What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 401 added, 228 removed, 875 unchanged (42% 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 March 31, 2022 are not necessarily indicative of the results of operations for the full year.

The results for the period ended June 30, 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 March 31,

As of June 30,

2022 As of December 31,

3 unchanged sentences

Accounts receivable, net of allowances of $ 268 and $ 272 , respectively

Notes and other receivables 284 321

Inventory, net of reserve of $ 438 and $ 438 , respectively

Other receivables 311 321

Inventory 1,581 1,976

Short-term investments — 43,125

Note receivable 5,967 —

Prepaid expenses and other current assets 3,463 4,842

13 unchanged sentences

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

As of March 31,

As of June 30,

2022 As of December 31,

17 unchanged sentences

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

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

zero and 49,250 issued and outstanding as of June 30, 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.

53,197.7234 and zero issued and outstanding as of June 30, 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 March 31, 2022 and December 31, 2021

1 issued and 1 outstanding as of June 30, 2022 and December 31, 2021

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

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

126 issued and 126 outstanding as of June 30, 2022 and December 31, 2021

Common Stock - $ 0.001 par value;

2,000,000,000 shares authorized;

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.

155,105,962 and 124,440,924 issued and 155,105,961 and 124,440,923 outstanding as of June 30, 2022 and December 31, 2021, respectively.

Additional paid-in capital 334,436 332,639

1 unchanged sentence

( 695 ) ( 695 )

Accumulated other comprehensive (loss) income ( 58 ) 44

Accumulated other comprehensive income 598 44

Accumulated deficit ( 281,463 ) ( 250,309 )

10 unchanged sentences

(In thousands, except per share data)

For the Three Months Ended March 31,

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

2022 2021 2022 2021

Revenues $ 4,725 $ 3,453 $ 9,956 $ 6,407

6 unchanged sentences

Acquisition-related costs 147 535 268 1,005

Impairment of goodwill 7,570 — 7,570 —

Amortization of intangibles 1,369 1,191 2,691 1,693

4 unchanged sentences

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

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

Other income 108 386

Unrealized loss on equity securities ( 1,503 ) —

Recovery of valuation allowance on related party loan - held for sale — 7,462 — 7,345

Other (expense)/income, net ( 879 ) 125 ( 771 ) 511

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

Unrealized gain/(loss) on equity securities 247 ( 28,965 ) ( 1,256 ) ( 28,965 )

Total Other Income (Expense) ( 456 ) 29,994 ( 1,849 ) 29,884

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

Income tax provision ( 100 ) ( 9 )

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

Net (Loss) Income, before tax ( 20,346 ) 16,701 ( 31,803 ) 4,171

Income tax benefit/(provision) 16 ( 2,195 ) ( 84 ) ( 2,204 )

Net (Loss) Income $ ( 20,330 ) 14,506 ( 31,887 ) $ 1,967

Net (Loss) Income Attributable to Non-controlling Interest ( 458 ) ( 253 ) ( 804 ) ( 235 )

5 unchanged sentences

Amortization premium- modification related to Series 8 Preferred Stock 1,252 — 1,362 —

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

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

Net (Loss) Income Attributable to Common Stockholders $ ( 24,857 ) $ 14,759 $ ( 42,219 ) $ 2,202

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except per share data)

Net (Loss) Income Per Share - Basic $ ( 0.16 ) $ 0.13 $ ( 0.29 ) $ 0.02

Net (Loss) Income Per Share - Diluted $ ( 0.16 ) $ 0.13 $ ( 0.29 ) $ 0.02

Weighted Average Shares Outstanding

Basic and Diluted 138,502,493 78,942,697

Basic 153,519,283 110,040,532 146,052,371 94,577,520

Diluted 153,519,283 110,041,378 146,052,371 94,591,619

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Three Months Ended March 31,

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

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

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

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

2022 2021 2022 2021

Net (Loss) Income $ ( 20,330 ) $ 14,506 $ ( 31,887 ) $ 1,967

Unrealized gain on available for sale debt securities 375 $ — 375 —

Unrealized foreign exchange (loss) income from cumulative translation adjustments 282 52 180 ( 619 )

Comprehensive (Loss) Income $ ( 19,673 ) $ 14,558 $ ( 31,332 ) $ 1,348

The accompanying notes are an integral part of these financial statements

13 unchanged sentences

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

Amortization Premium- modification related to Series 8 Preferred Stock — — — ( 110 ) — — — — — — 110 — — — — — $ 110

