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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 393 added, 297 removed, 979 unchanged (41% of the section changed)

3 unchanged sentences

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

The results for the period ended June 30, 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.

The results for the period ended September 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 ended December 31, 2021 and 2020 included in the annual report on Form 10-K filed with the U.S.

Securities and Exchange Commission (the “SEC”) on March 16, 2022.

2 unchanged sentences

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

As of June 30,

As of September 30,

2022 As of December 31,

22 unchanged sentences

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

As of June 30,

As of September 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 June 30, 2022 and December 31, 2021, respectively.

zero and 49,250 issued and outstanding as of September 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 June 30, 2022 and December 31, 2021, respectively.

53,197.7234 and zero issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

(Liquidation preference of $ 53,198 )

3 unchanged sentences

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

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

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

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

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

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

Common Stock - $ 0.001 par value;

26,666,667 shares authorized;

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.

2,250,597 and 1,730,141 issued and 2,250,596 and 1,730,140 outstanding as of September 30, 2022 and December 31, 2021, respectively.

Additional paid-in capital 331,487 332,761

14 unchanged sentences

(In thousands, except per share data)

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

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

2022 2021 2022 2021

19 unchanged sentences

Total Other Income (Expense) ( 7,600 ) ( 22,347 ) ( 9,449 ) 7,537

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

Net Loss, before tax ( 17,993 ) ( 34,803 ) ( 49,796 ) ( 30,632 )

Income tax benefit/(provision) — 854 ( 84 ) ( 1,350 )

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

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

Net Loss $ ( 17,993 ) ( 33,949 ) ( 49,880 ) $ ( 31,982 )

Net Loss Attributable to Non-controlling Interest ( 402 ) ( 309 ) ( 1,206 ) ( 544 )

Net Loss Attributable to Stockholders of Inpixon ( 17,591 ) ( 33,640 ) ( 48,674 ) ( 31,438 )

4 unchanged sentences

Amortization premium- modification related to Series 8 Preferred Stock 1,265 — 2,626 —

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

Net Loss Attributable to Common Stockholders $ ( 22,631 ) $ ( 36,602 ) $ ( 64,850 ) $ ( 34,400 )

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

Net Loss Per Share - Basic and Diluted $ ( 10.21 ) $ ( 22.31 ) $ ( 31.08 ) $ ( 23.95 )

Weighted Average Shares Outstanding

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

Basic and Diluted 2,216,544 1,640,971 2,086,633 1,436,093

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

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

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

Net Loss $ ( 17,993 ) $ ( 33,949 ) $ ( 49,880 ) $ ( 31,982 )

Unrealized foreign exchange (loss) income from cumulative translation adjustments 898 ( 404 ) 1,452 ( 1,012 )

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

Comprehensive Loss $ ( 17,095 ) $ ( 34,353 ) $ ( 48,428 ) $ ( 32,994 )

The accompanying notes are an integral part of these financial statements

27 unchanged sentences

Balance - June 30, 2022 — — 53,197.7234 48,158 1 — 126 — 2,139,011 2 334,589 ( 1 ) ( 695 ) 598 ( 281,463 ) 956 $ 53,987

Stock options granted to employees and consultants for services — — — — — — — — — — 688 — — — — — 688

Common shares issued for extinguishment of debt — — — — — — — — 111,585 — 1,250 — — — — — 1,250

Accrete discount - preferred series 8 shares — — — 6,305 — — — — — — ( 6,305 ) — — — — — ( 6,305 )

Amortization Premium- modification related to Series 8 Preferred Stock — — — ( 1,265 ) — — — — — — 1,265 — — — — — 1,265

Cumulative translation adjustment — — — — — — — — — — — — — 898 ( 69 ) 68 897

Net loss — — — — — — — — — — — — — — ( 17,591 ) ( 402 ) ( 17,993 )

Balance - September 30, 2022 — — 53,197.7234 53,198 1 — 126 — 2,250,596 $ 2 $ 331,487 ( 1 ) $ ( 695 ) $ 1,496 $ ( 299,123 ) $ 622 $ 33,789

The accompanying notes are an integral part of these financial statements

23 unchanged sentences

Balance - June 30, 2021 — — 1 $ — 126 $ — 1,623,648 $ 2 $ 322,311 ( 1 ) $ ( 695 ) $ 52 $ ( 178,931 ) $ 2,747 $ 145,486

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

Common shares issued for extinguishment of debt — — — — — — 11,696 — 1,000 — — — — — 1,000

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

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

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

Common shares issued for conversion of preferred shares — — — — — — 104,334 — 9,500 — — — — — 9,500

Restricted stock grants forfeited — — — — — — ( 4,500 ) — — — — — — — —

Cumulative Translation Adjustment — — — — — — — — — — — ( 404 ) ( 22 ) 21 ( 405 )

