What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 447 added, 657 removed, 656 unchanged (63% of the section changed)

3 unchanged sentences

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

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

The results for the period ended March 31, 2022 are not necessarily indicative of the results of operations for the full year.

These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our audited consolidated financial statements for the fiscal years December 31, 2021 and 2020 included in the annual report on Form 10-K filed with the U.S.

3 unchanged sentences

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

As of September 30,

As of March 31,

2022 As of December 31,

21 unchanged sentences

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

As of September 30,

As of March 31,

2022 As of December 31,

4 unchanged sentences

Accrued liabilities 3,863 10,665

Income tax liabilities 3,509 —

Operating lease obligation, current 619 643

11 unchanged sentences

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

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

zero and 49,250 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Series 8 Convertible Preferred Stock- 53,197.7234 shares authorized;

53,197.7234 and zero issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

(Liquidation preference of $ 53,197,723 )

3 unchanged sentences

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

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

1 issued, and 1 outstanding as of March 31, 2022 and December 31, 2021

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

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

126 issued, and 126 outstanding as of March 31, 2022 and December 31, 2021

Common Stock - $ 0.001 par value;

2,000,000,000 shares authorized;

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

152,476,356 and 124,440,924 issued and 152,476,355 and 124,440,923 outstanding as of March 31, 2022 and December 31, 2021, respectively.

Additional paid-in capital 338,183 332,639

4 unchanged sentences

Stockholders’ Equity Attributable to Inpixon 76,047 81,803

Non-controlling Interest 1,357 1,688

INPIXON AND SUBSIDIARIES

1 unchanged sentence

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

Non-controlling Interest 2,460 41

Total Stockholders’ Equity 77,404 83,491

4 unchanged sentences

(In thousands, except per share data)

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

September 30,

2021 2020 2021 2020

For the Three Months Ended March 31,

Revenues $ 5,231 $ 2,954

12 unchanged sentences

Loss on exchange of debt for equity — ( 30 )

Benefit (provision) for valuation allowance on related party loan - held for sale — ( 679 ) 7,345 ( 1,514 )

Other income (expense) ( 47 ) 11 464 ( 488 )

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

Provision for valuation allowance on related party loan - held for sale — ( 117 )

Other income 108 386

Unrealized loss on equity securities ( 1,503 ) —

1 unchanged sentence

Net Loss, before tax ( 11,457 ) ( 12,530 )

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

Income tax provision ( 100 ) ( 9 )

Net Loss ( 11,557 ) $ ( 12,539 )

1 unchanged sentence

Net Loss Attributable to Stockholders of Inpixon ( 11,211 ) ( 12,557 )

Accretion of Series 7 Preferred Stock ( 4,555 ) —

Accretion of Series 8 Preferred Stock ( 548 ) —

Deemed dividend for the modification related to Series 8 Preferred Stock ( 2,627 ) —

Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock 1,469 —

Amortization premium- modification related to Series 8 Preferred Stock 110 —

Net Loss Attributable to Common Stockholders $ ( 17,362 ) $ ( 12,557 )

Net Loss Per Share - Basic and Diluted $ ( 0.13 ) $ ( 0.16 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Weighted Average Shares Outstanding

4 unchanged sentences

(In thousands)

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

September 30,

2021 2020 2021 2020

For the Three Months Ended March 31,

Net Loss $ ( 11,557 ) $ ( 12,539 )

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

Unrealized foreign exchange loss from cumulative translation adjustments ( 102 ) ( 671 )

Comprehensive Loss $ ( 11,659 ) $ ( 13,210 )

2 unchanged sentences

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

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

(In thousands, except per share data)

Series 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

Series 7 Preferred Stock Series 8 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 Shares Amount

Balance - January 1, 2022 49,250 $ 44,695 — $ — 1 $ — 126 $ — 124,440,924 $ 124 $ 332,639 ( 1 ) $ ( 695 ) $ 44 $ ( 250,309 ) $ 1,688 $ 83,491

Common shares issued for registered direct offering — — — — — — 15,800,000 16 74,058 — — — — — $ 74,074

Common shares issued for extinguishment of debt — — — — — — — — 4,310,245 4 1,496 — — — — — $ 1,500

Common shares issued for cashless stock options exercised — — — — — — 4,977 — — — — — — — $ —

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 — — — — — — — — 5,096 — — — — — $ 5,096

Cumulative translation adjustment — — — — — — — — — — — ( 671 ) — — $ ( 671 )

Net loss — — — — — — — — — — — — ( 12,557 ) 18 $ ( 12,539 )

Balance - March 31, 2021 — — 1 — 126 — 101,382,448 $ 101 $ 310,013 ( 1 ) $ ( 695 ) $ ( 11 ) $ ( 193,549 ) $ 60 $ 115,919

Stock options and restricted stock awards granted to employees for services — — — — — — — — — — 1,533 — — — — — $ 1,533

Common shares issued for Game Your Game acquisition — — — — — — 1,179,077 1 1,402 — — — — — — 2,811 4,214

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 for cashless stock options exercised — — — — — — 414 — — — — — — — — — —

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

Taxes paid on stock based compensation — — — — — — — — ( 1,687 ) — — — — — — — ( 1,687 )

Cumulative translation adjustment — — — — — — — — — — — — 63 ( 141 ) 130 52

Net income (loss) — — — — — — — — — — — — 14,759 ( 253 ) 14,506

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

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

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

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

Series 7 Preferred redeemed for cash ( 49,250 ) ( 49,250 ) — — — — — — — — — 1 — — — — — $ —

Series 8 Preferred stock issued for cash — — 53,197.7234 41,577 — — — — — — 5,329 — — — — — $ 5,329

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

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

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

Accretion Discount- Series 7 Preferred Shares — 4,555 — — — — — — — — ( 4,555 ) — — — — — $ ( 4,555 )

Accretion Discount- Series 8 Preferred Shares — — — 548 — — — — — — ( 548 ) — — — — — $ ( 548 )

Deemed dividend for the modification related to Series 8 Preferred Stock — — — 2,627 — — — — — — ( 2,627 ) — — — — — ( 2,627 )

Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock — — — ( 1,469 ) — — — — — — 1,469 — — — — — 1,469

Amortization Premium- modification related to Series 8 embedded warrants — — — ( 110 ) — — — — — — 110 — — — — — 110

Restricted stock grants withheld for taxes — — — — — — — — ( 960,106 ) ( 1 ) ( 335 ) — — — — — $ ( 336 )

Common shares issued for CXApp earnout — — — — — — — — 10,873,886 11 3,686 — — — — — $ 3,697

Common shares issued for exchange of warrants — — — — — — — — 13,811,407 14 ( 14 ) — — — — — $ —

Cumulative translation adjustment — — — — — — — — — — — — — ( 102 ) ( 15 ) 15 $ ( 102 )

Net loss — — — — — — — — — — — — — — ( 11,211 ) ( 346 ) $ ( 11,557 )

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

Balance - March 31, 2022 — $ — 53,197.7234 $ 43,173 1 $ — 126 $ — 152,476,356 $ 152 $ 338,183 ( 1 ) $ ( 695 ) $ ( 58 ) $ ( 261,535 ) $ 1,357 $ 77,404

