What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-16 compared with 2022-11-14 · 468 added, 750 removed, 622 unchanged (66% of the section changed)

3 unchanged sentences

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

The results for the period ended September 30, 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.

The results for the period ended March 31, 2023 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, 2022 and 2021 included in the annual report on Form 10-K for the year ended December 31, 2022 filed with the U.S.

Securities and Exchange Commission (the “SEC”) on April 17, 2023.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

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

As of September 30,

As of March 31,

2023 As of December 31,

3 unchanged sentences

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

Other receivables 137 321

Notes and other receivables 430 86

Inventory 2,179 2,442

Short-term investments — 43,125

Note receivable — 150

Prepaid expenses and other current assets 2,797 2,803

Current assets of discontinued operations — 12,261

Total Current Assets 23,659 29,866

5 unchanged sentences

Intangible assets, net 2,810 2,994

Goodwill — 7,672

Other assets 175 158

Non-current assets of discontinued operations — 20,711

Total Assets $ 29,907 $ 57,635

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

1 unchanged sentence

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

As of September 30,

As of March 31,

2023 As of December 31,

8 unchanged sentences

Acquisition liability — 197

Current liabilities of discontinued operations — 5,218

Total Current Liabilities 23,431 24,714

1 unchanged sentence

Operating lease obligation, noncurrent 297 334

Other liabilities, noncurrent 28 28

Acquisition liability, noncurrent — 220

Non-current liabilities of discontinued operations — 472

Total Liabilities 23,728 25,520

Commitments and Contingencies — —

Mezzanine Equity

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

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 September 30, 2022 and December 31, 2021, respectively.

(Liquidation preference of $ 53,198 )

Stockholders’ Equity

2 unchanged sentences

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

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

1 issued and 1 outstanding as of March 31, 2023 and December 31, 2022

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

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

126 issued and 126 outstanding as of March 31, 2023 and December 31, 2022

Common Stock - $ 0.001 par value;

500,000,000 shares authorized;

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.

16,478,253 and 3,570,894 issued and 16,478,252 and 3,570,893 outstanding as of March 31, 2023 and December 31, 2022, respectively.

Additional paid-in capital 339,148 346,668

1 unchanged sentence

( 695 ) ( 695 )

Accumulated other comprehensive income 1,496 44

Accumulated other comprehensive (loss) income ( 198 ) 1,061

Accumulated deficit ( 330,586 ) ( 313,739 )

1 unchanged sentence

Non-controlling Interest ( 1,506 ) ( 1,184 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

Total Stockholders’ Equity 6,179 32,115

Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 108,595 $ 156,673

The accompanying notes are an integral part of these financial statements

Total Liabilities and Stockholders’ Equity $ 29,907 $ 57,635

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

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

2022 2021 2022 2021

(In thousands, except share and per share data)

For the Three Months Ended March 31,

Revenues $ 3,104 $ 2,649

6 unchanged sentences

Acquisition-related costs 164 115

Impairment of goodwill — — 7,570 —

Transaction costs 1,400 —

Amortization of intangibles 220 347

1 unchanged sentence

Loss from Operations ( 8,182 ) ( 9,237 )

Other Income (Expense)

Interest income (expense), net ( 240 ) ( 15 ) ( 62 ) 1,191

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

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

Other (expense)/income, net ( 1,506 ) ( 47 ) ( 2,277 ) 464

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

Other (Expense)/Income

Interest (expense)/income, net ( 1,725 ) 1

Other income/(expense), net 29 ( 44 )

Unrealized gain/(loss) on equity securities 34 ( 1,503 )

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

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

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

Total Other Expense ( 1,662 ) ( 1,546 )

Net Loss from Continuing Operations, before tax ( 9,844 ) ( 10,783 )

Income tax provision ( 2,478 ) —

Net Loss from Continuing Operations ( 12,322 ) ( 10,783 )

Loss from Discontinued Operations, Net of Tax ( 4,856 ) ( 774 )

Net Loss ( 17,178 ) ( 11,557 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(In thousands, except share and per share data)

Net Loss Per Share - Basic and Diluted $ ( 1.38 ) $ ( 9.05 )

1 unchanged sentence

Basic and Diluted 12,238,684 1,917,629

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

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

2022 2021 2022 2021

For the Three Months Ended March 31,

Net Loss $ ( 17,178 ) $ ( 11,557 )

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

Unrealized foreign exchange loss from cumulative translation adjustments ( 1,259 ) ( 102 )

Comprehensive Loss $ ( 18,437 ) $ ( 11,659 )

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

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

(In thousands, except per share data)

(In thousands, except share and per share data)

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

Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2023 1 $ — 126 $ — 3,570,894 $ 4 $ 346,668 ( 1 ) $ ( 695 ) $ 1,061 $ ( 313,739 ) $ ( 1,184 ) $ 32,115

Common shares issued for extinguishment of debt — — — — 1,547,234 1 1,425 — — — — — 1,426

Common shares issued for net cash proceeds of a public offering 9,655,207 10 14,956 — — — — — 14,966

Stock options and restricted stock awards granted to employees for services — — — — — — 329 — — — — — 329

Deconsolidation of CXApp business as result of spin off — — — — — — ( 24,230 ) 1 — — — — — ( 24,230 )

Common shares issued for net proceeds from warrants exercised — — — — 1,380,000 1 — — — — — — 1

Common shares issued for exchange of warrants — — — — 324,918 — — — — — — — —

Cumulative translation adjustment — — — — — — — — — ( 1,259 ) 26 ( 17 ) ( 1,250 )

Net loss — — — — — — — — — — ( 16,873 ) ( 305 ) ( 17,178 )

Balance - March 31, 2023 1 $ — 126 $ — 16,478,253 $ 16 $ 339,148 ( 1 ) $ ( 695 ) $ ( 198 ) $ ( 330,586 ) $ ( 1,506 ) $ 6,179

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

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

(In thousands, except share and per share data)

Series 7 Preferred Stock Series 8 Preferred Stock Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2022 49,250 44,695 — — 1 $ — 126 $ — 1,730,140 $ 2 $ 332,761 ( 1 ) $ ( 695 ) 44 $ ( 250,309 ) $ 1,688 $ 83,491

14 unchanged sentences

Balance - March 31, 2022 — $ — 53,198 $ 43,173 1 $ — 126 $ — 2,103,949 $ 2 $ 338,333 ( 1 ) $ ( 695 ) $ ( 58 ) $ ( 261,535 ) $ 1,357 $ 77,404

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

Common shares issued for extinguishment of debt — — — — — — — — 35,062 — 500 — — — — — $ 500

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

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

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

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

Balance - June 30, 2022 — — 53,197.7234 48,158 1 — 126 — 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

INPIXON AND SUBSIDIARIES

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

(In thousands, except per share data)

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

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2021 — — 1 $ — 126 $ — 779,964 $ 1 $ 225,665 ( 1 ) $ ( 695 ) $ 660 $ ( 180,992 ) $ 41 $ 44,680

Common shares issued for registered direct offering — — — — — — 210,668 — 74,074 — — — — — 74,074

Common shares issued for extinguishment of debt — — — — — — 11,919 — 1,500 — — — — — 1,500

Common shares issued for cashless stock options exercised — — — — — — 67 — — — — — — — —

