the weighted average discount rate used to determine the operating lease liabilities was 8.0 %.

8 unchanged sentences

Compliance with Nasdaq Continued Listing Requirement

Between November 2015 and May 2018, we received four deficiency letters from Nasdaq indicating that we did not comply with certain Nasdaq continued listing requirements.

Such deficiencies were later cured.

However, on May 30, 2019, we received another deficiency letter from Nasdaq indicating that, based on our closing bid price for the last 30 consecutive business days, we did not comply with the minimum bid price requirement of $ 1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with the Nasdaq Listing Rules, the Company was provided with a 180 calendar day period, through November 26, 2019 (the “Compliance Deadline”), to regain compliance with the Minimum Bid Price Requirement.

On November 27, 2019, the Company received notice from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) that based upon the Company’s continued non-compliance with the Minimum Bid Price Requirement (as defined below), the Company’s common stock would be subject to delisting from Nasdaq (the “Staff Delisting Determination”), unless the Company timely requested an appeal hearing before the Nasdaq Hearings Panel (the “Panel”).

The Company requested such hearing, which was held on January 23, 2020, following the Company’s implementation of a reverse stock split effective on January 7, 2020.

On February 5, 2020, the Company received a letter from the Office of General Counsel of Nasdaq informing us that the Nasdaq Hearings Panel (the “Panel”) granted the Company’s request to continue the listing of the Company’s common stock on Nasdaq, subject to a “Panel Monitor” period pursuant to Nasdaq Listing Rule 5815(d)(4)(A) which expired on February 5, 2021.

Note 30 - Subsequent Events

Capital Raises

On January 24, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which it sold in a registered direct offering, 5,800,000 shares of its common stock, and warrants to purchase up to 19,354,838 shares of common stock at an exercise price of $ 1.55 per share (the “January 2021 Purchase Warrants”) for a combined purchase price of $ 1.55 per share and pre-funded warrants to purchase up to 13,554,838 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 1.549 per share for net proceeds of approximately $ 27.8 million.

Each January 2021 Purchase Warrant and January 2021 Pre-funded Warrant is exercisable for

On October 25, 2021, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock (“Common Stock”) for the prior 30 consecutive business days beginning on September 13, 2021, and ending on October 22, 2021, the Company no longer met the requirement to maintain a minimum bid price of $ 1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until April 25, 2022, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our Common Stock must be at least $ 1.00 per share for a minimum of ten consecutive business days during this 180-day period.

In the event that we do not regain compliance within this 180-day period, we may be eligible to seek an additional compliance period of 180 calendar days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq will provide us with notice that our Common Stock will be subject to delisting.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

one share of common stock, is immediately exercisable and will expire 5 years from the issuance date.

The January 2021 Pre-funded Warrants were exercised in full as of February 8, 2021.

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.

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.

The First February 2021 Pre-funded warrants were exercised in full as of February 18, 2021.

On February 16, 2021, we entered into a Securities Purchase Agreement with an institutional investor, pursuant to which we sold in a registered direct offering, 3,000,000 shares of our common stock, and warrants to purchase up to 9,950,250 shares of common stock at an exercise price of $ 2.01 per share (the “Second February 2021 Purchase Warrants”) for a combined purchase price of $ 2.01 per share and pre-funded warrants to purchase up to 6,950,250 shares of common stock ("Second February 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 2.009 per share for net proceeds of $ 18.5 million after deducting placement agent commissions and offering expenses.

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

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

Termination of Equity Distribution Agreement (ATM)

On February 12, 2021, we terminated that certain Equity Distribution Agreement, dated March 3, 2020, with Maxim Group LLC.

Stock Option Exercises

On February 5, 2021, the Company issued 4,977 shares of common stock in connection with the cashless exercise of 14,583 employee stock options.

Note 34 - Correction of Previously Issued Financial Statements

The Company follows ASC Topic 250, Accounting Changes and Error Corrections, when accounting for accounting changes and errors in previously issued financial statements.

The former is a change in accounting principle, a change in accounting estimates or a change in reporting entity.