The accompanying notes are an integral part of these financial statements

1 unchanged sentence

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

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

(In thousands, except per share data)

2 unchanged sentences

Balance - January 1, 2021 — — 1 $ — 126 $ — 53,178,462 $ 53 $ 225,613 ( 1 ) $ ( 695 ) $ 660 $ ( 180,992 ) $ 41 $ 44,680

Stock options granted to employees and consultants for services — — — — — — — — 399 — — — — — 399

Common Shares issued for net cash proceeds of a public offering — — — — — — 937,010 1 1,251 — — — — — 1,252

Common shares issued for extinguishment of debt — — — — — — 1,896,557 2 4,192 — — — — — 4,194

Cumulative translation adjustment — — — — — — — — — — — ( 613 ) — ( 1 ) ( 614 )

Net income (loss) — — — — — — — — — — — — ( 6,158 ) ( 10 ) ( 6,168 )

Balance - March 31, 2020 — — 1 $ — 126 $ — 7,068,490 $ 7 $ 164,225 ( 1 ) $ ( 695 ) $ ( 517 ) $ ( 157,920 ) $ 15 $ 5,115

Stock options granted to employees for services — — — — — — — — 286 — — — — — 286

Common and preferred shares issued for net cash proceeds from a public offering — — — — — — 29,033,036 29 40,490 — — — — — 40,519

Common shares issued for registered direct offering — — — — — — 15,800,000 16 74,058 — — — — — 74,074

Common shares issued for extinguishment of debt — — — — — — 893,921 1 1,499 — — — — — 1,500

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

Cumulative translation adjustment — — — — — — — — — — — 318 — — 318

Net income (loss) — — — — — — — — — — — — ( 7,322 ) 19 ( 7,303 )

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

Common shares issued for cashless stock options exercised — — — — — — 4,977 — — — — — — — —

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 — — — — — — — — 5,096 — — — — — 5,096

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

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

Cumulative translation adjustment — — — — — — — — — — — ( 671 ) — — ( 671 )

Net loss — — — — — — — — — — — — ( 12,557 ) 18 ( 12,539 )

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

Balance - March 31, 2021 — — 1 $ — 126 $ — 101,382,448 $ 102 $ 310,013 ( 1 ) $ ( 695 ) $ ( 11 ) $ ( 193,549 ) $ 59 $ 115,919

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended March 31,

Cash Flows Used in Operating Activities (Unaudited)

5 unchanged sentences

Stock based compensation 1,533 5,096

Earnout payment expense ( 2,827 ) —

Loss on exchange of debt for equity — 30

Amortization of debt discount — 224

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

Provision for doubtful accounts 100 —

Related party note, gain on foreign currency transaction — ( 363 )

Unrealized gain on note ( 167 ) —

Provision for inventory obsolescense 300 —

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

Provision for valuation allowance for related party receivable — 648

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

Deferred income tax ( 4,507 ) ( 87 )

Provision for valuation allowance for held for sale loan — 117

Income tax expense — 9

Unrealized loss on equity securities 1,503 —

14 unchanged sentences

Purchases of capitalized software ( 107 ) ( 253 )

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

Sales of other short term investments 2,000 —

Purchases of treasury bills ( 63,362 ) —

Investments in short term investments — ( 42,059 )

Sales of treasury bills 28,001 —

Purchase of Systat licensing agreement — ( 900 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Issuance of note receivable ( 268 ) —

Acquisition of Ten Degrees — ( 1,500 )

Acquisition of Game Your Game 184 —

Acquisition of CXApp ( 15,186 ) —

Acquisition of Visualix ( 61 ) —

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

Net Cash Provided By (Used in) Investing Activities 27,813 ( 43,321 )

Cash From Financing Activities

Net repayments to bank facility — ( 150 )

Net proceeds from issuance of preferred stock and warrants 46,906 —

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

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

Net repayments of notes payable — ( 74 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Cash paid for redemption of preferred stock series 7 ( 49,250 ) —

Restricted stock forfeiture for settlement of employee taxes ( 336 ) —

Loans to related party — ( 117 )

Repayments from related party — 292

Net proceeds from promissory notes 364 —

Repayment of CXApp acquisition liability ( 1,787 ) —

Repayment of acquisition liability to Nanotron shareholders ( 467 ) —

Repayment of acquisition liability to Locality shareholders — ( 467 )

Net Cash Provided By Financing Activities 125,425 47,053

Net Cash (Used In) Provided By Financing Activities ( 4,103 ) 77,269

Effect of Foreign Exchange Rate on Changes on Cash ( 19 ) ( 10 )

7 unchanged sentences

Non-cash investing and financing activities

Common shares issued for extinguishment of liability $ — $ 200

Common shares issued for extinguishment of debt $ 1,500 $ 1,500

Right of use asset obtained in exchange for lease liability $ — $ 389

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 $ —

Common shares issued for CXApp Earnout Payment $ 3,697 $ —

Common shares issued in exchange for warrants $ 14 $ —

The accompanying notes are an integral part of these financial statements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

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, Inpixon Limited (“Inpixon UK”), Inpixon GmbH ("Inpixon Germany"), as well as Inpixon Germany's wholly-owned subsidiary, Nanotron GmbH ("Nanotron"), Design Reactor, Inc.

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

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

("Active Mind Technology") (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.

Change in Segment Reporting

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.

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

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

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

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

See further details in Note 14, 22 and 24.

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 pre-funded 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 $ 2.009 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 1 - Organization and Nature of Business (continued)

for an aggregate subscription amount of $ 54.1 million.

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

See further breakdown in Note 17 - Capital Raises.

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 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“GAAP”), which are the accounting principles that are generally accepted in the United States of America.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), for interim financial information and the rules and regulations of the Securities and Exchange Commission ("SEC") .

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Interim results are not necessarily indicative of the results for the full year ending December 31, 2021.

Interim results for the three months ended March 31, 2022 are not necessarily indicative of the results for the full year ending December 31, 2022.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the years ended December 31, 2021 and 2020 included in the annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 16, 2022.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies

The Company's complete accounting policies are described in Note 2 to the Company's audited consolidated financial statements and notes for the years ended December 31, 2021 and 2020.

As of March 31, 2022, the Company has a working capital surplus of approximately $ 74.3 million, cash of approximately $ 60.9 million and short term investments of $ 15.0 million.

For the three months ended March 31, 2022, the Company had a net loss of approximately $ 11.6 million.

On March 22, 2022, 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) 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 112,778,720 shares of common stock.

Each share of Series 8 Convertible Preferred Stock and the related warrants were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value of each share of Series 8 Convertible Preferred Stock for an aggregate subscription amount of $ 50.0 million.

The net proceeds to the Company from this offering was $ 46.9 million after placement agent commissions and other offering costs.

See further breakdown in Note 12 - Capital Raises.

Risks and Uncertainties

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

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

While the impact of the COVID-19 pandemic is generally subsiding, the lasting impact on our business and results of operations continues to remain uncertain.

While we were able to continue operations remotely throughout the pandemic, we have experienced supply chain cost increases and constraints and delays in the receipt of certain components of our hardware products impacting delivery times for our products.