Common shares issued for net proceeds from warrants exercised — — — — — — 420,071 — 3,779 — — — — — 3,779

Stock options granted to employees and consultants for services — — — — — — — — 5,096 — — — — — 5,096

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

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

Balance - March 31, 2021 — — 1 $ — 126 $ — 1,422,689 $ 1 $ 310,114 ( 1 ) $ ( 695 ) $ ( 11 ) $ ( 193,549 ) $ 59 $ 115,919

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

Common shares issued for Game Your Game acquisition — — — — — — 15,722 — 1,403 — — — — — 1,403

Common shares issued for Visualix acquisition — — — — — — 4,928 — 429 — — — — — 429

Common shares issued for the CXApp — — — — — — 117,995 1 9,999 — — — — 2,811 12,811

Common shares for cashless stock options exercised — — — — — — 6 — — — — — — — —

Common shares issued for restricted stock grants — — — — — — 62,308 — — — — — — — —

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

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

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

Balance - June 30, 2021 — — 1 $ — 126 $ — 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

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash Flows Used in Operating Activities (Unaudited)

6 unchanged sentences

Earnout expense valuation benefit — ( 2,827 )

Loss on exchange of debt for equity — 30

Amortization of debt discount 834 —

Amortization of original issued discount 121 —

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 )

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

Unrealized loss on foreign currency transactions ( 205 ) ( 167 )

Distribution of equity method investment shares to employees as compensation 666 —

Deferred income tax 2,478 —

Loss on disposal of property and equipment 1 —

Unrealized loss on equity securities ( 34 ) 1,503

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:

8 unchanged sentences

Operating lease obligation ( 109 ) ( 141 )

Other liabilities — 89

Net Cash Used in Operating Activities ( 9,503 ) ( 15,319 )

1 unchanged sentence

Purchase of property and equipment ( 6 ) ( 81 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Investment in capitalized software ( 220 ) ( 107 )

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 — 28,001

Purchase of Systat licensing agreement — ( 900 )

Proceeds from repayment of note receivable 150 —

Issuance of note receivable ( 300 ) —

Acquisition of Game Your Game — 184

Acquisition of CXApp — ( 15,186 )

Acquisition of Visualix — ( 61 )

Net Cash Provided By (Used in) Investing Activities 36,748 ( 52,708 )

Net Cash (Used in) Provided By Investing Activities ( 376 ) 27,813

Cash From Financing Activities

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

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

Net proceeds from promissory note 125 364

Net proceeds for registered direct offering 14,966 —

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

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Taxes paid related to net share settlement of restricted stock units — ( 336 )

Loans to related party — ( 117 )

Repayment of CXApp acquisition liability ( 197 ) ( 1,787 )

Repayment of acquisition liability to Nanotron shareholders — ( 467 )

Repayment of acquisition liability to Locality shareholders — ( 500 )

Net Cash Provided By Financing Activities 902 125,425

Common shares issued for net proceeds from warrants 1 —

Distribution to shareholders related to spin-off of CXApp ( 10,003 ) —

Net Cash Provided By (Used In) Financing Activities 4,892 ( 4,103 )

Effect of Foreign Exchange Rate on Changes on Cash 6 ( 19 )

Net Increase in Cash and Cash Equivalents 10,673 48,789

Net (Decrease)/Increase in Cash and Cash Equivalents ( 4,981 ) 8,372

Cash and Cash Equivalents - Beginning of period 20,235 52,480

8 unchanged sentences

Common shares issued in exchange for warrants $ — $ 14

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

Settlement of Sysorex Note $ — $ 7,462

Investment in equity securities 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

Noncash net assets distribution to shareholders related to spin-off of CXApp $ 14,227 $ —

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 1 - Organization and Nature of Business

Inpixon is the Indoor Intelligence™ company.

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

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

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

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

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

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

Inpixon customers can leverage our real-time positioning, mapping and analytics technologies to achieve higher levels of productivity and performance, increase safety and security, improve worker and employee satisfaction rates and drive a more connected work environment.

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

Together, our technologies allow organization to create and utilize the digital twin of a physical location and to deliver enhanced experiences in their current environment and in the metaverse.

Inpixon specializes in providing real-time location systems (RTLS) for the industrial sector.

As the manufacturing industry has evolved, RTLS technology has become a crucial aspect of Industry 4.0.

Our RTLS solution leverages cutting-edge technologies such as IoT, AI, and big data analytics to provide real-time tracking and monitoring of assets, machines, and people within industrial environments.

With our RTLS, businesses can achieve improved operational efficiency, enhanced safety, and reduced costs.

By having real-time visibility into operations, industrial organizations can make informed, data-driven decisions, minimize downtime, and ensure compliance with industry regulations.

With our RTLS, industrial businesses can transform their operations and stay ahead of the curve in the digital age.

Inpixon's full-stack industrial IoT solution provides end-to-end visibility and control over a wide range of assets and devices.

It's designed to help organizations optimize their operations and gain a competitive edge in today's data-driven world.

The turn-key platform integrates a range of technologies, including RTLS, sensor networks, edge computing, and big-data analytics, to provide a comprehensive view of an organizations's operations.

We help organizations to track the location and status of assets in real-time, identify inefficiencies, and make decisions that drive business growth.

Our IoT stack covers all the technology layers, from the edge devices to the cloud.

It includes hardware components such as sensors and gateways, a robust software platforms for data management and analysis, and a user-friendly dashboard for real-time monitoring and control.

Our solutions also offer robust security features to help ensure the protection of sensitive data.

Additionally, Inpixon's RTLS provides scalability and flexibility, allowing organizations to easily integrate it with their existing systems and add new capabilities as their needs evolve.

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

• Digital solutions (eTearsheets;

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

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

Enterprise Apps Spin-off and Business Combination

On March 14, 2023, we completed the Enterprise Apps Spin-off and subsequent Business Combination (the "Closing") In connection with the Closing, KINS was renamed CXApp Inc.

(“New CXApp”).

Pursuant to the Transaction Agreements, Inpixon contributed to CXApp cash and certain assets and liabilities constituting the Enterprise Apps Business, including certain related subsidiaries of Inpixon, to CXApp (the “Contribution”).

In consideration for the Contribution, CXApp issued to Inpixon additional shares of CXApp common stock such that the number of shares of CXApp common stock then outstanding equaled the number of shares of CXApp common stock necessary to effect the Distribution.

Pursuant to the Distribution, Inpixon shareholders as of the Record Date received one share of CXApp common stock for each share of Inpixon common stock held as of such date.

Pursuant to the Merger Agreement, each share of Legacy CXApp common stock was thereafter exchanged for the right to receive 0.09752221612415190 of a share of New CXApp Class A common stock (with fractional shares rounded down to the nearest whole share) and 0.3457605844401750 of a share of New CXApp Class C common stock (with fractional shares rounded down to the nearest whole share).

New CXApp Class A common stock and New CXApp Class C common stock are identical in all respects, except that New CXApp Class C common stock is not listed and will automatically convert into New CXApp Class A common stock on the earlier to occur of (i) the 180 th day following the closing of the Merger and (ii) the day that the last reported sale price of New CXApp Class A common stock equals or exceeds $ 12.00

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

per share for any 20 trading days within any 30 -trading day period following the closing of the Merger.

Upon the closing of the Transactions, Inpixon’s existing security holders held approximately 50.0 % of the shares of New CXApp common stock outstanding.