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

4 unchanged sentences

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

Stock options and restricted stock awards granted to employees for services — — — — — — — — — — — 741 — — — — — — — $ 741

Common shares issued for extinguishment of debt — — — — — — — — 2,629,606 3 497 — — — — — $ 500

Accretion Discount- Series 8 Preferred Shares — — — 6,236 — — — — — — ( 6,236 ) — — — — — — — $ ( 6,236 )

Amortization Premium- modification related to Series 8 Preferred Stock — — — ( 1,251 ) — — — — — — 1,251 — — — — — — — $ 1,251

Cumulative translation adjustment — — — — — — — — — — — — — — 656 ( 56 ) 57 $ 657

Net loss — — — — — — — — — — — — — — ( 19,872 ) ( 458 ) $ ( 20,330 )

Balance - June 30, 2022 — $ — 53,197.7234 $ 48,158 1 $ — 126 $ — 155,105,962 $ 155 $ 334,436 ( 1 ) $ ( 695 ) $ 598 $ ( 281,463 ) $ 956 $ 53,987

The accompanying notes are an integral part of these financial statements

13 unchanged sentences

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

Stock options and restricted stock awards granted to employees for services — — — — — — — — 2,053 — — — — — 2,053

Common shares issued for Game Your Game acquisition — — — — — — 1,179,077 1 1,402 — — — — — 1,403

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

Common shares issued for the CXApp — — — — — — 8,849,538 9 9,991 — — — — 2,811 12,811

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 $ 117 $ 322,196 ( 1 ) $ ( 695 ) $ 52 $ ( 178,931 ) $ 2,747 $ 145,486

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash Flows Used in Operating Activities (Unaudited)

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

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

Net (loss) income $ ( 31,887 ) $ 1,967

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

Depreciation and amortization 650 625

2 unchanged sentences

Stock based compensation 2,274 7,149

Earnout payment expense ( 2,827 ) —

Earnout expense valuation benefit ( 2,827 ) —

Loss on exchange of debt for equity — 30

Amortization of debt discount — 224

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

Amortization of original issued discount ( 92 ) —

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

Unrealized gain on note 344 ( 490 )

Provision for valuation allowance for held for sale loan — 117

Income tax expense — 9

Recovery for valuation allowance for held for sale loan — ( 7,345 )

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

Deferred income tax ( 1 ) ( 4,507 )

Unrealized loss on equity securities 1,256 28,965

Impairment of goodwill 7,570 —

Changes in operating assets and liabilities:

12 unchanged sentences

Purchase of property and equipment ( 140 ) ( 149 )

Purchases of capitalized software ( 107 ) ( 253 )

Investment in capitalized software ( 306 ) ( 373 )

Investments in short term investments — ( 2,000 )

Purchase of convertible note ( 5,500 ) —

Purchases of treasury bills — ( 63,362 )

Sales of treasury bills 43,001 28,000

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Purchase of Systat licensing agreement — ( 900 )

Acquisition of Game Your Game — 184

Acquisition of CXApp — ( 15,186 )

Acquisition of Visualix — ( 61 )

Net Cash Provided By (Used in) Investing Activities 37,055 ( 53,847 )

2 unchanged sentences

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

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Net proceeds from promissory note 364 —

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

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

Taxes paid related to net share settlement of restricted stock units ( 336 ) ( 1,687 )

Loans to related party — ( 117 )

Net proceeds from promissory notes 364 —

Repayment of CXApp acquisition liability ( 1,847 ) ( 137 )

Repayment of acquisition liability to Nanotron shareholders — ( 467 )

Repayment of acquisition liability to Locality shareholders — ( 500 )

12 unchanged sentences

Common shares issued in exchange for warrants $ 14 $ —

Right of use asset obtained in exchange for lease liability $ 284 $ —

Settlement of Sysorex Note $ — $ 7,462

Investment in equity securities $ — $ 58,905

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

The accompanying notes are an integral part of these financial statements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 1 - Organization and Nature of Business

17 unchanged sentences

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

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.

Interim results for the three and six months ended June 30, 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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 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.

As of June 30, 2022, the Company has a working capital surplus of approximately $ 65.2 million, and cash of approximately $ 65.8 million.