In addition, to the extent that certain customers continue to be challenged by the lasting effects of the pandemic, we have and may continue to see an impact in the demand of certain products and delays in certain projects and customer orders.

Despite these challenges, we were able to realize growth in revenue for the first quarter of 2022 when compared to the same period of 2021 as a result of an increase in sales associated with our indoor intelligence platform including the CXApp and Intranav acquisitions completed in April and December 2021, respectively.

We anticipate that certain global events, such as the continued impact of the pandemic, the recent military conflict between Russia and Ukraine, and inflation on our customers and partners in regions throughout the world.

We expect that supply chain interruptions and constraints, and increased costs on parts, materials and labor may continue to be a challenge for our business.

The impact that these global events will have on general economic conditions is continuously evolving and the ultimate that they will 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.

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 these financial statements are issued.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods.

Actual results could differ from those estimates.

1 unchanged sentence

• the valuation of stock-based compensation;

• the valuation of the assets and liabilities acquired of Systat, Ten Degrees, Nanotron, Game Your Game, Visualix, and CXApp as described in Note 5 , Note 6 , Note 7 , Note 8 , Note 9 and Note 10 , respectively, as well as the valuation of the Company’s common stock issued in the transactions;

• the allowance for doubtful accounts;

• the valuation of the Company’s common stock issued in transactions, including acquisitions;

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

• the allowance for credit losses;

• the valuation of loans receivable;

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

Business Combinations

The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition.

The excess of the purchase price over the estimated fair value is recorded as goodwill.

All acquisition costs are expensed as incurred.

Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date.

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 gains and losses included in the Other income (expense) line of the Condensed Consolidated Statements of Operations.

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

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

The Company recorded unrealized losses of approximately $ 89,000 and $ 2,000 for the three months ended March 31, 2022 and 2021, respectively.

Mezzanine equity

6 unchanged sentences

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

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

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

The Unrealized loss on equity securities for the three months ended March 31, 2022 and 2021 was approximately $ 1.5 million and zero , respectively.

Revenue Recognition

7 unchanged sentences

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.

Accordingly, the Company is the principal in the transaction with the customer and records revenue on a gross basis.

The Company receives fixed consideration for sales of hardware and software products.

The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice.

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

Accordingly, the Company is the principal in the transaction with the customer and records revenue on a gross

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

The Company receives fixed consideration for sales of hardware and software products.

The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice.

Software As A Service Revenue Recognition

17 unchanged sentences

Anticipated losses are recognized as soon as they become known.

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

For the three months ended March 31, 2022 and 2021, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

1 unchanged sentence

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.

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 with the option to upgrade to a perpetual license at the end of the term.

The contracts may also provide for yearly on-going maintenance services for a specified price, which includes maintenance services, designated support, and enhancements, upgrades and improvements to the software (the “Maintenance Services”), depending on the contract.

7 unchanged sentences

Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer.

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

Renewal contracts are not

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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

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

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

5 unchanged sentences

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

The Company had deferred revenue of approximately $ 4.1 million and $ 4.8 million as of March 31, 2022 and December 31, 2021, 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.

6 unchanged sentences

Forfeitures of unvested stock options are recorded when they occur.

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

The Company incurred stock-based compensation charges of approximately $ 1.5 million and $ 5.1 million for the three months ended March 31, 2022 and 2021, respectively, which are included in general and administrative expenses.

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

2 unchanged sentences

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

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

For the Nine Months Ended September 30,

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 three months ended March 31, 2022 and 2021:

For the Three Months Ended March 31,

Options 28,456,321 7,012,891

1 unchanged sentence

Convertible preferred stock 112,779,566 846

Earnout reserve 11,061,939 —

Rights to common stock 3,938,424 —

Restricted Stock Award — 5,250,000

Total 275,496,281 61,662,075

Preferred Stock

The Company relies on the guidance provided by ASC 480, "Distinguishing Liabilities from Equity", to classify certain redeemable and/or convertible instruments.

Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value.

Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

At all other times, preferred shares are classified as permanent equity.

The Company also follows the guidance provided by ASC 815 "Derivatives and Hedging", which states that contracts that are both, (1) indexed to its own stock and (2) classified in stockholders’ equity in its statement of financial position, are not classified as derivative instruments, and to be recorded under stockholder's equity on the balance sheet of the financial statements.

Management assessed the preferred stock and determined that it did meet the scope exception under ASC 815, and would be recorded as equity, and not a derivative instrument, on the balance sheet of the Company's financial statements.

Fair Value of Financial Instruments

5 unchanged sentences

Recently Issued and Adopted Accounting Standards

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 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 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 August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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”) .

ASU 2020-06 reduces the number of models used to account for convertible instruments, amends diluted EPS calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity.

The amendments add certain disclosure requirements to increase transparency and decision-usefulness about a convertible instrument's terms and features.

Under the amendment, the Company must use the if-converted method for including convertible instruments in diluted EPS as

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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

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.

opposed to the treasury stock method.

ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2023 for smaller reporting companies as defined by the SEC.

Early adoption is allowed under the standard with either a modified retrospective or full retrospective method.

The Company early adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method.

As a result of Management’s evaluation, the adoption of ASU 2020-06 did not have a material impact on the consolidated financial statements.

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.

2 unchanged sentences

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.

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 and disclosures.

Subsequent Events

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

The Company adopted ASU 2021-04 on January 1, 2022.

As a result of Management’s evaluation, the adoption of ASU 2021-04 did not have a material impact on the consolidated financial statements.

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, with early adoption permitted.

The Company adopted ASU 2021-08 on January 1, 2022.

As a result of Management’s evaluation, the adoption of ASU 2021-08 did not have a material impact on the consolidated financial statements.

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.

The Company adopted ASU 2021-10 on January 1, 2022.

As a result of Management’s evaluation, the adoption of ASU 2021-10 did not have a material impact on the consolidated financial statements.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 4 - Disaggregation of Revenue

2 unchanged sentences

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 recognition policy.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 4 - Disaggregation of Revenue (continued)

Revenues consisted of the following (in thousands):

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

2021 2020 2021 2020

For the Three Months Ended March 31,

Recurring revenue

9 unchanged sentences

Total Revenue $ 5,231 $ 2,954

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

2021 2020 2021 2020

For the Three Months Ended March 31,

Revenue recognized at a point in time

12 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 5 - Systat Licensing Agreement

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 (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 - Business Combinations ("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.

(“Sysorex”), into a new note in an amount equal to $ 3.0 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat Software, Inc.

in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement.

An additional $ 3.3 million of the principal balance underlying the Sysorex Note was partitioned and assigned to Systat Software, Inc.

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

(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;

and (iii) $ 1.0 million on March 19, 2021.

In addition, the cash consideration of $ 2.2 million was delivered on July 8, 2020.

In connection with the License Grant, the Systat Parties provided Inpixon with equipment to use at no additional cost for a minimum period of six months following the Closing Date.

The Company is also entitled to any customer maintenance revenue, new license fees, or license renewal fees, received by any of the Systat Parties after June 1, 2020 in connection with the Systat Customer Contracts and/or Systat Distribution Agreements (as such terms are defined in the License Agreement) assigned to and assumed by us in connection with the License Agreement.