The transaction is expected to be tax-free to Inpixon and its stockholders for U.S.

federal income tax purposes.

On March 15, 2023, New CXApp began regular-way trading on NASDAQ under the ticker symbol “CXAI.” Inpixon continues to trade under the ticker symbol “INPX.”

In accordance with applicable accounting guidance, the results of CXApp are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for all periods presented prior to the completion of the Enterprise Apps Spin-off.

The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

See Note 24 of the Notes to the Condensed Consolidated Statements of Operations for additional information on the Enterprise Apps 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 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.

Interim results for the three months ended March 31, 2023 are not necessarily indicative of the results for the full year ending December 31, 2023.

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, 2022 and 2021 included in the annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 17, 2023.

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 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.

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

See further breakdown in Note 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 (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.

The Company's complete accounting policies are described in Note 2 to the Company's audited consolidated financial statements and notes for the year ended December 31, 2022.

As of March 31, 2023, the Company has a working capital surplus of approximately $ 0.2 million, and cash of approximately $ 15.3 million.

For the three months ended March 31, 2023, the Company had a net loss of approximately $ 17.2 million.

During the three months ended March 31, 2023, the Company used approximately $ 9.5 million of cash for operating activities.

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

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.

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

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

1 unchanged sentence

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

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.

4 unchanged sentences

and other matters that influence our customers spending.

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

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

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 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.

While we have been able to realize growth in the three months ended March 31, 2023 as compared to the same period in 2022, the impact that these global events will have on general economic conditions is continuously evolving and the ultimate impact that they will have on our results of operations continues to remain uncertain.

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

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

The Company's recurring losses and utilization of cash in its operations are indicators of going concern however with the Company's current liquidity position, including $ 15.3 million cash on hand plus the $ 4.1 million raised under the ATM Offering since April 1, 2023, approximately $ 3.8 million in additional funds available under the ATM Offering, and additional financing available to the Company, we believe we have the ability to mitigate such concerns for a period of at least one year from the date these financial statements are issued.

Consolidations

The consolidated financial statements have been prepared using the accounting records of Inpixon, Inpixon GmbH, Inpixon Limited, Nanotron Technologies, GmBh, Intranav GmbH, Inpixon India Limited and Game Your Game, Inc.

The consolidated financial statements also include financial data of Inpixon Canada, Inc., Design Reactor, Inc.

and Inpixon Philippines, Inc.

through March 14, 2023, which is the date those entities were spun off in the Enterprise Apps Spin-off and Business Combination transaction discussed above.

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

Use of Estimates

5 unchanged sentences

• the allowance for credit losses;

• the valuation of loans receivable;

• the valuation of equity securities;

6 unchanged sentences

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

Short-term investments

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

Treasury Bills.

Accrued interest on U.S.

Treasury bills are also classified as short term investment.

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

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

The Company recorded 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 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

3 unchanged sentences

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

The Unrealized loss on equity securities for the three and 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.

The unrealized gain on equity securities for the three months ended March 31, 2023 was approximately $ 0.03 million, and for the three months ended March 31, 2022 was a unrealized loss of approximately $ 1.5 million.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

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.

11 unchanged sentences

Anticipated losses are recognized as soon as they become known.

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

For the three months ended March 31, 2023 and 2022, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

License Revenue Recognition

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

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

17 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 $ 3.7 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 had deferred revenue of approximately $ 1.4 million and $ 1.3 million as of March 31, 2023 and December 31, 2022, respectively, related to cash received in advance for product maintenance services and professional services provided by the Company’s technical staff.

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

6 unchanged sentences

Forfeitures of unvested stock options are recorded when they occur.

The Company incurred stock-based compensation charges of approximately $ 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

The Company incurred stock-based compensation charges of approximately $ 0.3 million and $ 1.5 million for the three months ended March 31, 2023 and 2022, respectively, which are included in general and administrative expenses.

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

2 unchanged sentences

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

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the nine months ended September 30, 2022 and 2021:

For the Nine Months Ended September 30,

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,

Options 341,034 379,418

1 unchanged sentence

Convertible preferred stock 13 1,503,728

Earnout reserve — 147,493

Rights to common stock — 52,513

Total 4,188,156 3,673,286

Preferred Stock

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

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

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

Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain

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)

events not solely within the Company’s control) are classified as temporary equity.

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

3 unchanged sentences

Financial instruments consist of cash and cash equivalents, investments in equity securities, short-term investment, accounts receivable, notes receivable, accounts payable, and short-term debt.

Company determines the estimated fair value of such financial instruments presented in these financial statements using available market information and appropriate methodologies.

The Company determines the estimated fair value of such financial instruments presented in these financial statements using available market information and appropriate methodologies.

These financial instruments, except for short-term debt and investments in equity securities, are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature.

2 unchanged sentences

Recently Issued and Adopted Accounting Standards

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company reviewed recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

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.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

These reclassifications had no material effect on the reported results of operations or cash flows.

The condensed consolidated financial statements included approximately $ 1.1 million of earnings reclassified from controlling accumulated deficit to non-controlling interest.

This reclassification did not effect the Company’s total stockholders’ equity.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 4 - Disaggregation of Revenue

3 unchanged sentences

Revenues consisted of the following (in thousands):

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

2022 2021 2022 2021

For the Three Months Ended March 31,

Recurring revenue

Hardware $ — $ 3 $ — $ 3

Software 1,014 1,051

Professional services — — — 35

Total recurring revenue $ 1,014 $ 1,051

5 unchanged sentences

Total Revenue $ 3,104 $ 2,649

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

2022 2021 2022 2021

For the Three Months Ended March 31,

Revenue recognized at a point in time

1 unchanged sentence

SAVES (1) 393 368

Shoom (1) — — — —

Total $ 2,049 $ 1,188

8 unchanged sentences

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 4 - Disaggregation of Revenue (continued)

to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date, in which revenue is recognized over time.

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

Note 5 – CXApp Acquisition

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

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

On March 3, 2022, the Company issued 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 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 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 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.

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

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

For the Nine Months Ended September 30, 2021

Revenues $ 12,707

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

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

Weighted average common shares outstanding:

Basic and Diluted 1,487,975

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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 ) $ — $ —

Indoor Intelligence GTX 1 — ( 1 ) — —

Nanotron 1,119 — ( 1,035 ) ( 84 ) —

Jibestream 480 — ( 474 ) ( 6 ) —

CXApp 5,066 — ( 5,066 ) — —

Game Your Game 152 — ( 152 ) — —

IntraNav 159 — ( 147 ) ( 12 ) —

Total $ 7,672 $ — $ ( 7,570 ) ( 102 ) $ —

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 5- Goodwill and Intangible Assets

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

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

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

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

Gross Carrying Amount Accumulated Amortization Amount Remaining Weighted Average Useful Life

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

2022 2021 2022 2021

The Company’s significant assumptions in these analyses include, but are not limited to, project revenue, the weighted average cost of capital, the terminal growth rate, derived multiples from comparable market transactions and other market data.

As of March 31, 2023, the Company's cumulative impairment charges are approximately $ 13.5 million with approximately $ 11.6 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.