For the three and six months ended June 30, 2022, the Company had a net loss of approximately $ 20.3 million and $ 31.9 million, respectively.

During the six months ended June 30, 2022, the Company used approximately $ 19.5 million of cash for operating activities.

During the first quarter of 2022, the Company was required to redeem its Series 7 Preferred Stock for an aggregate amount of $ 49.3 million, however, on March 22, 2022, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which it 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.

1 unchanged sentence

See further breakdown in Note 14 - Capital Raises.

On July 22, 2022, the Company entered into a note purchase agreement in an aggregate initial principal amount of $ 6.5 million for which in exchange for the Note, the company received $ 5.0 million.

Additionally on July 22, 2022, the Company entered into an Equity Distribution Agreement under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 25 million.

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

Risks and Uncertainties

4 unchanged sentences

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.

Certain global events, such as the continued impact of the pandemic, the recent military conflict between Russia and Ukraine, and other general economic factors that are beyond our control may impact our results of operations.

These factors can include interest rates;

unemployment trends;

the threat or possibility of war, terrorism or other global or national unrest;

political or financial instability;

and other matters that influence our customers spending.

Increasing volatility in financial markets and changes in the economic climate could adversely affect our results of operation.

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

While we have been able to realize growth in the three and six months ended June 30, 2022 as compared to the same periods in 2021, the impact that these global events will have on general economic conditions is continuously evolving and the ultimate impact that they will have on our results of operations continues to remain uncertain.

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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.

3 unchanged sentences

• 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;

3 unchanged sentences

• impairment of long-lived assets and goodwill.

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)

Business Combinations

10 unchanged sentences

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

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

The Company recorded unrealized losses of approximately $ 0.04 million and $ 0.12 million for the three and six months ended June 30, 2022, respectively.

The Company recorded unrealized losses of approximately $ 0.06 million and $ 0.06 million for the three and six months ended June 30, 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 months ended March 31, 2022 and 2021 was approximately $ 1.5 million and zero , respectively.

The Unrealized (gain) or loss

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

on equity securities for the three and six months ended June 30, 2022 was approximately a gain of $ 0.2 million and loss of $ 1.3 million, respectively, and for the three and six months ended June 30, 2021 was a loss of approximately $ 29.0 million and $ 29.0 million, 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

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)

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.

18 unchanged sentences

For fixed fee contracts including maintenance service provided by in house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service.

Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

Anticipated losses are recognized as soon as they become known.

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

For the three months ended June 30, 2022 and 2021, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

11 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.

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)

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.

7 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 $ 4.1 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 had deferred revenue of approximately $ 3.6 million and $ 4.8 million as of June 30, 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.

3 unchanged sentences

Options and warrants granted to consultants and other non-employees are recorded at fair value as of the grant date and subsequently adjusted to fair value at the end of each reporting period until such options and warrants vest, and the fair value of such instruments, as adjusted, is expensed over the related vesting period.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

1 unchanged sentence

Forfeitures of unvested stock options are recorded when they occur.

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.

The Company incurred stock-based compensation charges of approximately $ 0.7 million and $ 2.1 million for the three months ended June 30, 2022 and 2021, respectively.

The Company incurred stock-based compensation charges of approximately $ 2.3 million and $ 7.1 million for the six months ended June 30, 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 THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 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 three months ended March 31, 2022 and 2021:

For the Three Months Ended March 31,

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

2022 2021 2022 2021

Net (loss) income attributable to common stockholders $ ( 24,857 ) $ 14,759 $ ( 42,219 ) $ 2,202

Weighted -average number of shares outstanding 153,519,283 110,040,532 146,052,371 94,577,520

Incremental shares from assumed conversion of options — — — 382

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

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

Diluted Weighted-average number of shares outstanding 153,519,283 110,041,378 146,052,371 94,591,619

Earnings (loss) per Share- Basic $ ( 0.16 ) $ 0.13 $ ( 0.29 ) $ 0.02

Earnings (loss) per Share- Diluted $ ( 0.16 ) $ 0.13 $ ( 0.29 ) $ 0.02

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

2022 2021 2022 2021

Options ( 649,377 ) 6,847,877 27,806,944 1,659,366

2 unchanged sentences

Rights to common stock — — 3,938,424 —

Restricted Stock Award — 5,250,000

Total ( 649,381 ) 56,246,305 274,846,900 46,057,794

5 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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.