The net amount owed to the Company for this period is included in the Other Receivable line item listed in the assets acquired below.

The License Grant will remain in effect for a period of 15 years following the Closing Date, unless terminated sooner upon mutual written consent of Systat Software, Inc.

and us or upon termination by either for the other party’s specified breach.

In connection with the License Grant, the Company expanded its operations into the United Kingdom and Germany.

As a result of such expansion, the Company formed Inpixon Limited, a new wholly owned subsidiary in the United Kingdom, and established Inpixon GmbH, a wholly owned subsidiary incorporated under the laws of Germany.

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 purchase price is allocated as follows (in thousands):

Fair Value Allocation

Assets Acquired:

Other receivable $ 44

Developed technology 1,200

Customer relationships 395

Tradename & Trademarks 279

Non-compete agreements 495

Liabilities Assumed:

Deferred Revenue $ 733

Total Purchase Price $ 2,200

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 5 - Systat Licensing Agreement (continued)

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

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.

Note 6 - Ten Degrees Acquisition

On August 19, 2020, in accordance with the terms and conditions of that certain Asset Purchase Agreement ("APA"), by and among the Company, 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”), 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 Business Combinations , 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.

In accordance with the terms of the APA, commencing as of the date of the APA, the Transferors, and their affiliates, have agreed to not compete with our business associated with the TDI Assets for a period of five years from the closing date.

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 6 - Ten Degrees Acquisition (continued)

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

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

Fair Value Allocation

Assets Acquired:

Developed technology $ 1,701

Non-compete agreements 399

Total Purchase Price $ 2,100

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

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

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

Note 7 – Nanotron Acquisition

On October 6, 2020, the Company, through its wholly-owned subsidiary, Inpixon Germany, a limited liability company incorporated under the laws of Germany (the "Purchaser" and together with Inpixon, the "Company"), completed the acquisition of all the outstanding capital stock of Nanotron, a limited liability company incorporated under the laws of Germany, pursuant to the terms and conditions of that certain Share Sale and Purchase Agreement (the "Purchase Agreement"), dated as of October 5, 2020, among the Company, Nanotron and Sensera Limited (the "Seller", and the owner of all outstanding shares of Nanotron), a stock corporation incorporated under the laws of Australia and the sole shareholder of Nanotron.

As a result of the acquisition, the Company now owns 100 % of Nanotron.

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

The total paid to Sensera Limited 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 (the "Purchase Price") to secure Sensera Limited'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 (as described in the Purchase Agreement) versus the working capital target (as described in the Purchase Agreement) (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 to obtain the release of certain existing security interests on Nanotron’s assets.

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

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

A balance of $ 465,843 was paid to the Seller in full satisfaction of the Holdback Funds payable by the Purchaser to the Seller pursuant to the Purchase Agreement.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 7 – Nanotron Acquisition (continued)

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

Fair Value Allocation

Assets acquired:

Cash and cash equivalents 301

Trade and other receivables 576

Inventory 827

Prepaid expenses and other current assets 103

Operating lease right-of-use asset 557

Property, plant, and equipment 433

Proprietary Technology 1,213

Customer Relationships 1,055

Non-compete Agreements 610

In-Process R&D 505

IP Agreement 178

Goodwill 3,501

Total assets acquired $ 9,910

Liabilities assumed:

Accounts payable 526

Lease liabilities 557

Restructuring Costs 214

Accrued Liabilities 361

Total liabilities assumed 1,658

Total Purchase Price $ 8,252

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 local tax purposes, but will be amortizable in the computation of the shareholder’s U.S.

tax liability.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 8 – 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 of $ 3,070,035 the Company acquired 522,000 shares of the Company's common stock from Game Your Game, which represent 52.2 % of the outstanding shares of Common Stock of Game Your Game on a fully diluted basis.

The goodwill of $ 285,867 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 preliminary 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 48.8 % 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 8 – Game Your Game Acquisition (continued)

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 preliminary 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 3

Tradename 689

Proprietary technology 3,190

Customer relationship 933

Total assets acquired $ 7,274

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 ( 2,811 )

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

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

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

Professional fees $ 154

Consulting fees 150

Total acquisition costs $ 304

The Company has elected the practical expedient to recognize revenue for the right

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 9 – 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 number of common stock shares)

Total Purchase Price $ 490

Assets Acquired (in thousands):

Developed Technology $ 429

Non-compete Agreements 61

Total Purchase Price $ 490

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 4 - Disaggregation of Revenue (continued)

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.

Note 5 – CXApp Acquisition

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

In exchange for the aggregate purchase price of $ 32,500,000 , 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 $ 17,431,697 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 preliminary purchase price (in thousands).

Cash $ 22,500

Stock ( 8,849,538 number of common stock shares)

Total Purchase Price $ 32,500

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 10 – CXApp Acquisition (continued)

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.

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

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

Total acquisition liability $ 5,761

In connection with the Acquisition, the Company is to pay an additional amount up to $ 12,500,000 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.

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

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

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):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 10 – CXApp Acquisition (continued)

Fair Value Allocation

Assets acquired:

Cash and cash equivalents 1,312

Trade and other receivables 1,626

Prepaid expenses and other current assets 68

Property, plant, and equipment 6

Tradename 2,170

Proprietary technology 8,740

Customer relationships 4,680

Non-compete agreements 2,690

Goodwill 17,432

Total assets acquired 38,724

Liabilities assumed:

Accounts payable 203

Deferred revenue 1,372

Accrued expenses and other liabilities 116

Deferred tax liability 4,505

Other tax liability, noncurrent 28

Total liabilities assumed 6,224

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

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

Accounting fees $ 115

Legal fees 360

Total acquisition costs $ 475

On March 3, 2022, we entered into a Second Amendment to that certain Stock Purchase Agreement, dated as of April 30, 2021 (the CXApp Stock Purchase Agreement"), by and among the Company, Design Reactor, Inc.

(the "CXApp") and the holders of the outstanding capital stock of CXApp (the "Sellers") with the Sellers' Representative (as defined in the CXApp Stock Purchase Agreement), pursuant to which the parties agreed that withholding taxes payable by certain of the Sellers, as applicable, in connection with the issuance of the Earnout Shares (as defined in the CXApp Purchase Agreement) would be offset up to the aggregate amount payable to such Seller by the Company from the Holdback Amount (as defined in the CXApp Purchase Agreement) 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 (as defined in the CXApp Purchase Agreement).

The fair market value of the Earnout Shares issued was lower than the fair market value of the Earnout Shares as of December 31, 2021, and therefore the Company recorded a benefit of $ 2.8 million for the three months ended March 31, 2022, which is included in the General and Administrative costs of the condensed consolidated statements of operations.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 6 - Proforma Financial Information

Nanotron Proforma and CXApp Proforma Financial Information

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

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

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

CXApp Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company and the CXApp for the three months ended March 31, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 30, 2021.