Intangibles assets at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

March 31, 2023

Gross Amount Accumulated Amortization Spin-Off Net Carrying Amount Remaining Weighted Average Useful Life

IP Agreement $ 165 $ ( 103 ) $ — $ 62 1.50

Trade Name/Trademarks 1,792 ( 306 ) ( 1,367 ) 119 3.75

Customer Relationships 6,211 ( 843 ) ( 4,454 ) 914 2.61

Developed Technology 14,772 ( 1,690 ) ( 11,466 ) 1,616 4.97

Non-compete Agreements 1,837 ( 534 ) ( 1,204 ) 99 0.49

Totals $ 24,777 $ ( 3,476 ) $ ( 18,491 ) $ 2,810

December 31, 2022

Gross Amount Accumulated Amortization Impairment Spin-Off Net Carrying Value

IP Agreement $ 162 $ ( 91 ) $ — $ — $ 71

Trade Name/Trademarks 3,590 ( 1,414 ) ( 593 ) ( 1,458 ) 125

Webstores & Websites 404 ( 258 ) ( 146 ) — —

4 unchanged sentences

Amortization Expense:

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.

Amortization expense from continuing operations for the three months ended March 31, 2023 and 2022 was approximately $ 0.2 million and $ 0.7 million respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 7- Goodwill and Intangibles (continued)

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 5 - Goodwill and Intangible Assets (continued)

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

3 unchanged sentences

December 31, 2026 413

December 31, 2027 326

December 31, 2028 and thereafter 151

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 6 - Inventory

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

Inventory as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

As of March 31, 2023 As of December 31, 2022

Raw materials $ 376 $ 351

5 unchanged sentences

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

As of September 30, 2022

As of March 31, 2023

Cost Fair Value

3 unchanged sentences

Total investments in equity securities- fair value $ 65,301 $ 364

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.

For the three months ended March 31, 2023 and 2022, the Company recognized a net unrealized gain on equity securities of $ 0.03 million and an unrealized loss of $ 1.5 million, respectively, in the other income/expense section of the condensed consolidated statements of operations.

On April 27, 2022, the Company purchased a 10 % convertible note in aggregate principal amount of approximately $ 6.1 million for a purchase price of $ 5.5 million 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”).

7 unchanged sentences

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 NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

The Company recognized an unrealized gain on conversion of $ 0.8 million recognized in the income statement for the year ended December 31, 2022.

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.

The fair value was determined by the closing trading price of the security as of March 31, 2023.

The Company recognized an unrealized gain on FOXO common stock of $ 0.03 million and zero on the income statement for the three months ended March 31, 2023 and 2022, respectively.

Note 8 - Other Long Term Investments

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

In 2020, the Company paid $ 1.8 million for 599,999 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).

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 entered into the Business Combination (see “Enterprise Apps Spin-off and Business Combination” under Note 1 above and “Recent Events - Enterprise Apps Spin-off and Business Combination” 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.

3 unchanged sentences

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 September 30, 2022, CVH had no operating results as CVH is a holding company.

During the period January 1, 2021 to December 31, 2021 and January 1, 2022 to March 31, 2023, 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 September 30, 2022:

Ownership interest as of September 30,

The following component represents components of Other long-term investments as of March 31, 2023:

Ownership interest as of March 31, Ownership interest as of December 31,

2023 2022 Instrument Held

1 unchanged sentence

CVH Class B 38.4 % 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.

Inpixon’s investment in equity method eligible entities are represented on the balance sheet as an asset of approximately $ 0.1 million as of March 31, 2023 and approximately $ 0.7 million as of December 31, 2022.

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

2 unchanged sentences

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.

As a result of the closing of the Business Combination, on March 15, 2023, the $ 150,000 loan was repaid.

On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees and directors (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020.

The Company recorded approximately $ 0.7 million of compensation expense for the fair market value of the shares transferred to the Transferees which is included in the operating expenses section of the condensed consolidated statements of operations in the quarter ended March 31, 2023.

Note 9 - Accrued Liabilities

Accrued liabilities as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

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

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

As of March 31, 2023 As of December 31, 2022

Accrued compensation and benefits $ 1,354 $ 655

1 unchanged sentence

Accrued bonus and commissions 381 426

Accrued transaction costs 2,075 —

Accrued other 855 105

2 unchanged sentences

Note 10 - Debt

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

Debt as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

Short-Term Debt Maturity March 31, 2023 December 31, 2022

March 2020 10 % Note

3/18/2023 $ — $ —

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

July 2022 Promissory Note, less debt discount of $ 398 and $ 760 , respectively.

7/22/2023 6,776 6,045

December 2022 Promissory Note , less debt discount of $ 1,409 and $ 1,880 , respectively.

12/30/2023 6,992 6,520

Third Party Note Payable 6/30/2023 1,203 1,078

Total Short-Term Debt $ 14,971 $ 13,643

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.

Interest expense on the short-term debt totaled approximately $ 1.7 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, 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

10 unchanged sentences

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

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

The March 2020 10 % Note

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 10- 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.

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

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

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

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

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 1.5 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 1.5 million;

and (ii) exchange the partitioned note for the delivery of 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 nine months ended September 30, 2021.

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

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

and (ii) exchange the partitioned note for the delivery of 11,696 shares of the Company’s common stock, at an effective price per share equal to $ 85.50 .

On February 1, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.5 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.5 million;

and (ii) exchange the partitioned note for the delivery of 15,889 shares of the Company’s common stock, at an effective price per share equal to $ 31.47 .

On February 18, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.4 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.4 million;

and (ii) exchange the partitioned note for the delivery of 12,885 shares of the Company’s common stock, at an effective price per share equal to $ 27.17 .

On March 15, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.7 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.7 million;

and (ii) exchange the partitioned note for the delivery of 28,698 shares of the Company’s common stock, at an effective price per share equal to $ 22.65 .

Effective as of March 16, 2022, we entered into a third amendment (the “Third Amendment”) to the Original Note which was accounted for as a modification.

Pursuant to the terms of the Third Amendment, the maturity date of the Original Note was extended from March 18, 2022 to March 18, 2023 (the “Maturity Date Extension”).

In exchange for the Maturity Date Extension, we agreed to pay a 2 % extension fee in the amount of approximately $ 56,860 (the “Extension Fee”), which was added to the outstanding balance of the Original Note.

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

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 .

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

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to approximately $ 0.3 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.3 million;

and (ii) exchange the partitioned note for the delivery of 19,806 shares of the Company’s common stock, at an effective price per share equal to $ 12.75 .

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 17, 2020, the Company amended the one time monitoring fee applicable in the event the note was outstanding on the date that was 6 months from the issuance date, from 10 % to 5 %.

The monitoring fee of approximately $ 0.3 million was added to the March 2020 10 % Note balance as of that date.

On March 17, 2021, the Company extended the maturity date of the March 2020 10 % Note from March 18, 2021 to March 18, 2022 for which the Company agreed to pay an extension fee of approximately $ 0.1 million which was added to the outstanding balance of the March 2020 10 % Note.

Effective as of March 16, 2022, we entered into a third amendment (the “Third Amendment”) to the March 2020 10 % Note which was accounted for as a modification.

Pursuant to the terms of the Third Amendment, the maturity date of the March 2020 10 % Note was extended from March 18, 2022 to March 18, 2023 (the “Maturity Date Extension”).