9 unchanged sentences

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 THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

opposed to the treasury stock method.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 4 - Disaggregation of Revenue

3 unchanged sentences

Revenues consisted of the following (in thousands):

For the Three Months Ended March 31,

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

2022 2021 2022 2021

Recurring revenue

9 unchanged sentences

Total Revenue $ 4,725 $ 3,453 $ 9,956 $ 6,407

For the Three Months Ended March 31,

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

2022 2021 2022 2021

Revenue recognized at a point in time

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 4 - Disaggregation of Revenue (continued)

5 unchanged sentences

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.

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 six months ended June 30, 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 THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 6 - Proforma Financial Information

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

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

1 unchanged sentence

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

For the Three Months Ended March 31, 2021

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

Revenues $ 3,828 $ 8,527

Net income (loss) attributable to common stockholders $ 14,875 $ 1,794

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

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

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

Weighted average common shares outstanding:

Basic and Diluted 87,693,906

Basic 112,957,969 100,444,630

Diluted 112,958,815 100,458,729

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 7- Goodwill and Intangibles

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

The following table summarizes the changes in the carrying amount of Goodwill for the six months ended June 30, 2022 (in thousands):

Segments Acquisitions Balance as of January 1, 2022 Goodwill additions through acquisitions Valuation Measurement Period Adjustments Exchange rate fluctuations as of June 30, 2022 Balance as of June 30, 2022

SAVES Systat $ 695 $ — $ ( 695 ) $ — $ —

7 unchanged sentences

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):

The Company's goodwill balance and other assets with indefinite lives were evaluated for potential goodwill impairment on a reporting unit basis during the period ended June 30, 2022 as certain indications on a qualitative and a quantitative basis were identified that an impairment exists as of the reporting date primarily from a sustained decrease in their stock price.

The Company utilized a mix of both the income and market approaches in determining the fair value of the reporting units.

The Company noted that 50 % weight was attributed to the income approach and 50 % was attributed to the market approach.

During the period ended June 30, 2022, the Company recognized approximately $ 7.6 million of goodwill impairment on Systat, GTX, Nanotron, Jibestream, CXApp, Game Your Game, and IntraNav.

As of June 30, 2022, the Company's cumulative impairment charges are approximately $ 31.0 million with approximately $ 29.1 million related to the Indoor Intelligence reporting unit, approximately $ 1.2 million related to the Shoom reporting unit and approximately $ 0.7 million related to the SAVES reporting unit.

As of December 31, 2021, the Company's cumulative goodwill impairment charges were approximately $ 23.4 million with approximately $ 22.2 million related to the Indoor Intelligence reporting unit and approximately $ 1.2 million related to the Shoom reporting unit.

Intangibles assets at June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

Gross Carrying Amount Accumulated Amortization Amount Remaining Weighted Average Useful Life

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

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

2022 2021 2022 2021

7 unchanged sentences

Amortization Expense:

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

Amortization expense for the three and six months ended June 30, 2022 was approximately $ 1.5 million and $ 3.0 million, respectively, and for the three and six months ended June 30, 2021 was approximately $ 1.4 million and $ 2.0 million, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

6 unchanged sentences

Note 8 - Inventory

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

Inventory as of June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

As of June 30, 2022 As of December 31, 2021

Raw materials $ 170 $ 163

1 unchanged sentence

Finished goods 954 1,274

Subtotal inventory 2,204 2,414

Inventory obsolescence reserve ( 438 ) ( 438 )

Total Inventory $ 1,766 $ 1,976

Inventory $ 1,581 $ 1,976

Note 9 - Investments in Equity Securities

1 unchanged sentence

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

As of March 31, 2022

As of June 30, 2022

Cost Fair Value

3 unchanged sentences

Total investments in equity securities- fair value $ 58,905 $ 582

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

For the three months ended June 30, 2022 and 2021, the Company recognized a net unrealized (gain) loss on equity securities of $( 0.2 ) million and $ 29.0 million, respectively, and $ 1.3 million and $ 29.0 million for the six months ended June 30, 2022 and 2021, respectively, in the other income/expense section of the condensed consolidated statements of operations.

Note 10 - Investments in Debt Securities

On April 27, 2022, the Company purchased a 10 % convertible note in aggregate principal amount of $ 6.1 million for a purchase price of $ 5.5 million from FOXO Technologies Inc.