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

Balance - September 30, 2021 $ 49,250 39,495 1 $ — 126 $ — 1,735,178 $ 2 $ 336,064 ( 1 ) $ ( 695 ) $ ( 352 ) $ ( 212,593 ) $ 2,459 $ 124,885

The accompanying notes are an integral part of these financial statements

2 unchanged sentences

(In thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash Flows Used in Operating Activities (Unaudited)

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

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

Net loss $ ( 49,880 ) $ ( 31,982 )

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

Depreciation and amortization 1,008 970

7 unchanged sentences

Accrued interest income, related party ( 278 ) ( 1,627 )

Provision for doubtful accounts 5 100

Unrealized gain on note 1,870 ( 638 )

Provision for inventory obsolescense — 300

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

1 unchanged sentence

Deferred income tax ( 1 ) ( 4,507 )

Loss on disposal of property and equipment 1 —

Unrealized loss on equity securities 7,110 51,250

Impairment of goodwill 7,570 —

Realized loss on sale of equity securities 151 —

Gain on conversion of note receivable ( 791 ) —

Other 196 137

Changes in operating assets and liabilities:

12 unchanged sentences

Purchase of property and equipment ( 221 ) ( 258 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Investment in capitalized software ( 611 ) ( 857 )

Investments in short term investments — ( 2,000 )

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

Sales of other short term investments — 2,000

Purchase of convertible note ( 5,500 ) —

Sales of equity securities 229 —

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 )

Issuance of note receivable ( 150 ) ( 268 )

Acquisition of Game Your Game — 184

12 unchanged sentences

Repayment of acquisition liability to Locality shareholders — ( 500 )

Net Cash (Used In) Provided By Financing Activities ( 4,163 ) 74,945

Net Cash Provided By Financing Activities 902 125,425

Effect of Foreign Exchange Rate on Changes on Cash ( 34 ) 90

12 unchanged sentences

Settlement of Sysorex Note $ — $ 7,462

Investment in equity securities $ — $ 58,905

Investment in equity securities through conversion of note receivable $ 6,776 $ 58,905

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

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

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

Common shares issued for Visualix asset acquisition $ — $ 429

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

The accompanying notes are an integral part of these financial statements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 1 - Organization and Nature of Business

7 unchanged sentences

• 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;

eInvoice, adDelivery) or cloud-based applications and analytics for the advertising, media and publishing industries and 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.

3 unchanged sentences

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

Proposed Spin-Off of Enterprise Apps Business

On September 25, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Inpixon, KINS Technology Group Inc., a Delaware corporation (“KINS”), CXApp Holding Corp., a Delaware corporation and newly formed wholly-owned subsidiary of Inpixon (“CXApp”), and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS will acquire Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the “Enterprise Apps Business”) in exchange for the issuance of shares of KINS capital stock valued at $ 69 million (the “Business Combination”).

Immediately prior to the Merger and pursuant to a Separation and Distribution Agreement, dated as of September 25, 2022, among KINS, Inpixon, CXApp and Design Reactor, Inc., a California corporation (“Design Reactor”) (the “Separation Agreement”), and other ancillary conveyance documents, Inpixon will, among other things and on the terms and subject to the conditions of the Separation Agreement, transfer the Enterprise Apps Business, including certain related subsidiaries of Inpixon, including Design Reactor, to CXApp (the "Reorganization").

Following the Reorganization, Inpixon will distribute 100 % of the common stock of CXApp, par value $ 0.00001 , to certain holders of Inpixon securities as of a record date to be determined (the “Spin-Off”).

Immediately following the Spin-Off, in accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into CXApp (the “Merger”), with CXApp continuing as the surviving company in the Merger and as a wholly-owned subsidiary of KINS.

The Spin-Off and the Merger are subject to various conditions to closing, including the effectiveness of a Registration Statement on Form S-4 filed by KINS in connection with the Business Combination and a Registration Statement on Form S-1 filed by CXApp in connection with the Spin-Off.

Reverse Stock Split

On October 7, 2022, the Company effected a 1-for-75 reverse stock split.

See Note 27 for more details.

All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 2 - Basis of Presentation

2 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 and six months ended June 30, 2022 are not necessarily indicative of the results for the full year ending December 31, 2022.

Interim results for the three and nine months ended September 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.

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

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 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.

As of September 30, 2022, the Company has a working capital surplus of approximately $ 51.6 million, and cash of approximately $ 63.2 million.

For the three and nine months ended September 30, 2022, the Company had a net loss of approximately $ 18.0 million and $ 49.9 million, respectively.

During the nine months ended September 30, 2022, the Company used approximately $ 26.9 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.