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

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

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

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

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

Revenues $ 4,426 $ 11,184

Net income (loss) attributable to common stockholders $ ( 7,369 ) $ ( 23,230 )

Net income (loss) per basic and diluted common share $ ( 0.15 ) $ ( 0.72 )

Weighted average common shares outstanding:

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

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

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

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

For the Three Months Ended March 31, 2021

Revenues $ 4,429

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 7- Goodwill and Intangibles

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

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

Systat $ 520 $ 175 $ — $ — $ 695

GTX 2 — — — 2

The following table summarizes the changes in the carrying amount of Goodwill for the three months ended March 31, 2022 (in thousands):

Segments Acquisitions Balance as of January 1, 2022 Goodwill additions through acquisitions Valuation Measurement Period Adjustments Exchange rate fluctuations as of March 31, 2022 Balance as of March 31, 2022

SAVES Systat $ 695 $ — $ — $ — $ 695

Indoor Intelligence GTX 1 — — — 1

Nanotron 1,119 — — ( 21 ) 1,098

Locality 672 — — 1 673

Jibestream 480 — — 7 487

1 unchanged sentence

Game Your Game 152 — — — 152

IntraNav 159 — — ( 2 ) 157

Total $ 7,672 $ — $ — ( 16 ) $ 7,656

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

The Company reviews goodwill for impairment on a reporting unit basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

As of March 31, 2022, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

As of March 31, 2022 and December 31, 2021, the Company has cumulative goodwill impairment charges of $ 0 and $ 14.8 million related to the Indoor Intelligence reporting unit, respectively.

Intangibles assets at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

Gross Carrying Amount Accumulated Amortization Amount Remaining Weighted Average Useful Life

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

March 31, December 31, March 31, December 31,

2022 2021 2022 2021

5 unchanged sentences

Non-compete Agreements 4,783 4,786 ( 2,000 ) ( 1,666 ) 2.21

Export License $ 14 $ — $ ( 14 ) $ — 0

Totals $ 40,456 $ 40,433 $ ( 8,454 ) $ ( 6,955 )

Amortization Expense:

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

Amortization expense for the three months ended March 31, 2022 and 2021 was approximately $ 1.5 million and $ 0.6 million, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

6 unchanged sentences

Note 8 - Inventory

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

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

Inventory as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

As of March 31, 2022 As of December 31, 2021

Raw materials $ 469 $ 463

7 unchanged sentences

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

As of September 30, 2021

As of March 31, 2022

Cost Fair Value

3 unchanged sentences

Total investments in equity securities- fair value $ 58,905 $ 335

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

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

For the three months ended March 31, 2022 and 2021, the Company recognized a net unrealized loss on equity securities of $ 1.5 million and zero , respectively, in the other income/expense section of the condensed consolidated statements of operations.

Note 10 - Accrued Liabilities

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

Accrued liabilities as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 10- Accrued Liabilities (continued)

As of March 31, 2022 As of December 31, 2021

Accrued compensation and benefits $ 1,365 $ 8,027

5 unchanged sentences

Note 11 - Debt

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

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

Debt as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

Short-Term Debt Maturity March 31, 2022 December 31, 2021

March 2020 10 % Note

3/18/2023 $ 1,808 $ 3,251

Unamortized Debt discount — ( 254 )

Third Party Note Payable 12/31/2022 $ 603 239

Total Short-Term Debt $ 2,411 $ 3,490

Interest expense on the short-term debt totaled approximately $ 0.1 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively, which was amortized to interest expense from the combined amortization of deferred financing costs and note discounts recorded at issuance for the Short Term Debt.

Notes Payable

1 unchanged sentence

On March 18, 2020, the Company entered into a note purchase agreement with Iliad Research and Trading, L.P.

("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 10 % Note, the holder paid an aggregate purchase price of $ 5,000,000 .

("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 10 % Note, the holder paid an aggregate purchase price of $ 5.0 million.

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

7 unchanged sentences

Upon the occurrence of a bankruptcy-related event of default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the March 2020 10 % Note will become immediately due and payable at the mandatory default amount.

On September 17, 2020, the Company 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.

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 September 17, 2020, the Company amended the one time

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 11- Debt (continued)

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.

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:

1 unchanged sentence

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

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

2 unchanged sentences

On February 1, 2022, 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 $ 0.5 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.5 million;

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 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 $ 0.4 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.4 million;

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 March 15, 2022, 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 $ 0.7 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.7 million;

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 which was accounted for as a modification.

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 approximately $ 56,860 (the “Extension Fee”), which was added to the outstanding balance of the Original Note.

Third Party Note Payable

Game Your Game entered into promissory notes with an individual whereby it received approximately $ 0.24 million on October 29, 2021, approximately $ 0.24 million on January 18, 2022, and approximately $ 0.13 million on March 22, 2022 for funding of outside liabilities and working capital needs.

All of the promissory notes have a interest rate of 8 % and are due on or before December 31, 2022.

As of March 31, 2022, the balance owed under the notes was $ 0.6 million.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 12 - Capital Raises

March 2020 Distribution Agreement

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 our 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 our sales agent.

The Company intends to use the net proceeds of the ATM primarily for working capital and general corporate purposes.

The Company may also use a portion of the net proceeds to invest in or acquire businesses or technologies that it believes are complementary to its own, although the Company has no current plans, commitments or agreements with respect to any acquisitions as of the date of this filing.

Maxim will be entitled to compensation at a fixed commission rate of 4.0 % of the gross sales price per share sold for the initial $ 50 million of shares and 3.25 % for any sales in excess of such amount.

In addition, the Company has agreed to reimburse Maxim for its costs and out-of-pocket expenses incurred in connection with its services, including the fees and out-of-pocket expenses of its legal counsel.

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.

Registered Direct Offerings

3 unchanged sentences

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

On February 12, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which it sold in a registered direct offering, 7,000,000 shares of its common stock, and warrants to purchase up to 15,000,000 shares of common stock at an exercise price of $ 2.00 per share (the “First February 2021 Purchase Warrants”) for a combined

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

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.

6 unchanged sentences

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

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

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 March 31, 2022.

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.

1 unchanged sentence

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.

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

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

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

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

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

The holders of the Series 7 Convertible Preferred Stock are entitled to 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 12- Capital Raises (continued)

deducting the placement agent fees and other estimated offering expenses, were approximately $ 50.6 million.

See Note 1 4 for Preferred Stock and Note 17 for Warrant details.

Each share of Series 8 Convertible Preferred Stock and the related Warrants were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value of each share of Series 8 Convertible Preferred Stock for an aggregate subscription amount of $ 50.0 million.

In connection with this offering, the Company filed a Certificate of Designation for the Series 8 Convertible Preferred Stock with the Nevada Secretary of State.

Each share of Series 8 Convertible Preferred Stock has a par value of $ 0.001 per share and stated value of $ 1,000 per share.

The shares of Series 8 Convertible Preferred Stock are convertible into shares of the Company’s common stock, at a conversion price of $ 0.4717 per share.

Each share of Series 8 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 October 1, 2022 and ending ninety 90 days thereafter, the holders of the Series 8 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 8 Convertible Preferred Stock will forfeit 50 % of the warrants issued in connection therewith.

The holders of the Series 8 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 8 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 8 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 containing a total value of $ 5.6 million.

The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, were approximately $ 46.9 million.

See Note 14 for Preferred Stock and Note 17 for Warrant details.