Interest on the convertible note accrues at 12 % per annum.

The term of the convertible note is twelve months , however FOXO has the ability to extend the maturity date for an additional 3 months.

The convertible note is subject to certain conversion features which include qualified financing, and/or qualified transaction, as defined in the securities purchase agreement.

The Company can voluntarily convert the note after 270 days.

The note will be required to convert upon FOXO completing a qualified offering.

The convertible note receivable is not traded in active markets and fair value was determined using a present value technique.

The convertible note receivable is accounted for as available-for-sale debt securities based on “Level 3” inputs, which consist of

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset, with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income (loss).

Note 11 - Other Long Term Investments

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

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

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

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

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

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

The Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income.

During the period January 1, 2021 to December 31, 2021 and January 1, 2022 to June 30, 2022, CVH had no operating results as CVH is a holding company.

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

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

The following component represents components of Other long-term investments as of June 30, 2022:

Ownership interest as of June 30,

2022 Instrument Held

CVH LLC Class A 14.1 % Units

CVH LLC Class B 38.4 % Units

Inpixon’s investment in equity method eligible entities are represented on balance sheet as an asset of $ 2.5 million as of June 30, 2022 and December 31, 2021.

Ownership interest in equity method eligible entities did not change from the year ended December 31, 2021 to June 30, 2022.

Note 12 - Accrued Liabilities

Accrued liabilities as of June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

As of June 30, 2022 As of December 31, 2021

Accrued compensation and benefits $ 1,391 $ 8,027

5 unchanged sentences

Note 13 - Debt

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

Debt as of June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 13- Debt (continued)

Short-Term Debt Maturity June 30, 2022 December 31, 2021

March 2020 10 % Note

2 unchanged sentences

Total Short-Term Debt $ 1,911 $ 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.

Interest expense on the short-term debt totaled approximately $ 0.1 million and $ 1.4 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $ 0.2 million and $ 2.0 million for the six months ended June 30, 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

13 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

2 unchanged sentences

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 three months ended March 31, 2021.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 13- Debt (continued)

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:

17 unchanged sentences

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.

On May 17, 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 approximately $ 0.3 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.3 million;

and (ii) exchange the partitioned note for the delivery of 1,144,164 shares of the Company’s common stock, at an effective price per share equal to $ 0.22 .

On May 31, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

and (ii) exchange the partitioned note for the delivery of 1,485,442 shares of the Company’s common stock, at an effective price per share equal to $ 0.17 .

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 13- Debt (continued)

Third Party Note Payable

1 unchanged sentence

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

As of June 30, 2022, the balance owed under the notes was $ 0.6 million.

Note 14 - Capital Raises

13 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 March 31, 2022.

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 June 30, 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 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 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

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 14- Capital Raises (continued)

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

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 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.

See Note 1 5 for Preferred Stock and Note 19 for Warrant details.

19 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 15 - Common Stock

3 unchanged sentences

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 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.

During the three months ended June 30, 2022, the Company issued 2,629,606 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 0.5 million under partitioned notes.

See Note 13 .

Note 1 6 - Preferred Stock

3 unchanged sentences

The Series 4 Preferred is non-voting (except to the extent required by law) and was convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 4 Preferred of $ 1,000 per share to be converted by $ 828 .

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

As of June 30, 2022, there was 1 share of Series 4 Preferred outstanding.

Series 5 Convertible Preferred Stock

2 unchanged sentences

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.

As of June 30, 2022, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

Series 7 Convertible Preferred Stock

2 unchanged sentences

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).

Each holder of the Series 7 Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 16- Preferred Stock (continued)

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 .

3 unchanged sentences

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 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.

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

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

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.

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

As of June 30, 2022 there were 0 shares of Series 7 Convertible Preferred stock outstanding.

Series 8 Convertible Preferred Stock

8 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 17- Authorized Share Increase

3 unchanged sentences

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 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.

The aggregate number of shares that may be awarded under the 2018 Plan as of June 30, 2022 is 46,000,000 .

As of June 30, 2022, 31,029,530 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 14,970,541 options were available for future grant under the 2018 Plan.

Employee Stock Options

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

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

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

3 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 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.

During the six months ended June 30, 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.

1 unchanged sentence

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 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.