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 1,503,726 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 13 - Capital Raises.

Effective October 1, 2022, the holders of Series 8 Convertible Preferred Stock were eligible to redeem their shares.

During October 2022, the Company received cash redemption notices from the holders of the Series 8 Convertible Preferred Stock issued on March 22, 2022, totaling 45,755.72 shares of Series 8 Convertible Preferred Stock for aggregate cash paid of approximately $ 45.8 million.

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.

Additionally on July 22, 2022, the Company entered into an Equity Distribution Agreement (the "Sales 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.

The Company did not make any sales pursuant to the Sales Agreement as of September 30, 2022.

On October 18, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 253,112 shares of the Company’s common stock, warrants to purchase up to 3,846,153 shares of common stock at a combined offering price of $ 5.85 per share and pre-funded warrants to purchase up to 2,310,990 shares of common stock at a purchase price of $ 5.849 per pre-funded warrant, with each pre-funded warrant having an exercise price of $ 0.001 per share.

The Company raised net proceeds of $ 14.2 million after deduction of sales commissions and other offering expenses.

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.

In order to continue our operations, we have supplemented the revenues we earned with proceeds from the sale of

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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.

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.

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

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

These factors can include interest rates;

5 unchanged sentences

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.

While we have been able to realize growth in the nine months ended September 30, 2022 as compared to the same period 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.

1 unchanged sentence

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.

20 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 $ 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.

The Company recorded zero unrealized losses for the three and

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

nine months ended September 30, 2022, respectively.

The Company recorded unrealized losses of approximately $ 0.1 million for each of the three and nine months ended September 30, 2021, respectively.

Mezzanine equity

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

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

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

Investment in equity securities- fair value

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

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

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

1 unchanged sentence

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 (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.

The Unrealized loss on equity securities for the three and nine months ended September 30, 2022 was approximately $ 5.9 million and $ 7.1 million, respectively, and for the three and nine months ended September 30, 2021 was a loss of approximately $ 22.3 million and $ 51.3 million, respectively.

Revenue Recognition

17 unchanged sentences

The Company’s professional services include milestone, fixed fee and time and materials contracts.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

Professional services under milestone contracts are accounted for using the percentage of completion method.

9 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

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 June 30, 2022 and 2021, the Company did not incur any such losses.

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

These amounts are based on known and estimated factors.

19 unchanged sentences

The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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 $ 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 had deferred revenue of approximately $ 3.7 million and $ 4.8 million as of September 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 $ 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.

The Company incurred stock-based compensation charges of approximately $ 0.7 million and $ 1.7 million for the three months ended September 30, 2022 and 2021, respectively.

The Company incurred stock-based compensation charges of approximately $ 3.0 million and $ 8.8 million for the nine months ended September 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.

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)

Net Income (Loss) Per Share

1 unchanged sentence

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.

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

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 June 30, 2022 and 2021:

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

2022 2021 2022 2021

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, 2022 and 2021:

For the Nine Months Ended September 30,

Options 363,973 160,992

1 unchanged sentence

Convertible preferred stock 1,503,739 525,345

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

Earnout reserve — 147,493

Total 3,605,444 2,119,142

2 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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" (“ASC 815”), 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.

6 unchanged sentences

Recently Issued and Adopted Accounting Standards

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”) .

In August 2020, the 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.

19 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 3 - Summary of Significant Accounting Policies (continued)

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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 4 - Disaggregation of Revenue

3 unchanged sentences

Revenues consisted of the following (in thousands):

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

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

2022 2021 2022 2021

10 unchanged sentences

Total Revenue $ 4,177 $ 4,450 $ 14,133 $ 10,857

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

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

2022 2021 2022 2021

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 4 - Disaggregation of Revenue (continued)

5 unchanged sentences

On March 3, 2022, the Company issued 144,986 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 six months ended June 30, 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 nine months ended September 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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 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 and six months ended June 30, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 30, 2021.

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

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

1 unchanged sentence

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

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

For the Nine Months Ended September 30, 2021

Revenues $ 12,707

Net income (loss) attributable to common stockholders $ ( 32,503 )

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

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

Net income (loss) per basic and diluted common share $ ( 21.84 )

Weighted average common shares outstanding:

Basic 112,957,969 100,444,630

Diluted 112,958,815 100,458,729

Basic and Diluted 1,487,975

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 7- Goodwill and Intangibles

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

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

Segments Acquisitions Balance as of January 1, 2022 Goodwill additions through acquisitions Impairment Exchange rate fluctuations as of September 30, 2022 Balance as of September 30, 2022

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

10 unchanged sentences

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.