The latter is an error in recognition, measurement, presentation, or disclosure in financial statements resulting from mathematical mistakes, mistakes in the application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared.

Subsequent to the issuance of the Company’s consolidated and combined financial statements as of September 30, 2021 and 2020 (the “previously issued financial statements”), new information became available to management which required a re-evaluation of the Company’s historical application of ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC Topic 260, Earnings per Share (“ASC 260”) and concluded a accretion discount of the Series 7 preferred shares should have recorded been as a reduction to the Company’s Net Loss Attributable to Common Stockholders.

The error also impacted the company’s Net Loss Per Share- Basic and Diluted calculation.

Management evaluated the quantitative and qualitative impact of this accounting error and concluded it was not material to the Company’s previously issued financial statements.

Notwithstanding this conclusion, management has revised the accompanying consolidated financial statements and related disclosures included herein to correct this accounting error for all periods presented, as well as the accompanying footnotes affected by the accounting error, which include additional disclosure or corresponding revisions to the Consolidated Statements.

The correction of this accounting error had no effect on the Company’s previously reported revenues and operating loss.

The following tables summarize the effect of correcting this accounting error on the Company’s previously issued financial statements:

Consolidated Statement of Operations Information

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

As Previously Issued Adjustment Corrected As Previously Issued Adjustment Corrected

Net loss attributable to Stockholders of Inpixon $ ( 33,640 ) $ — $ ( 33,640 ) $ ( 31,438 ) $ — $ ( 31,438 )

Accretion of Series 7 preferred stock $ — $ ( 2,962 ) $ ( 2,962 ) $ — $ ( 2,962 ) $ ( 2,962 )

Net Loss Attributable to Common Stockholders $ ( 33,640 ) $ ( 2,962 ) $ ( 36,602 ) $ ( 31,438 ) $ ( 2,962 ) $ ( 34,400 )

Net Loss Per Share - Basic and Diluted $ ( 0.29 ) $ ( 0.02 ) $ ( 0.31 ) $ ( 0.31 ) $ ( 0.03 ) $ ( 0.34 )

Note 35 - Subsequent Events

On January 8, 2022 the Company granted 9,945,000 stock options to employees, consultants and directors of the Company.

These options are 100% vested at grant or vest over 12 or 48 months, have a life of 10 years and an exercise price of $ 0.53 per share.

On January 28, 2022, the Company entered into an Exchange Agreement with the holder of certain existing warrants of the Company which were exercisable for an aggregate of 49,305,088 shares of the Company’s common stock.

Pursuant to the Exchange Agreement, the Company has agreed to issue to the Warrant Holder an aggregate of 13,811,407 shares of common stock and rights to receive an aggregate of 3,938,424 shares of common stock in exchange for the existing warrants.

On February 1, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 1.5 million and then cause the outstanding balance of the Original Note to be reduced by $ 1.5 million;

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 .

Stock Option and Restricted Stock Awards

On February 18, 2021, the Company granted 1,480,500 stock options to employees of the Company.

These options vest pro-rata over 12 , 24 , or 36 months, have a life of ten years and an exercise price of $ 1.78 per share.

On February 18, 2021, the Company granted 120,000 stock options to the directors of the Company.

These options vest upon grant, have a life of ten years and an exercise price of $ 1.78 per share.

On February 18, 2021, the Company granted 5,250,000 restricted stock awards to employees of the Company.

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

Systat License Agreement

(i) partition a new promissory note in the form of the Original Note equal to $ 500,000 and then cause the outstanding balance of the Original Note to be reduced by

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

In addition, we exercised our 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 .

Nanotron Purchase Agreement

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 .

In addition, the amount payable was further reduced by $ 59,156.74 in connection with a post closing working capital adjustment and the satisfaction of a claim related to a customer dispute.

A balance of $ 465,843.26 was paid to the Seller in full satisfaction of the Holdback Funds payable by the Purchaser to the Seller pursuant to the Purchase Agreement.