During the three months ended June 30, 2022 and 2021, the Company recorded a charge for the amortization of stock options of approximately $ 0.7 million and $ 0.3 million, respectively, and approximately $ 1.6 million and $ 0.8 million for the six months ended June 30, 2022 and 2021, respectively, which is included in the general and administrative section of the condensed consolidated statement of operations.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

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

As of June 30, 2022, the fair value of non-vested stock options totaled approximately $ 3.8 million, which will be amortized to expense over the weighted average remaining term of 1.13 years.

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

5 unchanged sentences

Forfeited — ( 791,442 ) — ( 791,442 )

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)

Ending balance as of June 30, 2022 70 27,806,873 1 27,806,944

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 three months ended March 31, 2022 were as follows:

For the Three Months Ended March 31, 2022

Key weighted-average assumptions used to apply this pricing model during six months ended June 30, 2022 were as follows:

For the Six Months Ended June 30, 2022

Risk-free interest rate 1.50 %

2 unchanged sentences

Dividends assumption - -

The expected stock price volatility for the Company’s stock options was determined by the historical volatilities for industry peers and used an average of those volatilities.

The expected stock price volatility for the Company’s stock options was determined by the historical volatility for industry peers and used an average of those volatility.

The Company attributes the value of stock-based compensation to operations on the straight-line single option method.

10 unchanged sentences

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.

During the three months ended June 30, 2022 and 2021, the Company recorded a charge of $ 0.04 million and $ 1.7 million, respectively, and $ 0.7 million and $ 6.3 million for the six months ended June 30, 2022 and 2021, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock based award activity granted:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

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

Restricted Stock Grants

1 unchanged sentence

Forfeited ( 960,106 )

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

Ending balance as of June 30, 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 19 - Warrants

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.

14 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 19 - Warrants (continued)

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.

5 unchanged sentences

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.

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.

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 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.

12 unchanged sentences

Note 20- Income Taxes

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.

There is an income tax benefit of approximately $ 0.02 million and income tax expense of $ 2.2 million for the three months ended June 30, 2022 and 2021, respectively.

There is an income tax expense of approximately $ 0.1 million and $ 2.2 million for the six months ended June 30, 2022 and 2021, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 21 - 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 March 31, 2022 and December 31, 2021 was immaterial.

Cash in foreign financial institutions as of June 30, 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 months ended March 31, 2022 and 2021 (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Note 19 - Credit Risk and Concentrations (continued)

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

Customer F 412 11 % — — %

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 six months ended June 30, 2022 and 2021 (in thousands):

For the Three Months Ended June 30, 2022 For the Three Months Ended June 30, 2021

Customer B 349 7 % 316 9 %

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.

For the Six Months Ended June 30, 2022 For the Six Months Ended June 30, 2021

Customer B 693 7 % 630 10 %

As of June 30, 2022, two customers represented approximately 18 % of total accounts receivable.

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

As of June 30, 2022, two vendors represented approximately 23 % of total gross accounts payable.

Purchases from these vendors during the six months ended June 30, 2022 was approximately $ 0.4 million.

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

Purchases from these vendors during the six months ended June 30, 2021 was approximately $ 0.4 million.

For the six months ended June 30, 2022, one vendors represented approximately 33 % of total purchases.

For the six months ended June 30, 2021, three vendors represented approximately 23 %, 16 %, and 12 % 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:

6 unchanged sentences

Gross profit is the primary measure of segment profitability used by the Company’s CODM.

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 21 - Credit Risk and Concentrations (continued)

For the Three Months Ended March 31,

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

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

2022 2021 2022 2021

Revenue by Segment

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 22 - Fair Value of Financial Instruments

4 unchanged sentences

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

The Company's assets measured at fair value consisted of the following at June 30, 2022 and December 31, 2021:

Fair Value at June 30, 2022

Total Level 1 Level 2 Level 3

1 unchanged sentence

Investments in equity securities 582 — — 582

Investments in debt securities 5,967 $ — $ — $ 5,967

Total assets $ 6,549 $ — $ — $ 6,549

11 unchanged sentences

treasury bills is an actively traded market given the high level of daily trading volume.

treasury bills were sold by the Company during the period ended June 30, 2022.

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 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:

Investments in debt securities are valued using an option pricing model under the income approach methodology as the investment does not have observable inputs of identical or comparable instruments.