During the nine months ended September 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 September 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):

Intangibles assets at September 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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

Gross Carrying Amount Accumulated Amortization Amount Remaining Weighted Average Useful Life

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

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

2022 2021 2022 2021

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Amortization Expense:

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.

Amortization expense for the three and nine months ended September 30, 2022 was approximately $ 1.5 million and $ 4.6 million, respectively, and for the three and nine months ended September 30, 2021 was approximately $ 1.7 million and $ 3.6 million, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

6 unchanged sentences

Note 8 - Inventory

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

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

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

Raw materials $ 369 $ 163

5 unchanged sentences

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

As of June 30, 2022

As of September 30, 2022

Cost Fair Value

3 unchanged sentences

Total investments in equity securities- fair value $ 65,301 $ 1,124

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.

On April 27, 2022, the Company purchased a 10 % convertible note in aggregate principal amount of $ 6,050,000 for a purchase price of $ 5,500,000 from FOXO Technologies Operating Company, formerly FOXO Technologies Inc.

(“FOXO Legacy”), pursuant to the terms of a securities purchase agreement between FOXO Legacy and the Company (the “April 2022 Purchase Agreement”).

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 term of the convertible note is twelve months , however FOXO Legacy 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 April 2022 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

The note is required to convert upon FOXO Legacy completing a qualified offering.

On September 15, 2022, FOXO Legacy consummated a business combination with Delwinds Insurance Acquisition Corp., now known as FOXO Technologies Inc.

("FOXO"), which qualified as a qualified offering as defined in the April 2022 Purchase Agreement.

This qualified offering triggered a mandatory conversion of the convertible note to FOXO Legacy common stock which was then automatically converted into 891,124 shares of FOXO Class A common stock, par value $ 0.0001 (“FOXO common stock”) upon closing of the business combination.

The Company recognized an unrealized gain on conversion of $ 0.8 million to be recognized on the income statement for the three and nine months ended September 30, 2022.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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).

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOXO common stock is traded in active markets, as the security is trading under “FOXO” on the NYSE American.

FOXO common stock is accounted for as available-for-sale equity securities based on “Level 1” inputs, which consist of quoted prices in active markets, with unrealized holding gains and losses included in earnings.

The fair value was determined by the closing trading price of the security as of September 30, 2022.

The Company recognized an unrealized loss on FOXO common stock of $ 5.3 million to be recognized on the income statement for the three and nine months ended September 30, 2022.

For the three months ended September 30, 2022 and 2021, inclusive of the FOXO transactions above, the Company recognized a net unrealized (gain) loss on equity securities of $ 5.9 million and $ 22.3 million, respectively, and $ 7.1 million and $ 51.3 million for the nine months ended September 30, 2022 and 2021, respectively, in the other income/expense section of the condensed consolidated statements of operations.

Note 10 - 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”).

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

The Company is a member of CVH.

CVH owns certain interests in KINS Capital, LLC, the sponsor entity (the “Sponsor”) to KINS Technology Group Inc., a Delaware corporation and special purpose acquisition company with which the Company anticipates entering into the Business Combination (see “Proposed Spin-Off of our Enterprise Apps Business” under Note 1 above and “Recent Events - Proposed Spin-Off of our Enterprise Apps Business” section under Part I, Item 2 herein for more details).

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 capital contribution was used by CVH to fund the Sponsor's purchase of securities in KINS.

The underlying subscription 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.

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

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

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,

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

Ownership interest as of September 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.

CVH Class A 14.1 % Units

CVH 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 September 30, 2022 and December 31, 2021.

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

On July 1, 2022, the Company loaned $ 150,000 to CVH.

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

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

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

Note 11 - 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

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

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

Accrued compensation and benefits $ 1,186 $ 8,027

5 unchanged sentences

Note 12 - Debt

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

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

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

March 2020 10 % Note

3/18/2023 $ 58 $ 3,251

Streeterville Note, less debt discount of $ 1,123 and zero , respectively.

7/22/2023 $ 5,343 —

Third Party Note Payable 12/31/2022 $ 778 239

Total Short-Term Debt $ 6,179 $ 3,490

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.

Interest expense on the short-term debt totaled approximately $ 0.2 million and $ 1.4 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $ 0.4 million and $ 2.0 million for the nine months ended September 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

11 unchanged sentences

The March 2020 10 % Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22 %.

Upon the occurrence of an event of default (except a default due to the occurrence of bankruptcy or insolvency proceedings, the holder may, by written notice, declare all unpaid principal, plus all accrued interest and other amounts due under the March 2020 10 % Note to be immediately due and payable.

Upon the occurrence of an event of default (except a default due to the occurrence of bankruptcy or insolvency proceedings, the

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 12- Debt (continued)

holder may, by written notice, declare all unpaid principal, plus all accrued interest and other amounts due under the March 2020 10 % Note to be immediately due and payable.