In exchange for the Maturity Date Extension, we agreed to pay a 2 % extension fee in the amount of approximately $ 0.1 million (the “Extension Fee”), which was added to the outstanding balance of the March 2020 10 % Note.

During the year ended December 31, 2022, the Company entered into exchange agreements with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition new promissory notes in the form of the March 2020 10 % Note equal to approximately $ 3.7 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 3.7 million;

and (ii) exchange the partitioned notes for the delivery of 287,802 shares of the Company’s common stock, at effective prices between $ 4.78 and $ 31.47 per share.

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 .

During the quarter ended March 31, 2023, the Company entered into exchange agreements with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition new promissory notes in the form of the March 2020 10 % Note equal to approximately $ 0.9 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.9 million;

and (ii) exchange the partitioned note for the delivery of 611,258 shares of the Company's common stock at effective prices between $ 1.09 and $ 1.68 per share.

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”).

On July 22, 2022, the Company entered into a note purchase agreement (the "Purchase Agreement") with Streeterville Capital, LLC (the “Holder” or "Streeterville"), pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note (the “July 2022 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.

1 unchanged sentence

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

We may pay all or any portion of the amount owed earlier than it is due;

provided that in the event we may elect to prepay all or any portion of the outstanding balance, it shall pay to the Holder 115 % of the portion of the outstanding balance we may elect to prepay.

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.

The July 2022 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 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 July 2022 Note to be immediately due and payable.

Upon the occurrence of bankruptcy-related event of default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the July 2022 Note will become immediately due and payable at the mandatory default amount.

Under the terms of the July 2022 Note, if the note is still outstanding after 6 months from the issuance date, or as of January 22, 2023, a 10 % monitoring fee would be added to the balance of the note.

On January 31, 2023, the Holder agreed to reduce the one time monitoring fee from 10 % to 5 %.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 10- 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.

During the quarter ended March 31, 2023, the Company entered into exchange agreements with Streeterville, pursuant to which the Company and Streeterville agreed to:

(i) partition new promissory notes in the form of the July 2022 Note equal to approximately $ 0.5 million and then cause the outstanding balance of the July 2022 Note to be reduced by approximately $ 0.5 million;

and (ii) exchange the partitioned notes for the delivery of 935,976 shares of the Company’s common stock, at effective prices between $ 0.37 and $ 0.915 per share.

The Company analyzed the exchange of the principal under the July 2022 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 there was no loss on the exchange for debt for equity.

December 2022 Note Purchase Agreement and Promissory Note

On December 30, 2022, we entered into a note purchase agreement with Streeterville Capital, LLC (the "Holder"), pursuant to which we agreed to issue and sell to the Holder an unsecured promissory note (the "December 2022 Note") in an aggregate initial principal amount of $ 8.4 million, which is payable on or before the date that is 12 months from the issuance date.

The initial principal amount of includes an original issue discount of $ 1.9 million and $ 0.02 million that we 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 $ 6.5 million.

Interest on the December 2022 Note accrues at a rate of 10 % per annum and is payable on the maturity date or otherwise in accordance with the December 2022 Note.

We may pay all or any portion of the amount owed earlier than it is due;

provided that in the event we may elect to prepay all or any portion of the outstanding balance, it shall pay to the Holder 115 % of the portion of the outstanding balance we may elect to prepay.

Beginning on the date that is 6 months from the issuance date and at the intervals indicated below until the December 2022 Note is paid in full, the Holder shall have the right to redeem up to an aggregate of 1/6th of the initial principal balance of the December 2022 Note plus any interest accrued thereunder each month by providing written notice delivered to us;

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

Upon receipt of any monthly redemption notice, we shall pay the applicable monthly redemption amount in cash to the Holder within five (5) business days of the Company's receipt of such monthly redemption notice.

The December 2022 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 bankruptcy-related event of default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the December 2022 Note will become immediately due and payable at the mandatory default amount.

Third Party Note Payable

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.

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 26, 2022, approximately $ 0.1 million on September 16, 2022, approximately $ 0.1 million on October 26, 2022, approximately $ 0.1 million on November 29, 2022, approximately $ 0.1 million on December 22, 2022, approximately $ 0.03 million on January 18, 2023 and approximately $ 0.1 million on March 30, 2023 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 June 30, 2023.

As of March 31, 2023, the balance owed under the notes was $ 1.2 million.

Note 11 - 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, 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 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.

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.

On March 22, 2022, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which the Company sold in a registered direct offering (i) 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 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.

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

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

Each share of Series 8 Convertible Preferred Stock has

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 11- Capital Raises (continued)

the Company’s common stock.

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

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

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

The Series 7 Convertible Preferred Stock and related warrants subject to forfeiture are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash and the warrants are an embedded feature for the Series 7 Convertible Preferred Stock.

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.

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

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

a par value of $ 0.001 per share and stated value of $ 1,000 per share.

The shares of Series 8 Convertible Preferred Stock are convertible into shares of the Company’s common stock, at a conversion price of $ 35.38 per share.

7 unchanged sentences

See Note 1 3 for Preferred Stock and Note 15 for Warrant details.

During the quarter ended December 31, 2022, the Company received cash redemption notices from the holders of the Series 8 Convertible Preferred Stock issued on March 22, 2022, totaling 53,197.72 shares of Series 8 Convertible Preferred Stock for aggregate cash paid of approximately $ 53.2 million which were therefore fully redeemed.

In conjunction with the redemption, 751,841 warrants were forfeited.

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.

3 unchanged sentences

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

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

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

During the quarter ended March 31, 2023, the Company sold 9,655,207 shares of common stock at share prices between $ 1.15 and $ 1.86 per share under the Sales Agreement for gross proceeds of approximately $ 15.4 million or net proceeds of $15.0 million after deducting the placement agency fees and other offering expenses.

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 additional 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 is currently subject to the SEC’s “baby shelf rules,” which prohibit companies with a public float of less than $75 million from issuing securities under a shelf registration statement in excess of one-third of such company’s public float in a 12-month period.

These rules may limit future issuances of shares by the Company under the Sales Agreement or other offerings pursuant to the Company’s effective shelf registration statement on Form S-3.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 12 - 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 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.

On March 3, 2022, the Company issued 144,986 shares of common stock to the sellers of the CXApp in connection with the satisfaction of an earnout payment.

During the three months ended March 31, 2022, the Company issued 57,472 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.5 million under partitioned notes.

During the three months ended June 30, 2022, the Company issued 35,062 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 0.5 million under partitioned notes.

During the three months ended March 31, 2023, the Company issued 1,547,234 shares of common stock under exchange agreements to settle outstanding balance and interest totaling approximately $ 1.4 million under partitioned notes.

See Note 10 .

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.

During the three months ended March 31, 2023, the Company issued 9,655,207 shares of common stock in connection with the ATM Offering at per share prices between $ 1.15 and $ 1.86 , resulting in gross proceeds to the Company of approximately $ 15.4 million and net proceeds of $ 15.0 million after subtracting sales commissions and other offering expenses.

Se e Note 11 .

During the three months ended March 31, 2023, the Company issued 1,380,000 shares of common stock in connection with the exercise of 1,380,000 pre-funded warrants at $ 0.001 per share in connection with the October 2022 registered direct offering.

During the three months ended March 31, 2023, the Company issued 324,918 shares of common stock in connection with a warrant amendment to exchange all of the then outstanding September 2021 warrants and March 2022 warrants.