Between March 15, 2022 and March 22, 2022, the Company received cash redemption notices from the holders of the Series 7 Convertible Preferred Stock issued on September 15, 2021, totaling 49,250 shares of Series 7 Convertible Preferred Stock for aggregate cash required to be paid of approximately $ 49.3 million.

In addition, in accordance with the related purchase agreement, upon redemption of the Series 7 Convertible Preferred Stock, each holder will forfeit 75 % of the related warrants that were issued.

Therefore, as of March 22, 2022, 49,250 shares of Series 7 Convertible Preferred Stock were redeemed and 29,550,000 related warrants were forfeited.

The Company noted about 71 % of the Series 7 Preferred Stock holders that redeemed shares also participated as Series 8 Convertible Preferred Stock holders (“shared holders”).

The Company accounted for proceeds of the shared holders as a modification to the Series 7 and Series 8 Convertible Preferred Stock, as well as the related embedded warrants.

The total change in fair value as a result of modification related to the Preferred Stock amounted to $ 2.6 million which were recognized as a deemed dividend at the date of the modification, upon which will be amortized until the redemption period begins on October 1, 2022.

The total change in fair value as a result of modification related to the embedded warrants amounted to $ 1.5 million which was recognized as a deemed contribution at the date of the modification, upon which will be accreted until the redemption period begins on October 1, 2022.

Note 13 - Common Stock

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 $ 1,499,106 under partitioned notes.

(See Note 16 ).

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 $ 74.06 million after subtracting sales commissions and other offering expenses (See Note 17 ).

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

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 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 19, 2022, 960,106 shares of common stock issued in connection with restricted stock grants were withheld for employee taxes.

On March 3, 2022, the Company issued 10,873,886 shares of common stock to the sellers of the CXApp in connection with the satisfaction of an earnout payment.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

See Note 10 and Note 13 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 $ 1,401,924 .

(See Note 8).

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 $ 428,323 .

( See Note 9)

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 $ 10,000,000 .

(See Note 10).

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 16 ).

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

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

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Note 13- Common Stock (continued)

During the three months ended March 31, 2022, the Company issued 4,310,245 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.5 million under partitioned notes.

Note 1 4 - 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 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.

Series 4 Convertible Preferred Stock

On April 20, 2018, the Company filed with the Secretary of State of the State of Nevada the Certificate of Designation that created the Series 4 Convertible Preferred Stock (“Series 4 Preferred”), authorized 10,415 shares of Series 4 Preferred and designated the preferences, rights and limitations of the Series 4 Preferred.

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 .

As of March 31, 2022, there was 1 share of Series 4 Preferred outstanding.

Series 5 Convertible Preferred Stock

On January 14, 2019, the Company filed with the Secretary of State of the State of Nevada the Certificate of Designation that created the Series 5 Convertible Preferred Stock, authorized 12,000 shares of Series 5 Convertible Preferred Stock and designated the preferences, rights and limitations of the Series 5 Convertible Preferred Stock.

The Series 5 Convertible Preferred Stock is non-voting (except to the extent required by law).

The Series 5 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 5 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 149.85 .

As of March 31, 2022, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

Series 7 Convertible Preferred Stock

On September 13, 2021, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada, amending the Company’s Articles of Incorporation, as amended, to establish 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 holders of Series 7 Convertible Preferred Stock are entitled to 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 is entitled to the number of votes equal to the number of shares of common stock into which the Series 7 Convertible Preferred Stock then held by such holder could be converted on the record date for the vote which is being taken, provided, however, that the voting power of a holder together with its Attribution Parties (as defined in the Certificate of Designation), may not exceed 19.99 % (or such greater percentage allowed by the Nasdaq Listing Rules without any shareholder approval requirements).

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

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

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

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

Each share of Series 7 Convertible Preferred Stock and the related Warrants were sold at a subscription amount of $ 920 , representing an original issue discount of 8 % of the stated value for an aggregate subscription amount of $ 54.1 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

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

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 14- Preferred Stock (continued)

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.

As of March 31, 2022 there were 0 shares of Series 7 Convertible Preferred stock outstanding.

Series 8 Convertible Preferred Stock

On March 22, 2022, the Company filed a 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 8 Convertible Preferred Stock, consisting of 53,197.7234 authorized shares, $ 0.001 par value per share and $ 1,000 stated value per share.

The holders of the Series 8 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 8 Convertible Preferred Stock are entitled to 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 8 Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the Series 8 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 8 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 8 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 0.4717 .

On March 22, 2022, the Company entered into a securities 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 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 112,778,720 shares of common stock (the “Warrants”).

Each share of Series 8 Convertible Preferred Stock and the related Warrants (see Note 17) were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value for an aggregate subscription amount of $ 50.0 million.

The shares of Series 8 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 $ 46.9 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.

Note 15- Authorized Share Increase

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 16 - Stock Award Plans and Stock-Based Compensation

1 unchanged sentence

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 16 - Stock Award Plans and Stock-Based Compensation (continued)

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

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 .

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

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

The aggregate number of shares that may be awarded under the 2018 Plan as of March 31, 2022 is 43,000,000 .

As of March 31, 2022, 31,678,907 of stock options and restricted stock were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 70 under our 2011 Plan) and 11,321,164 options were available for future grant under the 2018 Plan.

Employee Stock Options

5 unchanged sentences

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

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

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

During the three months ended March 31, 2022, the Company granted options under the 2018 Plan for the purchase of 9,945,000 shares of common stock to employees and consultants of the Company.

These options are 100% vested or vest pro-rata over 12 or 48 months, have a life of ten years and an exercise price of $ 0.53 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 $ 1.8 million.

The fair value of the common stock as of the grant date was determined to be $ 0.53 per share.

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

During the three months ended March 31, 2022 and 2021, the Company recorded a charge for the amortization of stock options of approximately $ 0.9 million and $ 0.5 million, respectively, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of March 31, 2022, the fair value of non-vested stock options totaled approximately $ 4.7 million, which will be amortized to expense over the weighted average remaining term of 1.21 years.

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

5 unchanged sentences

Forfeited — ( 269,712 ) — ( 269,712 )

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

Ending balance as of March 31, 2022 70 28,456,250 1 28,456,321

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 16 - Stock Award Plans and Stock-Based Compensation (continued)

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

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

For the Nine Months Ended September 30, 2021

Key weighted-average assumptions used to apply this pricing model during three months ended March 31, 2022 were as follows:

For the Three Months Ended March 31, 2022

Risk-free interest rate 1.50 %

7 unchanged sentences

The dividends assumptions was $ 0 as the Company historically has not declared any dividends and does not expect to.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

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.

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

2 unchanged sentences

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

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

On February 19, 2022, 960,106 restricted stock grants were forfeited for employee taxes.

During the three months ended March 31, 2022 and 2021 the Company recorded a charge of $ 0.7 million and $ 4.6 million, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock based award activity granted:

Restricted Stock Grants

Beginning balance as of January 1, 2022 4,182,692

Forfeited ( 960,106 )

Ending balance as of March 31, 2022 3,222,586

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.

1 unchanged sentence

Note 17 - Warrants

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 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 17 - Warrants (continued)

On January 24, 2021, Inpixon entered into a securities purchase agreement (the "January 2021 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 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.