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.

4 unchanged sentences

and (ii) exchange the partitioned note for the delivery of 11,919 shares of the Company’s common stock, at an effective price per share equal to $ 125.85 .

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 six months ended June 30, 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:

18 unchanged sentences

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;

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to approximately $ 0.3 million and

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 12- Debt (continued)

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 15,256 shares of the Company’s common stock, at an effective price per share equal to $ 16.50 .

4 unchanged sentences

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

and (ii) exchange the partitioned note for the delivery of 32,074 shares of the Company’s common stock, at an effective price per share equal to $ 10.91 .

On July 11, 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 33,949 shares of the Company’s common stock, at an effective price per share equal to $ 11.78 .

On August 4, 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 25,691 shares of the Company’s common stock, at an effective price per share equal to $ 11.68 .

On September 9, 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 $ 0.2 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.2 million;

and (ii) exchange the partitioned note for the delivery of 19,871 shares of the Company’s common stock, at an effective price per share equal to $ 10.07 .

July 2022 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 $ 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 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 12- Debt (continued)

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.

Third Party Note Payable

Game Your Game entered into promissory notes with an individual whereby it received approximately $ 0.2 million on October 29, 2021, approximately $ 0.2 million on January 18, 2022, and approximately $ 0.1 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 June 30, 2022, the balance owed under the notes was $ 0.6 million.

Game Your Game entered into promissory notes with an individual whereby it received approximately $ 0.2 million on October 29, 2021, approximately $ 0.2 million on January 18, 2022, approximately $ 0.1 million on March 22, 2022, approximately $ 0.1 million on August 17, 2022, and approximately $ 0.1 million on September 21, 2022 for funding of outside liabilities and working capital needs.

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

As of September 30, 2022, the balance owed under the notes was $ 0.8 million.

Note 13 - Capital Raises

Registered Direct Offerings

On January 24, 2021, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which it sold in a registered direct offering, 5,800,000 shares of its common stock, and warrants to purchase up to 19,354,838 shares of common stock at an exercise price of $ 1.55 per share (the “January 2021 Purchase Warrants”) for a combined purchase price of $ 1.55 per share and pre-funded warrants to purchase up to 13,554,838 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 1.549 per share for net proceeds of approximately $ 27.8 million.

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

On January 24, 2021, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which it sold in a registered direct offering, 77,334 shares of its common stock, and 5-year warrants to purchase up to 258,065 shares of common stock at an exercise price of $ 116.25 per share (the “January 2021 Purchase Warrants”) for a combined purchase price of $ 116.25 per share and pre-funded warrants to purchase up to 180,732 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of $ 0.08 per share, at a purchase price of $ 116.18 per share for net proceeds of approximately $ 27.8 million.

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

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

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

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

In addition, the investor exercised its purchase rights for 40,000 shares of common stock pursuant to the January 2021 Purchase Warrant on February 11, 2021.

In January 2022, the January 2021 Purchase Warrants were exchanged for shares of the Company's common stock in connection with the Warrant Exchange (as defined below).

See Note 14 - Common Stock.

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, 93,334 shares of its common stock, and 5-year warrants to purchase up to 200,000 shares of common stock at an exercise price of $ 150.00 per share (the “First February 2021 Purchase Warrants”) for a combined purchase price of $ 150.00 per share and pre-funded warrants to purchase up to 106,667 shares of common stock ("First February 2021 Pre-funded Warrants") at an exercise price of $ 0.08 per share, at a purchase price of $ 149.93 per share for net proceeds of approximately $ 27.8 million.

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

On February 16, 2021, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which the Company sold in a registered direct offering, 3,000,000 shares of its common stock, and warrants to purchase up to 9,950,250 shares of common stock at an exercise price of $ 2.01 per share (the “Second February 2021 Purchase Warrants”) for a combined purchase price of $ 2.01 per share and pre-funded warrants to purchase up to 6,950,250 shares of common stock ("Second February 2021 Pre-funded Warrants") at an exercise price of $ 0.001 per share, at a purchase price of $ 2.009 per share for net proceeds of $ 18.5 million after deducting placement agent commissions and offering expenses.

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

In January 2022, the February 2021 Purchase Warrants were exchanged for shares of the Company's common stock in connection with the Warrant Exchange.

See Note 14 - Common Stock.

On February 16, 2021, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which the Company sold in a registered direct offering, 40,000 shares of its common stock, and 5-year warrants to purchase up to 132,670 shares of common stock at an exercise price of $ 150.75 per share (the “Second February 2021 Purchase Warrants”) for a combined purchase price of $ 150.75 per share and pre-funded warrants to purchase up to 92,670 shares of common stock ("Second February 2021 Pre-funded Warrants") at an exercise price of $ 0.08 per share, at a purchase price of $ 150.68 per share for net proceeds of $ 18.5 million after deducting placement agent commissions and offering expenses.