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value For the Six Months Ended June 30, 2022:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Level 3 Investments

Balance at beginning of period $ 1,838

Balance at January 1, 2022 $ 1,838

Transfers in - FOXO Technologies, Inc.

convertible note 6,050

FOXO Technologies, Inc.

- Original issue discount ( 550 )

FOXO Technologies, Inc.

- Amortization of original issue discount 92

Unrealized loss on equity securities ( 1,256 )

Balance at end of period $ 335

Unrealized gain on debt securities 375

Balance at June 30, 2022 $ 6,549

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

Level 3 Investments

Balance at January 1, 2021 $ —

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 ( 28,965 )

Balance at June 30, 2021 $ 29,940

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 23 - Foreign Operations

The Company’s operations are located primarily in the United States, Canada, India, Germany, Ireland, and the United Kingdom.

The Company’s operations are located primarily in the United States, Canada, India, Germany, Ireland, Philippines, and the United Kingdom.

Revenues by geographic area are attributed by country of domicile of our subsidiaries.

The financial data by geographic area are as follows (in thousands):

States Canada India Germany United Kingdom Ireland Eliminations Total

For the Three Months Ended March 31, 2022:

States Canada India Germany United Kingdom Ireland Philippines Eliminations Total

For the Three Months Ended June 30, 2022:

Revenues by geographic area $ 3,144 $ 616 $ 285 $ 1,023 $ 125 $ 2 $ — $ ( 470 ) $ 4,725

1 unchanged sentence

Net (loss) income by geographic area $ ( 15,061 ) $ ( 2,460 ) $ 76 $ ( 2,639 ) $ 45 $ ( 263 ) $ ( 28 ) $ — $ ( 20,330 )

For the Three Months Ended March 31, 2021:

For the Three Months Ended June 30, 2021:

Revenues by geographic area $ 2,395 $ 706 $ 223 $ 514 $ 91 $ — $ — $ ( 476 ) $ 3,453

1 unchanged sentence

Net (loss) income by geographic area $ 16,706 $ ( 1,230 ) $ ( 63 ) $ ( 839 ) $ 14 $ ( 82 ) $ — $ — $ 14,506

As of March 31, 2022:

For the Six months ended June 30, 2022:

Revenues by geographic area $ 6,855 $ 1,217 $ 682 $ 1,971 $ 243 $ 5 $ — $ ( 1,017 ) $ 9,956

Operating (loss) income by geographic area $ ( 22,974 ) $ ( 3,075 ) $ 127 $ ( 3,768 ) $ 56 $ ( 292 ) $ ( 27 ) $ ( 1 ) $ ( 29,954 )

Net (loss) income by geographic area $ ( 23,930 ) $ ( 3,599 ) $ 88 $ ( 4,012 ) $ 59 $ ( 466 ) $ ( 28 ) $ 1 $ ( 31,887 )

For the Six Months Ended June 30, 2021:

Revenues by geographic area $ 4,056 $ 1,461 $ 664 $ 1,409 $ 169 $ — $ — $ ( 1,352 ) $ 6,407

Operating (loss) income by geographic area $ ( 21,598 ) $ ( 2,465 ) $ 51 $ ( 1,630 ) $ 7 $ ( 78 ) $ — $ — $ ( 25,713 )

Net (loss) income by geographic area $ 5,759 $ ( 2,189 ) $ 39 $ ( 1,564 ) $ 4 $ ( 82 ) $ — $ — $ 1,967

As of June 30, 2022:

Identifiable assets by geographic area $ 187,174 $ 5,924 $ 667 $ 17,935 $ 246 $ 71 $ 253 $ ( 94,424 ) $ 117,846

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 24 - Related Party Transactions

23 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 24 - Related Party Transactions (continued)

23 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 24 - Related Party Transactions (continued)

Inpixon Canada Promissory Note

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

9 unchanged sentences

Note 25 - Leases

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

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

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

4 unchanged sentences

This lease expires on January 6, 2025 and the current lease rate is approximately $ 9,753 per month.

The Company entered into two new operating leases for its administrative office in Hyderabad, India and Manila, Philippines.

The Hyderabad, India and Manila, Philippines office lease expires on March 25, 2025 and May 14, 2025, respectively.