The Company also offered and sold to the Investor 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.

Each Pre-Funded Warrant is exercisable for one share of common stock.

1 unchanged sentence

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

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

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 2021 Purchase Agreement.

On February 12, 2021, Inpixon entered into a securities purchase agreement (the "February 12, 2021 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.

The Company also offered and sold to the Investor 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.

1 unchanged sentence

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Note 21 - Warrants (continued)

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

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 (the "February 16, 2021 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 five 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.

The Company also offered and sold to the Investor 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.

1 unchanged sentence

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

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

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 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 17 - Warrants (continued)

Convertible Preferred Shares, par value $ 0.001 per share, which are convertible into 47,000,000 shares of the Company’s common stock and warrants to purchase up to 47,000,000 shares of common stock.

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

The Company accounted for the exchange agreement as a warrant modification.

The Company determined the fair value of the existing warrants as if issued on the exchange agreement date and compared that to the fair value of the common stock issued.

The Company calculated the fair value of the existing warrants using a Black-Scholes Option pricing model and determined it to be approximately $ 0.16 per share.

The fair value of the common stock issued was based on the closing stock price of the date of the exchange.

The total fair value of the warrants prior to modification was greater than the fair value of the common stock issued, and therefore, there was no incremental fair value related to the exchange.

Between March 15 and March 22, 2022, we received cash redemption notices from the holders of the Company's Series 7 Convertible Preferred Stock issued on September 15, 2021, totaling 49,250 shares of Series 7 Convertible Preferred Stock for aggregate cash required to be paid of approximately $ 49.3 million.

In addition, upon redemption of the Series 7 Convertible Preferred Stock, each holder forfeited 75 % of the related warrants that were issued together with the Series 7 Convertible Preferred Stock (the "Series 7 Warrants").

29,550,000 corresponding warrants issued in connection with the issuance of the Series 7 Convertible Preferred Stock been forfeited and 17,450,000 related warrants remain outstanding.

On March 22, 2022, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 53,197.7234 shares of the Company’s Series 8 Convertible Preferred Shares, par value $ 0.001 per share, and warrants to purchase up to 112,778,720 shares of common stock.

Each share and related warrants were sold together at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value for an aggregate subscription amount of $ 50.0 million.

Note 18- Income Taxes

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

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

The Company’s effective tax rate varies from the statutory rate as a result of state taxes and release of valuation allowance.

There is an income tax expense of approximately $ 0.1 million and $ 0.01 million for the three months ended March 31, 2022 and 2021, respectively.

The income tax expense relates primarily to corporate income tax liabilities of Inpixon India.

Note 19 - Credit Risk and Concentrations

4 unchanged sentences

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

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

Cash in foreign financial institutions as of March 31, 2022 and December 31, 2021 was immaterial.

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

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

The following table sets forth the percentages of revenue derived by the Company from those customers, which accounted for at least 10% of revenues during the three months ended March 31, 2022 and 2021 (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 19 - Credit Risk and Concentrations (continued)

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

Customer A — — % 800 31 %

Customer B 327 8 % 305 12 %

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

Customer A — — % 1,300 23 %

For the three months ended March 31, 2022 For the three months ended March 31, 2021

Customer F 412 11 % — — %

Customer B — — % 313 11 %

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

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

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

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

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

Revenue Segments

As of March 31, 2022, two customers represented approximately 22 % of total accounts receivable.

As of March 31, 2022, three vendors represented approximately 48 % of total gross accounts payable.

There were no purchases from these vendors during the three months ended March 31, 2022.

For the three months ended March 31, 2022, two vendors represented approximately 48 %,and 14 % of total purchases.

For the three months ended March 31, 2021, three vendors represented approximately 33 %, 25 %, and 18 % 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:

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 19 - Credit Risk and Concentrations (continued)

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

2021 2020 2021 2020

For the Three Months Ended March 31,

Revenue by Segment

8 unchanged sentences

Gross profit by Segment $ 3,845 $ 2,070

Income (loss) from operations by Segment

Indoor Intelligence $ ( 10,033 ) $ ( 12,584 )

Saves ( 253 ) ( 67 )

Shoom 222 231

Income (loss) from operations by Segment $ ( 10,064 ) $ ( 12,420 )

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.

3 unchanged sentences

Note 20 - Fair Value of Financial Instruments

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

Fair Value at September 30, 2021

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.

The Company's assets measured at fair value consisted of the following at March 31, 2022 and December 31, 2021:

Fair Value at March 31, 2022

Total Level 1 Level 2 Level 3

2 unchanged sentences

Total assets $ 15,370 $ 15,035 $ — $ 335

Fair Value at December 31, 2021

Total Level 1 Level 2 Level 3

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 treasury bills with maturities greater than three months and based off of valuation received from data such as closing market prices provided by independent pricing services after considering factors such as the yields or prices of comparable investments of comparable quality, coupon, maturity, terms and type, reported transactions, indications as to values from dealers and general market conditions.

Short-term investments represent U.S.

treasury bills with maturities greater than three months.

The fair value 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 twelve months ended December 31, 2020.

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

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value For the Three Months Ended March 31, 2022:

Level 3 Investments

Balance at beginning of period $ 1,838

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 ( 1,503 )

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 21 - Foreign Operations

3 unchanged sentences

States Canada India Germany United Kingdom Ireland Eliminations Total

For the Three Months Ended September 30, 2021:

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

Operating income (loss) by geographic area $ ( 10,497 ) $ ( 1,190 ) $ ( 28 ) $ ( 667 ) $ 25 $ ( 99 ) $ — $ ( 12,456 )

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

For the Three Months Ended September 30, 2020:

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

Operating income (loss) by geographic area $ ( 5,996 ) $ ( 103 ) $ 92 $ ( 146 ) $ ( 93 ) $ — $ — $ ( 6,246 )

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

For the Nine Months Ended September 30, 2021:

For the Three Months Ended March 31, 2022:

Revenues by geographic area $ 3,711 $ 601 $ 397 $ 948 $ 118 $ 3 $ ( 547 ) $ 5,231

Operating income (loss) by geographic area $ ( 32,095 ) $ ( 3,655 ) $ 23 $ ( 2,297 ) $ 32 $ ( 177 ) $ — $ ( 38,169 )

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

For the Nine Months Ended September 30, 2020:

Operating (loss) income by geographic area $ ( 7,399 ) $ ( 1,276 ) $ 110 $ ( 1,340 ) $ 12 $ ( 161 ) $ ( 10 ) $ ( 10,064 )

Net (loss) income by geographic area $ ( 8,869 ) $ ( 1,139 ) $ 12 $ ( 1,373 ) $ 14 $ ( 202 ) $ — $ ( 11,557 )

For the Three Months Ended March 31, 2021:

Revenues by geographic area $ 1,661 $ 755 $ 441 $ 895 $ 78 $ — $ ( 876 ) $ 2,954

Operating income (loss) by geographic area $ ( 16,601 ) $ ( 242 ) $ 144 $ ( 146 ) $ ( 93 ) $ — $ — $ ( 16,938 )

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

As of September 30, 2021:

Operating (loss) income by geographic area $ ( 10,568 ) $ ( 1,213 ) $ 113 $ ( 747 ) $ ( 5 ) $ — $ — $ ( 12,420 )

Net (loss) income by geographic area $ ( 10,947 ) $ ( 959 ) $ 102 $ ( 725 ) $ ( 10 ) $ — $ — $ ( 12,539 )

As of March 31, 2022:

Identifiable assets by geographic area $ 200,969 $ 7,201 $ 673 $ 19,595 $ 268 $ 76 $ ( 91,557 ) $ 137,225

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 22 - Related Party Transactions

Nadir Ali, the Company’s Chief Executive Officer and a member of its Board of Directors, was a member of the Board of Directors of Sysorex, Inc.