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

In January 2022, the Second February 2021 Purchase Warrants were exchanged for shares of the Company's common stock in connection with the Warrant Exchange.

See Note 14 - Common Stock.

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 626,667 shares of common stock.

1 unchanged sentence

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 June 30, 2022.

The Company has authorized the issuance of 5,000,000 shares of preferred stock, of which none were issued and outstanding as of September 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.

The shares of Series 7 Convertible Preferred Stock are convertible into shares of the Company’s common stock, at a conversion price of $ 93.75 per share.

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

At any time beginning on the 6-month anniversary of the date the shares of Series 7 Convertible Preferred Stock are issued and ending 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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 13- Capital Raises (continued)

such share, plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due.

the Company’s common stock.

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.

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.

All of the shares of Series 7 Convertible Preferred Stock were redeemed in March 2022 and 75 % of the related warrants were forfeited.

See Note 1 5 for Preferred Stock and Note 18 for Warrant details.

12 unchanged sentences

See Note 1 5 for Preferred Stock and Note 18 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.

In addition, in accordance with the related purchase agreement, upon redemption of the Series 7 Convertible Preferred Stock, each holder forfeited 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 394,000 related warrants were forfeited.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 13- Capital Raises (continued)

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 14 - Common Stock

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 657,402 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.

Pursuant to the exchange agreement, the Company agreed to issue to the warrant holder an aggregate of 184,153 shares of common stock and rights to receive an aggregate of 52,513 shares of common stock in exchange for the existing warrants (the "Warrant Exchange").

On February 19, 2022, 12,802 shares of common stock issued in connection with restricted stock grants were withheld for employee taxes.

3 unchanged sentences

See Note 12 .

During the three months ended September 30, 2022, the Company issued 111,585 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.3 million under partitioned notes.

Note 1 5 - 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 $ 16,740 .

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

As of September 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 $ 11,238.75 .

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

As of September 30, 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 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

The holders of the Series

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 15- Preferred Stock (continued)

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

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).

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During the year ended December 31, 2021, 9,500 shares of Series 7 Convertible Preferred Stock were converted into 101,334 shares of the Company's common stock.

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

As of September 30, 2022, there were zero shares of Series 7 Convertible Preferred Stock outstanding.

Series 8 Convertible Preferred Stock

7 unchanged sentences

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.

The aggregate net proceeds from the

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 15- Preferred Stock (continued)

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.

As of September 30, 2022, there were 53,197.7234 shares of Series 8 Convertible Preferred Stock outstanding.

Note 16- 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 3,333,334 to 26,666,667 shares effective as of November 18, 2021.

The authorized shares listed herein are adjusted for the 1 for 75 reverse stock split that was effective October 7, 2022.

Note 17 - Stock Award Plans and Stock-Based Compensation

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

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

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

In February 2018, the Company adopted the 2018 Employee Stock Incentive Plan (the “2018 Plan” and together with the 2011 Plan, the “Option Plans”), which 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 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.

The aggregate number of shares that may be awarded under the 2018 Plan as of September 30, 2022 is 653,334 .

As of September 30, 2022, 406,941 of stock options and restricted stock were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 68 under our 2011 Plan) and 246,462 options were available for future grant under the 2018 Plan.

Employee Stock Options

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

During the nine months ended September 30, 2021, the Company granted options under the 2018 Plan for the purchase of 21,400 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 $ 137.25 per share.

3 unchanged sentences

On June 10, 2021, the Company issued 6 shares of common stock in connection with the cashless exercise of 82 employee stock options.

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.

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 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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 17 - 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.

During the nine months ended September 30, 2022, the Company granted options under the 2018 Plan for the purchase of 132,669 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 $ 39.75 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 $ 39.75 per share.

During the three months ended September 30, 2022 and 2021, the Company recorded a charge for the amortization of stock options of approximately $ 0.7 million and $ 0.6 million, respectively, and approximately $ 2.2 million and $ 1.4 million for the nine months ended September 30, 2022 and 2021, respectively, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of September 30, 2022, the fair value of non-vested stock options totaled approximately $ 3.0 million, which will be amortized to expense over the weighted average remaining term of 1.11 years.

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

5 unchanged sentences

Forfeited — ( 16,692 ) — ( 16,692 )

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

Ending balance as of September 30, 2022 68 363,904 1 363,973

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

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

For the Six Months Ended June 30, 2022

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

For the Nine Months Ended September 30, 2022

Risk-free interest rate 1.50 %

14 unchanged sentences

On August 21, 2021, 4,500 of unvested restricted stock award grants were forfeited in connection with the departure of an employee.