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 March 31, 2022 As of December 31, 2021

As of June 30, 2022 As of December 31, 2021

Palo Alto, CA Office $ 631 $ 631

7 unchanged sentences

Frankfurt, Germany Office 287 312

Manila, Philippines Office 250 —

Less accumulated amortization ( 1,209 ) ( 1,282 )

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 25 - Leases (continued)

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 March 31, 2022 and 2021 was $ 0.4 million and $ 0.3 million, respectively.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the three months ended June 30, 2022 and 2021 was $ 0.3 million and $ 0.3 million, respectively, and for the Six months ended June 30, 2022 and 2021 was $ 0.7 million and $ 0.6 million, respectively.

Lease liability is summarized below (in thousands):

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

As of June 30, 2022 As of December 31, 2021

Total lease liability $ 1,622 $ 1,751

12 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 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 %.

As of June 30, 2022, the weighted average remaining lease term is 3.97 years and the weighted average discount rate used to determine the operating lease liabilities was 6.4 %.

Note 26 - 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.

Compliance with Nasdaq Continued Listing Requirement

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 26 - Commitments and Contingencies (continued)

On October 25, 2021, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock (“Common Stock”) for the prior 30 consecutive business days beginning on September 13, 2021, and ending on October 22, 2021, the Company no longer met the requirement to maintain a minimum bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until April 25, 2022, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days during this 180-day period.

We were not able to regain compliance within this 180-day period, and were eligible to seek an additional 180 calendar days to meet the minimum bud price requirement if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

We provided Nasdaq written notice of our intention to cure the bid price deficiency during the second compliance period and on April 26, 2022, we received notice from Nasdaq that we were granted an additional 180 days, or until October 24, 2022 to regain compliance with this requirement.

If we are not able to cure the deficiency prior to October 24, 2022, Nasdaq will provide notice to us that our common stock will be subject to delisting.

Note 27 - 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.

Debt Exchanges

During the month of July 2022, the Company exchanged approximately $ 0.8 million of the outstanding principal and interest under the March 2020 10 % Note Purchase Agreement and Promissory Note for 4,951,646 shares of the Company's common stock at an exchange rate between $ 0.15 and $ 0.16 per share, in each case based on Nasdaq's minimum price.

On August 4, 2022, the Company exchanged approximately $ 0.3 million of the outstanding principal and interest under the March 2020 10 % Note Purchase Agreement and Promissory Note for 1,926,782 shares of the Company's common stock at an exchange rate of $ 0.1557 per share, in each case based on Nasdaq's minimum price.

At-The-Market (ATM) Program

On July 22, 2022, the Company entered into an Equity Distribution Agreement (the "Sales Agreement") with Maxim Group LLC (“Maxim”) under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 25 million (the “Shares”) from time to time through Maxim, acting exclusively as the Company’s sales agent (the “Offering”).

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

Note Purchase Agreement and Promissory Note

On July 22, 2022, the Company entered into a note purchase agreement (the "Purchase Agreement") with Streeterville Capital, LLC (the “Holder”), pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note (the “Note”) in an aggregate initial principal amount of $ 6.5 million (the “Initial Principal Amount”), which is payable on or before the date that is 12 months from the issuance date (the “Maturity Date”).

The Initial Principal Amount includes an original issue discount of $ 1.5 million and $ 15,000 that the Company agreed to pay to the Holder to cover the Holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the Note, the Holder paid an aggregate purchase price of $ 5.0 million (the “Transaction”).

Interest on the Note accrued at a rate of 10 % per annum, which is payable on the maturity date.

Beginning on the date that is 6 months from the issue date and at the intervals indicated below until the Note is paid in full, the Holder shall have the right to redeem up to an aggregate of 1/3 of the initial principal balance of the Note for cash each month.

Loan to Cardinal Ventures Holdings, LLC

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Note 27 - Subsequent Events (continued)

On July 1, 2022, the Company loaned $ 150,000 to Cardinal Venture Holdings LLC (“CVH”).

The Company is a member of CVH.

CVH owns certain interests in the sponsor entity (the “Sponsor”) to a special purpose acquisition corporation (the “SPAC”).

The loan bears no interest and is due and payable in full on the earlier of:

(i) the date by which the SPAC has to complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”), and (ii) immediately prior to the date of consummation of the Business Combination of the SPAC, unless accelerated upon the occurrence of an event of default.

Nadir Ali, the Company’s Chief Executive Officer and director, is also a member in CVH through 3AM, LLC, which may, in certain circumstances, be entitled to manage the affairs of CVH.

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