See Note 15 .

Note 1 3 - 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 September 30, 2022, there was 1 share of Series 4 Preferred outstanding.

As of March 31, 2023, 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 September 30, 2022, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

As of March 31, 2023, 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

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

The Series 7 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 7 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 93.75 .

On September 13, 2021, the Company entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell in a registered direct offering (i) up to 58,750 shares of Series 7 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 626,667 shares of common stock (the “Warrants”).

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

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

The shares of Series 7 Convertible Preferred Stocks were recorded as Mezzanine Equity as the holder has the option to redeem these shares for cash.

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

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 13- Preferred Stock (continued)

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

As of March 31, 2023, there were zero shares of Series 7 Convertible Preferred Stock outstanding.

Series 8 Convertible Preferred Stock

On March 22, 2022, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada, amending the Company’s Articles of Incorporation, as amended, by establishing the Series 8 Convertible Preferred Stock, consisting of 53,197.7234 authorized shares, $ 0.001 par value per share and $ 1,000 stated value per share.

The holders of the Series 8 Convertible Preferred Stock have full voting rights and powers, except as otherwise required by the Articles of Incorporation, as amended, or applicable law.

The holders of Series 8 Convertible Preferred Stock are entitled to vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company.

Each holder of the Series 8 Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the Series 8 Convertible Preferred Stock then held by such holder could be converted on the record date for the vote which is being taken, provided, however, that the voting power of a holder together with its Attribution Parties (as defined in the Certificate of Designation), may not exceed 19.99 % (or such greater percentage allowed by the Nasdaq Listing Rules without any shareholder approval requirements).

The Series 8 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 8 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 35.38 .

On March 22, 2022, the Company entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell in a registered direct offering (i) up to 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 1,503,726 shares of common stock (the “Warrants”).

Each share of Series 8 Convertible Preferred Stock and the related Warrants (see Note 15) were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value for an aggregate subscription amount of $ 50.0 million.

The shares of Series 8 Convertible Preferred Stocks are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash.

The aggregate net proceeds from the

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The shares of Series 8 Convertible Preferred Stocks were recorded as Mezzanine Equity 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.

As of March 31, 2023, there were zero shares of Series 8 Convertible Preferred Stock outstanding.

Note 14 - Stock Award Plans and Stock-Based Compensation

6 unchanged sentences

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

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

The aggregate number of shares that may be awarded under the 2018 Plan as of March 31, 2023 is 52,000,000 .

As of March 31, 2023, 341,034 of stock options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 57 shares under our 2011 Plan) and 49,330,234 options were available for future grant under the 2018 Plan.

Employee Stock Options

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.

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

The fair value of the common stock as of the grant date was determined to be $ 137.25 per share.

On February 5, 2021, the Company issued 67 shares of common stock in connection with the cashless exercise of 195 employee stock options.

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 three months ended March 31, 2023 and 2022, the Company recorded a charge for the amortization of stock options of approximately $ 0.3 million and $ 0.9 million, respectively, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of March 31, 2023, the fair value of non-vested stock options totaled approximately $ 1.7 million, which will be amortized to expense over the weighted average remaining term of 1.09 years.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 14 - Stock Award Plans and Stock-Based Compensation (continued)

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 — ( 8,727 ) — ( 8,727 )

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 nine months ended September 30, 2022 were as follows:

For the Nine Months Ended September 30, 2022

Risk-free interest rate 1.50 %

Expected life of option grants 5 years

Expected volatility of underlying stock 37.24 %

Dividends assumption - -

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

Ending balance as of March 31, 2023 57 340,976 1 341,034

The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model, however there were no stock option grants during the three months ended March 31, 2023.

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

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

3 unchanged sentences

Restricted Stock Awards

On February 19, 2021, the Company granted 70,000 restricted stock awards to employees of the Company.

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

In accordance with the terms of the restricted stock award agreements 12,291 shares of common stock underlying the awards were withheld by the Company in satisfaction of the employee portion of the payroll taxes required to paid in connection with the grant of such awards.

On April 23, 2021, the Company granted 4,598 restricted stock awards to employees of the Company.

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

During the three months ended March 31, 2023 and 2022, the Company recorded a charge of $ 0.02 million and $ 0.7 million, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock based award activity granted:

1 unchanged sentence

Beginning balance as of January 1, 2023 42,968

Forfeited ( 12,802 )

Ending balance as of September 30, 2022 42,968

Ending balance as of March 31, 2023 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.

1 unchanged sentence

Note 15 - Warrants

On January 24, 2021, Inpixon entered into a securities purchase agreement (the "January 2021 Purchase Agreement") with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 77,334 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 258,065 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 116.25 per share.

The Purchase Warrants have an exercise price of $ 116.25 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 Investor pre-funded warrants to purchase up to 40,000 shares of common stock (the “Pre-Funded Warrants” and, together with the 77,334 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

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

The purchase price of each Pre-Funded Warrant is $ 116.18 , and the exercise price of each Pre-Funded Warrant is $ 0.08 per share.

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

During the year ended December 31, 2021, the Company issued 180,732 shares of common stock in connection with the exercise of 180,732 Pre-Funded Warrants at $ 0.08 per share in connection with the January 2021 Purchase Agreement.

On February 12, 2021, Inpixon entered into a securities purchase agreement (the "February 12, 2021 Securities Purchase Agreement") with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 93,334 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 200,000 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 150.00 per share.

The Purchase Warrants have an exercise price of $ 150.00 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Investor pre-funded warrants to purchase up to 106,667 shares of common stock (the “Pre-Funded Warrants” and, together with the 93,334 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

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

The purchase price of each Pre-Funded Warrant is $ 149.93 , and the exercise price of each Pre-Funded Warrant is $ 0.08 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 18 - Warrants (continued)

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.

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 Investor pre-funded warrants to purchase up to 92,670 shares of common stock in lieu of shares of common stock at the Investor’s election.

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

The purchase price of each Pre-Funded Warrant is $ 150.68 , and the exercise price of each Pre-Funded Warrant is $ 0.08 per share.

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

During the year ended December 31, 2021, the Company issued 92,670 shares of common stock in connection with the exercise of 92,670 pre-funded warrants at $ 0.08 per share in connection with the February 16, 2021 Securities Purchase Agreement.

On September 13, 2021, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 58,750 shares of the Company’s Series 7 Convertible Preferred Shares, par value $ 0.001 per share, which are convertible into 626,667 shares of the Company’s common stock and warrants to purchase up to 626,667 shares of common stock.

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

5 unchanged sentences

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 15 - Warrants (continued)

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

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

394,000 corresponding warrants issued in connection with the issuance of the Series 7 Convertible Preferred Stock been forfeited and 232,675 related warrants remain outstanding.

394,000 corresponding warrants issued in connection with the issuance of the Series 7 Convertible Preferred Stock have been forfeited and 232,675 related warrants remain outstanding.

On March 22, 2022, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 53,197.7234 shares of the Company’s Series 8 Convertible Preferred Shares, par value $ 0.001 per share, and warrants to purchase up to 1,503,726 shares of common stock.

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

Warrant Amendments

On February 28, 2023, the Company entered into warrant amendments (the “Warrant Amendments”) with certain holders (each, including its successors and assigns, a “Holder” and collectively, the “Holders”) of (i) those certain Common Stock Purchase Warrants issued by the Company in April 2018 (the “April 2018 Warrants”) pursuant to the registration statement on Form S-3 (File No.