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

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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 17 - Stock Award Plans and Stock-Based Compensation (continued)

On February 19, 2022, 12,802 restricted stock grants were forfeited for employee taxes.

During the three months ended September 30, 2022 and 2021, the Company recorded a charge of $ 0.03 million and $ 1.1 million, respectively, and $ 0.7 million and $ 7.4 million for the nine months ended September 30, 2022 and 2021, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock based award activity granted:

Restricted Stock Grants

1 unchanged sentence

Forfeited ( 12,802 )

Ending balance as of June 30, 2022 3,222,586

Ending balance as of September 30, 2022 42,968

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.

16 unchanged sentences

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

During the 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 18 - 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.

During the year ended December 31, 2021, the Company issued 106,667 shares of common stock in connection with the exercise of 106,667 Pre-Funded Warrants at an exercise price of $ 0.08 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, 40,000 shares of the Company’s common stock, par value 0.001 per share, and warrants to purchase up to 132,670 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 150.75 per share.

The Purchase Warrants have an exercise price of $ 150.75 per share.

19 unchanged sentences

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 20- Income Taxes

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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 19- Income Taxes

There is an income tax benefit of approximately $ 0 million and $ 0.9 million for the three months ended September 30, 2022 and 2021, respectively.

There is an income tax expense of approximately $ 0.1 million and $ 1.4 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Note 20 - Credit Risk and Concentrations

3 unchanged sentences

The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits.

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

Cash in foreign financial institutions as of June 30, 2022 and December 31, 2021 was immaterial.

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

Cash in foreign financial institutions as of September 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 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 %

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.

During the three and nine months ended September 30, 2022 and 2021, no customer accounted for at least 10% of revenue.

As of September 30, 2022, two customers represented approximately 22 % of total accounts receivable.

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

As of September 30, 2022, two vendors represented approximately 34 % of total gross accounts payable.

Purchases from these vendors during the nine months ended September 30, 2022 was approximately $ 1.6 million.

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 approximately $ 0.5 million.

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

For the nine months ended September 30, 2021, three vendors represented approximately 24 %, 18 %, and 8 % 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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 20 - Credit Risk and Concentrations (continued)

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,

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

2022 2021 2022 2021

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 21 - 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 June 30, 2022 and December 31, 2021:

Fair Value at June 30, 2022

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

Fair Value at September 30, 2022

Total Level 1 Level 2 Level 3

15 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.

treasury bills were sold by the Company during the nine months ended September 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 fair value for Level 1 equity investments was determined using quoted prices of the security in active markets.

The fair value for Level 3 equity investments was determined using a pricing model with certain significant unobservable market data inputs.

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:

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, 2022:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Level 3 Investments

5 unchanged sentences

FOXO Technologies, Inc.

- Amortization of original issue discount 92

- Conversion of note to equity security ( 5,500 )

Unrealized loss on equity securities ( 1,791 )

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:

Balance at September 30, 2022 $ 47

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

Level 3 Investments

5 unchanged sentences

Unrealized loss on equity securities ( 51,250 )

Balance at June 30, 2021 $ 29,940

Balance at September 30, 2021 $ 7,655

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 22 - Foreign Operations

3 unchanged sentences

States Canada India Germany United Kingdom Ireland Philippines Eliminations Total

For the Three Months Ended June 30, 2022:

For the Three Months Ended September 30, 2022:

Revenues by geographic area $ 2,922 $ 484 $ 481 $ 880 $ 90 $ 1 $ — $ ( 681 ) $ 4,177

1 unchanged sentence

Net (loss) income by geographic area $ ( 12,890 ) $ ( 2,950 ) $ 107 $ ( 1,926 ) $ 22 $ ( 291 ) $ ( 64 ) $ ( 1 ) $ ( 17,993 )

For the Three Months Ended June 30, 2021:

For the Three Months Ended September 30, 2021:

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

1 unchanged sentence

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

For the Six months ended June 30, 2022:

For the Nine months ended September 30, 2022:

Revenues by geographic area $ 9,777 $ 1,701 $ 1,163 $ 2,851 $ 331 $ 6 $ — $ ( 1,696 ) $ 14,133

1 unchanged sentence

Net (loss) income by geographic area $ ( 36,818 ) $ ( 6,549 ) $ 195 $ ( 5,938 ) $ 78 $ ( 756 ) $ ( 92 ) $ — $ ( 49,880 )

For the Six Months Ended June 30, 2021:

For the Nine Months Ended September 30, 2021:

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

1 unchanged sentence

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

As of June 30, 2022:

As of September 30, 2022:

Identifiable assets by geographic area $ 181,374 $ 5,784 $ 740 $ 17,886 $ 236 $ 19 $ 253 $ ( 97,711 ) $ 108,595

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 23 - Related Party Transactions

23 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 23 - Related Party Transactions (continued)

23 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 23 - Related Party Transactions (continued)

Cardinal Ventures Holdings Investment

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.