("Sysorex") until he resigned on May 14, 2021.

In addition, Nadir Ali previously 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.

The consulting agreement was terminated on October 14, 2021.

Sysorex Note Purchase Agreement

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.

7 unchanged sentences

In addition, the Secured Note was amended to increase the default interest rate from 18 % to 21 % or the maximum rate allowable by law and to require a cash payment to the Company by Sysorex against the Loan Amount in an amount equal to no less than 6 % of the aggregate gross proceeds raised following the completion of any financing, or series of related financings, in which Sysorex raises aggregate gross proceeds of at least $ 5 million.

In accordance with the terms of the Systat License Agreement (see Note 5 ), on June 30, 2020, the Company partitioned a portion of the outstanding balance of the Secured Note into a new note in an amount equal to $ 3 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement ("Assignment Agreement").

In accordance with the terms of the Systat License Agreement, on June 30, 2020, the Company partitioned a portion of the outstanding balance of the Secured Note into a new note in an amount equal to $ 3 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement ("Assignment Agreement").

An additional $ 2.3 million of the principal balance underlying the Sysorex Note was partitioned into a new note and assigned to Systat as consideration payable for the rights granted under the license as of December 31, 2020.

1 unchanged sentence

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.

This amount excludes $ 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.

These amounts excludes $ 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.

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.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 22 - Related Party Transactions (continued)

2 unchanged sentences

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 as of December 31, 2020 of $ 89,062 .

The total owed to the Company for this settlement as of December 31, 2020 was $ 648,183 .

The Company had a full valuation allowance against this balance as of December 31, 2020.

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.

12 unchanged sentences

Systat License Agreement

Nadir Ali, our Chief Executive Officer and a member of our Board, is a related party in connection with the acquisition of the Licenses as a result of his prior service as a director of Sysorex, the issuer of the Sysorex Note that was assigned in accordance with the terms and conditions of the License Agreement.

In addition, Tanveer Khader and Kareem Irfan, members of our Board, may also be deemed related parties in connection with the acquisition of the Licenses as a result of their respective employment relationships with the Systat Parties.

(See Note 5 ).

Nadir Ali, the Company's Chief Executive Officer and a member of its Board of Directors, is a related party in connection with the acquisition of the Licenses as a result of his prior service as a director of Sysorex, the issuer of the Sysorex Note that was assigned in accordance with the terms and conditions of the License Agreement.

In addition, Tanveer Khader and Kareem Irfan, members of the Company's Board of Directors, may also be deemed related parties in connection with the acquisition of the Licenses as a result of their respective employment relationships with the Systat Parties.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 22 - Related Party Transactions (continued)

Inpixon Canada Promissory Note

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

As of March 31, 2022, Inpixon Canada owed the Company $ 18.0 million.

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

Cardinal Ventures Holdings Investment

Nadir Ali, our Chief Executive Officer and director, is also a controlling member of 3AM, LLC which is a member of Cardinal Ventures Holdings ("CVH"), which may, in certain circumstances, be entitled to manage the affairs of CVH.

Nadir Ali, the Company's Chief Executive Officer and a members of its Board of Directors, is also a controlling member of 3AM, LLC which is a member of Cardinal Ventures Holdings ("CVH"), which may, in certain circumstances, be entitled to manage the affairs of CVH.

Ali’s relationship may create conflicts of interest between Mr.

Ali’s obligations to our company and its shareholders and his economic interests and possible fiduciary obligations in CVH through 3AM.

Ali’s obligations to the Company and its shareholders and his economic interests and possible fiduciary obligations in CVH through 3AM.

For example, Mr.

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

Consulting Services

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

Director Services Agreement

The Company and Kareem Irfan, a director of the Company, have amended Mr.

Irfan's Director Services Agreement on May 16, 2022 (as amended, the "Amended Director Services Agreement") to increase his quarterly compensation by an additional $ 10,000 per month as consideration for the additional time and efforts dedicated to the Company and management in support of the evaluation of strategic relationships and growth initiatives.

The Amended Director Services Agreement supersedes and replaces all prior agreements by and between the Company and Mr.

Note 23 - Leases

2 unchanged sentences

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 2,510 EUR and 1,010 EUR per month.

The monthly lease rate is $ 2,789 and $ 1,122 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.

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

As of September 30, 2021

As of March 31, 2022 As of December 31, 2021

Palo Alto, CA Office $ 631 $ 631

6 unchanged sentences

Slough, United Kingdom Office — 34

Frankfurt, Germany Office 306 312

Less accumulated amortization ( 1,054 ) ( 1,282 )

Right-of-use asset, net $ 1,558 $ 1,736

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 23 - Leases (continued)

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

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

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the three months ended March 31, 2022 and 2021 was $ 0.4 million and $ 0.3 million, respectively.

Lease liability is summarized below (in thousands):

As of September 30, 2021

As of March 31, 2022 As of December 31, 2021

Total lease liability $ 1,601 $ 1,751

7 unchanged sentences

Year ending December 31, 2026 103

Year ending December 31, 2026 104

Total $ 1,770

3 unchanged sentences

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

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

As of March 31, 2022, the weighted average remaining lease term is 3.2 years and the weighted average discount rate used to determine the operating lease liabilities was 6.1 %.

Note 24 - Commitments and Contingencies

6 unchanged sentences

There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Note 29 - Subsequent Events

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

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

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

Note 25 - Subsequent Events

Debenture Investment

On April 27, 2022, the Company entered into and consummated the transactions contemplated by a securities purchase agreement (the “Purchase Agreement”) with an unaffiliated company operating in the insurance technology sector (“Debenture Seller”), pursuant to which it purchased a 10 % Original Issue Discount Senior Convertible Debenture (a “Debenture”) issued by the Debenture Seller in an aggregate principal amount of approximately $ 6.1 million for a purchase price of $ 5.5 million.

The Purchase Agreement is one of a series of securities purchase agreements which Debenture Seller has or will enter into under a private placement of Debentures commenced in February 2022.

Interest on the Debenture accrues at a rate of 12 % per annum, of which 12 months will be guaranteed, and is payable on each conversion date (as to the principal amount being converted) and on the maturity date, in cash, or in shares of Class A common stock of the Debenture Seller upon a conversion of all or a portion of the outstanding principal amount on the Debenture.

The Debenture will mature on the date that is 12 months from the original issue date, which may be extended or accelerated pursuant to the terms of the Debenture.

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

What changed 10-Q

Item 1. Financial Statements