333-204159), (ii) those certain Common Stock Purchase Warrants issued by the Company in September 2021 (the “September 2021 Warrants”) pursuant to the registration statement on Form S-3 (File No.

333-256827), and (iii) those certain Common Stock Purchase Warrants issued by the Company in March 2022 (the “March 2022 Warrants” and together with the April 2018 Warrants and the September 2021 Warrants, the “Existing Warrants”) pursuant to the registration statement on Form S-3 (File No.

Pursuant to the Warrant Amendments, the Company and the Holders have agreed to amend (i) the September 2021 Warrants and the March 2022 Warrants to provide that all of such outstanding warrants shall be automatically exchanged for shares of common stock of the Company, at a rate of 0.33 shares of Common Stock (the “Exchange Shares”) for each September 2021 Warrant or March 2022 Warrant, as applicable, and (ii) the April 2018 Warrants to remove the obligation of the Company to hold the portion of a Distribution (as defined in the April 2018 Warrants) in abeyance in connection with the Beneficial Ownership Limitation (as defined in the April 2018 Warrants).

In connection with the exchange of 232,675 September 2021 Warrants and 751,867 March 2022 Warrants, which were all of the then outstanding of those warrants as of the effective date of the Warrant Amendments, the Company issued 76,794 Exchange Shares and 248,124 Exchange Shares, respectively, resulting in the issuance of 324,918 Exchange Shares in the aggregate.

The Company accounted for the exchange as a warrant modification.

The Company determined the fair value of the Existing Warrants as if issued on the Warrant Amendment date and compared that to the fair value of the common stock issued for the Exchange Shares.

The Company calculated the fair value of the Existing Warrants using a Black-Scholes Option pricing model and determined it to be approximately $0.6 million.

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

The total fair value of the Existing Warrants prior to modification was greater than the fair value of the Exchange Shares issued, and therefore, there was no incremental fair value related to the Warrant Amendments.

Note 16- Income Taxes

There is an income tax expense of approximately $ 2.5 million and $ 0.0 million for the three months ended March 31, 2023 and 2022, respectively.

The income tax expense in the three months ended March 31, 2023 includes a $ 2.6 million deferred tax expense to increase the valuation allowance, which is offset by a current tax benefit of $ 0.1 million, due to the Enterprise Apps Spin-off.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 17 - 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 and Philippines subsidiaries.

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

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

Cash in foreign financial institutions as of March 31, 2023 and December 31, 2022 was immaterial.

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

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.

During the three months ended March 31, 2023 and 2022, three customers and one customer accounted for at least 10% of revenue, respectively.

As of March 31, 2023, three customers represented approximately 49 % of total accounts receivable.

As of March 31, 2022, one customer represented approximately 11 % of total accounts receivable.

As of March 31, 2023, one vendor represented approximately 21 % of total gross accounts payable.

Purchases from these vendors during the three months ended March 31, 2023 was approximately $ 0.4 million.

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

Purchases from these vendors during the three months ended March 31, 2022 was approximately $ 0.8 million.

For the three months ended March 31, 2023, one vendor represented approximately 21 %, and one vendor represented approximately 10 % of total purchases.

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

Note 18 - Segments

The Company’s operations consist of three reportable segments based on similar economic characteristics, the nature of products and production processes, end-use markets, channels of distribution, and regulatory environments:

Indoor Intelligence, SAVES, and Shoom.

During the second quarter of 2021, the Company changed the level of detail at which its Chief Executive Officer (“CEO”) acting as the Chief Operating Decision Maker, or “CODM”) regularly reviews and manages certain of its businesses, resulting in the bifurcation of its former one segment into three standalone reportable segments:

Indoor Intelligence, SAVES, and Shoom.

The Company now manages and reports its operating results through these three reportable segments.

This change allows the Company to enhance its customer focus and better align its business models, resources, and cost structure to the specific current and future growth drivers of each business, while providing increased transparency to the Company’s shareholders.

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

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

The Company completed the Enterprise Apps Spin-off during the three months ended March 31, 2023.

Design Reactor was entirely part of the Indoor Intelligence business segment.

As a result, the Company met the requirements of ASC 205-20 to report the results of the Design Reactor business as discontinued operations.

The operating results for Design Reactor have been reclassified to discontinued operations and are no longer reported in the Indoor Intelligence business segment.

See Note 24 for further details.

There were no changes to the Company's reportable segments as result of the Enterprise Apps Spin-off.

Gross profit is the primary measure of segment profitability used by the Company’s Chief Operating Decision Maker ("CODM").

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 20 - Credit Risk and Concentrations (continued)

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

2022 2021 2022 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 18 - Segments (continued)

For the Three Months Ended March 31,

Revenue by Segment

12 unchanged sentences

Shoom 229 180

Income (loss) from operations by Segment $ ( 10,393 ) $ ( 12,456 ) $ ( 40,347 ) $ ( 38,169 )

Loss from operations by Segment $ ( 8,182 ) $ ( 9,237 )

The reporting package provided to the Company's CODM does not include the measure of assets by segment as that information isn't reviewed by the CODM when assessing segment performance or allocating resources.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 19 - 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 September 30, 2022 and December 31, 2021:

Fair Value at September 30, 2022

The Company's assets measured at fair value consisted of the following at March 31, 2023 and December 31, 2022:

Fair Value at March 31, 2023

Total Level 1 Level 2 Level 3

Short-term investments $ — $ — $ — $ —

Investments in equity securities 364 353 — 11

Investments in debt securities — — — —

Total assets $ 364 $ 353 $ — $ 11

1 unchanged sentence

Total Level 1 Level 2 Level 3

Short-term investments $ 43,125 $ 43,125 $ — $ —

Investments in equity securities 330 319 — 11

1 unchanged sentence

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value.

Short-term investments represent U.S.

treasury bills with maturities greater than three months.

The fair value of the U.S.

treasury bills are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy.

The market for U.S.

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

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.

2 unchanged sentences

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 Nine Months Ended September 30, 2022:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Level 3 Investments

Balance at January 1, 2022 $ 1,838

Transfers in - FOXO Technologies, Inc.

convertible note 6,050

FOXO Technologies, Inc.

- Original issue discount ( 550 )

FOXO Technologies, Inc.

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

Unrealized loss on equity securities ( 1,791 )

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:

The Company noted that there was no change in Level 3 instruments for which significant unobservable inputs were used to determine fair value for the three months ended March 31, 2023.