Cardinal Venture Holdings Investment

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

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

2 unchanged sentences

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

On July 1, 2022, the Company loaned $ 150,000 to CVH.

Director Services Agreement

14 unchanged sentences

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

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

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

Palo Alto, CA Office $ 631 $ 631

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 24 - 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 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.

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, 2022 and 2021 was $ 0.3 million and $ 0.3 million, respectively, and for the Nine months ended September 30, 2022 and 2021 was $ 1.0 million and $ 0.8 million, respectively.

Lease liability is summarized below (in thousands):

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

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

Total lease liability $ 1,366 $ 1,751

2 unchanged sentences

Maturity analysis under the lease agreement is as follows (in thousands):

Year ending December 31, 2022 $ 412

Quarter ending December 31, 2022 $ 193

Year ending December 31, 2023 517

6 unchanged sentences

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term.

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

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 %.

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".

As of September 30, 2022, the weighted average remaining lease term is 2.9 years and the weighted average discount rate used to determine the operating lease liabilities was 6.4 %.

Note 25 - Restructuring Activities

On September 21, 2022, Inpixon informed its employees that it was taking steps to streamline its operations and conserve cash resources.

These steps included layoffs, which were completed by September 30, 2022, and which reduced Inpixon's global employee headcount by approximately 20 %.

The layoffs resulted in one-time expenses of approximately $ 0.6 million in the Indoor Intelligence segment which consisted of severance payouts to terminated employees and outplacement service expenses for the three and nine months ended September 30, 2022.

The Company anticipates additional costs to be recorded related to contingent payments in the amount of $ 0.2 million which have not been incurred as of September 30, 2022.

These expenses were included in the Company's total operating expenses on the Consolidated Statements of Operations with the restructuring costs payable included in accrued liabilities in the Condensed Consolidated Balance Sheets.

The Company recorded a Restructuring costs payable for costs incurred related to the restructuring activities noted above for costs incurred but not yet paid as of September 30, 2022.

A summary of the activity for the three months ended September 30, 2022, is included below (in thousands):

Restructuring costs payable - July 1, 2022 $ —

Restructuring costs incurred 597

Restructuring costs paid ( 343 )

Restructuring costs payable - September 30, 2022 $ 254

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 26 - Commitments and Contingencies

7 unchanged sentences

Compliance with Nasdaq Continued Listing Requirement

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

In accordance with Nasdaq Listing Rules we were provided until October 24, 2022 to regain compliance with this requirement.

We effected a 1-for-75 reverse stock split of our common stock on October 7, 2022, and on November 1, 2022, we were informed by Nasdaq that we had regained compliance with the minimum bid price requirement and that we were back in compliance with the applicable Nasdaq continued listing criteria.

Note 27 - Subsequent Events

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

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

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

On October 12, 2022, the Company issued 52,513 shares of common stock in connection with the exercise of a right to shares of common stock granted as part of warrant exchange agreement entered into on January 28, 2022.

On October 17, 2022, the Company exchanged approximately $ 0.4 million of the outstanding principal and interest under the March 2020 10 % Note Purchase Agreement and Promissory Note for 83,682 shares of the Company's common stock at a price of $ 4.78 per share, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

Reverse Stock Split

On October 4, 2022, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada to effect a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock at a ratio of one (1) share of common stock for every seventy five (75) shares of common stock (the “Reverse Stock Split”).

The Reverse Stock Split was effective October 7, 2022.

The Reverse Stock Split is primarily intended to bring the Company into compliance with the minimum bid price requirements for maintaining its listing on the Nasdaq Capital Market.

The Company has reflected the Reverse Stock Split herein, unless otherwise indicated.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 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.

Series 8 Preferred Stock Redemptions

Registered Direct Offering

On October 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor named therein (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 253,112 shares of the Company’s common stock and warrants to purchase up to 3,846,153 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 5.85 per share.

The Purchase Warrants have an exercise price of $ 5.85 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 2,310,990 shares of common stock, in lieu of shares of common stock at the Purchaser’s election.

Each pre-funded warrant is exercisable for one share of common stock.

The purchase price of each pre-funded warrant was $ 5.849 , and the exercise price of each pre-funded warrant is $ 0.001 per share.

The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.

The Company raised net proceeds of $ 14.2 million after deduction of sales commissions and other offering expenses.

In October 2022, the Company issued 598,990 shares of common stock in connection with the exercise of 598,990 pre-funded warrants at $ 0.001 per share.

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