Game Your Game Purchase Agreement

On March 25, 2021, we entered into a Stock Purchase Agreement (the “GYG Purchase Agreement”) with Game Your Game, Inc., a Delaware corporation (“GYG”), and certain selling shareholders (the "Selling Shareholders"), pursuant to which we will acquire an aggregate of 522,000 shares of common stock of GYG (the “GYG Shares”), representing 52.2 % of the outstanding shares of common stock of GYG on a fully diluted basis, in exchange for $ 1,666,932 in cash (the “Cash Consideration”), and a number of shares of our common stock equal to $ 1,403,103 divided by the lesser of (A) the closing price per share of our common stock, as reported by the Nasdaq Stock Market, immediately prior to the closing of the transaction and (B) the average closing price of our common stock, as reported by the Nasdaq Stock Market, for the 5 trading days immediately preceding the closing date.

The Cash Consideration will be used for working capital purposes and to satisfy certain outstanding payroll obligations of GYG.

The closing of the transaction is subject to the terms and satisfaction of the conditions set forth in the GYG Purchase Agreement.

GYG’s business consists of developing and providing solutions using sports data and analytics.

Iliad Note Extension

On March 17, 2021, we extended the maturity date of the March 2020 Note with Iliad from March 18, 2021 to March 18, 2022.

GTX Note Extension

On February 28, 2021 we agreed to extend the maturity date of the GTX Note to December 31, 2021.

In addition, we agreed that from June 1, 2020 until the earlier of the maturity date, the date on which the outstanding balance is paid in full or the date on which certain property is removed from GTX premises an amount equal to $ 585 per month would be offset as payment against the outstanding balance, applied first against the interset amount and then against the principal amount.

and (ii) exchange the partitioned note for the delivery of 1,191,611 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.4196 .

On February 18, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 350,000 and then cause the outstanding balance of the Original Note to be reduced by $ 350,000 ;

and (ii) exchange the partitioned note for the delivery of 966,317 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.3622 .

On February 19, 2022, 960,106 shares of common stock issued in connection with restricted stock grants were forfeited for employee taxes.

On March 3, 2022, we entered into a Second Amendment to the CXApp Stock Purchase Agreement with the Sellers' Representative, pursuant to which the parties agreed that withholding taxes payable by the Sellers, as applicable, in connection with the issuance of the Earnout Shares would be offset up to the aggregate amount payable to such Seller by the Company from the Holdback Amount and the Holdback Amount would be reduced by an equal amount.

On March 3, 2022, the Company issued 10,873,886 shares of Common Stock to the Sellers in connection with the satisfaction of the Earnout Payment.

Through March 15, 2022, the Company received notice of cash redemption from several holders of Series 7 Convertible Preferred Stock issued September 13, 2021 (as disclosed in Note 23).

The redemption period per the purchase agreement begins on March 15, 2022 and ends on June 14, 2022.

As of March 15, 2022, redemption notices totaling 33,000 preferred shares have been received for aggregate cash required to be paid of approximately $ 33.0 million.

In addition, in accordance with the purchase agreement, upon redemption of the preferred stock, each holder will forfeit 75 % of the common stock warrants that were issued.

Therefore, as of the date of this filing, 33,000 shares of Series 7 Convertible Preferred Stock have been redeemed and 19,800,000 warrants have been forfeited.

On March 15, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 650,000 and then cause the outstanding balance of the Original Note to be reduced by $ 650,000 ;

and (ii) exchange the partitioned note for the delivery of 2,152,317 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.3020 .

Effective as of March 16, 2022, we entered into a third amendment (the “Third Amendment”) to the Original Note.

Pursuant to the terms of the Third Amendment, the maturity date of the Original Note was extended from March 18, 2022 to March 18, 2023 (the “Maturity Date Extension”).

In exchange for the Maturity Date Extension, we agreed to pay a 2 % extension fee in the amount of $ 56,860.09 (the “Extension Fee”), which was added to the outstanding balance of the Original Note.

Following the application of the Extension Fee, as of March 16, 2022, the outstanding balance of the Original Note was $ 2,900,654.45 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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-K

Item 8. Financial Statements and Supplementary Data