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the three months ended March 31, 2023:

Level 3 Investments

Balance at January 1, 2023 $ 11

Transfers in- Sysorex Securities Settlement Agreement

Benefit (provision for valuation allowance on related party loan - held for sale 7,461

Interest income (expense), net 1,627

Gain on related party loan held for sale 49,817

Unrealized loss on equity securities —

Balance at September 30, 2021 $ 7,655

Balance at March 31, 2023 $ 11

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 20 - Foreign Operations

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

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

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

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

States Canada India Germany United Kingdom Ireland Philippines Eliminations Total

For the Three Months Ended September 30, 2022:

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

Operating (loss) income by geographic area $ ( 7,562 ) $ ( 1,401 ) $ 65 $ ( 1,334 ) $ 16 $ ( 139 ) $ ( 60 ) $ 22 $ ( 10,393 )

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

For the Three Months Ended September 30, 2021:

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

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

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

For the Nine months ended September 30, 2022:

States Canada India Germany United Kingdom Ireland Eliminations Total

For the Three months ended March 31, 2023:

Revenues by geographic area $ 1,915 $ — $ 500 $ 1,155 $ 90 $ 1 $ ( 557 ) $ 3,104

Operating (loss) income by geographic area $ ( 7,364 ) $ — $ 104 $ ( 830 ) $ ( 4 ) $ ( 89 ) $ 1 $ ( 8,182 )

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

For the Nine Months Ended September 30, 2021:

Net (loss) income from continuing operations by geographic area $ ( 11,532 ) $ — $ 104 $ ( 802 ) $ ( 4 ) $ ( 89 ) $ 1 $ ( 12,322 )

For the Three Months Ended March 31, 2022:

Revenues by geographic area $ 1,543 $ — $ 126 $ 948 $ 118 $ 4 $ ( 90 ) $ 2,649

Operating (loss) income by geographic area $ ( 7,670 ) $ — $ 39 $ ( 1,418 ) $ 13 $ ( 201 ) $ — $ ( 9,237 )

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

As of September 30, 2022:

Net (loss) income from continuing operations by geographic area $ ( 9,271 ) $ — $ 39 $ ( 1,373 ) $ 13 $ ( 201 ) $ 10 $ ( 10,783 )

As of March 31, 2023:

Identifiable assets by geographic area $ 49,052 $ — $ 704 $ 20,224 $ 295 $ 14 $ ( 40,382 ) $ 29,907

Long lived assets by geographic area $ 2,547 $ — $ 24 $ 3,084 $ 1 $ 3 $ — $ 5,659

Goodwill by geographic area $ — $ — $ — $ — $ — $ — $ — $ — $ —

As of December 31, 2022:

1 unchanged sentence

Long lived assets by geographic area $ 2,538 $ — $ 3 $ 3,308 $ 1 $ 4 $ — $ 5,854

Goodwill by geographic area $ 5,914 $ 480 $ — $ 1,278 $ — $ — $ — $ — $ 7,672

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 21 - Related Party Transactions

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

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

In addition, Nadir Ali previously entered into a consulting agreement with Sysorex, pursuant to which he agreed to provide certain business services specified in the agreement for the benefit of Sysorex in exchange for shares of Sysorex's common stock.

The consulting agreement was terminated on October 14, 2021.

Sysorex Note Purchase Agreement

On December 31, 2018, the Company and Sysorex entered into a note purchase agreement (the “Note Purchase Agreement”) pursuant to which the Company agreed to purchase from Sysorex at a purchase price equal to the Loan Amount (as defined below), a secured promissory note (the “Secured Note”) for up to an aggregate principal amount of $ 3 million (the “Principal Amount”), including any amounts advanced through the date of the Secured Note (the “Prior Advances”), to be borrowed and disbursed in increments (such borrowed amount, together with the Prior Advances, collectively referred to as the “Loan Amount”), with interest to accrue at a rate of 10 % percent per annum on all such Loan Amounts, beginning as of the date of disbursement with respect to any portion of such Loan Amount.

In addition, Sysorex agreed to pay $ 20,000 to the Company to cover the Company’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Secured Note (the “Transaction Expense Amount”), all of which amount is included in the Principal Amount.

Sysorex may borrow repay and borrow under the Secured Note, as needed, for a total outstanding balance, exclusive of any unpaid accrued interest, not to exceed the Principal Amount at any one time.

All sums advanced by the Company to the Maturity Date (as defined below) pursuant to the terms of the Note Purchase Agreement will become part of the aggregate Loan Amount underlying the Secured Note.

All outstanding principal amounts and accrued unpaid interest owing under the Secured Note shall become immediately due and payable on the earlier to occur of (i) 24 month anniversary of the date the Secured Note is issued (the “Maturity Date”), (ii) at such date when declared due and payable by the Company upon the occurrence of an Event of Default (as defined in the Secured Note), or (iii) at any such earlier date as set forth in the Secured Note.

All accrued unpaid interest shall be payable in cash.

On February 4, 2019, April 2, 2019, and May 22, 2019, the Secured Note was amended to increase the Principal Amount from $ 3 million to $ 5 million, $ 5 million to $ 8 million and $ 8 million to $ 10 million, respectively.

On March 1, 2020, the Company extended the maturity date of the Secured Note to December 31, 2022.

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

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

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

During the year ended December 31, 2020, an additional amount of approximately $ 2.6 million was advanced under the Secured Note and approximately $ 200,000 was repaid.

The amount owed for principal as of December 31, 2020 and accrued interest through September 30, 2019 by Sysorex to the Company as of December 31, 2020 was approximately $ 7.7 million.

These amounts excludes $ 275,000 of additional interest that the Company is contractually entitled to accrue from October 1, 2019 through December 31, 2019 and approximately $ 1.1 million of additional interest from January 1, 2020 through December 31, 2020 in accordance with the terms of the Sysorex Note, but did not accrue due to the uncertainty of repayment.

During the three months ended March 31, 2020 an additional $ 117,000 was advanced under the Secured Note and the Company was entitled to an additional $ 251,806 of interest in accordance with the terms of the Note, but did not accrue due to the uncertainty of repayment.

An additional $ 1 million of the principal balance under the Secured Note was assigned to Systat on March 19, 2021, as the final portion of the total consideration due in connection with the license.

As of April 14, 2021, the Sysorex Note Purchase Agreement was settled, see Sysorex Securities Settlement Agreement below.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 23 - Related Party Transactions (continued)

Sysorex Receivable

On February 20, 2019, the Company, Sysorex and Atlas Technology Group, LLC (“Atlas”) entered into a settlement agreement resulting in a net award of $ 941,796 whereby Atlas agreed to accept an aggregate of 16,655 shares of freely-tradable common stock of the Company in full satisfaction of the award.

The Company and Sysorex each agreed pursuant to the terms and conditions of that certain Separation and Distribution Agreement, dated August 7, 2018, as amended, that 50 % of the costs and liabilities related to the arbitration action would be shared by each party following the Spin-off.

As a result, Sysorex owes the Company $ 0.6 million for the settlement plus the interest accrued during the fiscal year ended December 31, 2020 of $ 0.1 million..

The total owed to the Company for this settlement as of December 31, 2021 and 2020 was $ 0 and $ 0.6 million, respectively.

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

As of April 14, 2021, the Sysorex Receivable was settled, see Sysorex Securities Settlement Agreement below.

Sysorex Securities Settlement Agreement

On April 14, 2021, the Company entered into a Securities Settlement Agreement (the “SSA”) and a Rights Letter Agreement (the “RLA”), each with Sysorex, whereby Sysorex agreed to satisfy in full its outstanding debt, in the aggregate amount of $ 9,088,176 as of March 31, 2021, owed to the Company under that certain secured promissory note, originally dated December 31, 2018, as amended from time to time, and in connection with that certain settlement agreement, dated February 20, 2019, by and among the Company, Sysorex and Atlas Technology Group, LLC (the “Debt Settlement”).

To effect the Debt Settlement, Sysorex agreed to issue to the Company (i) pursuant to the terms of the SSA, 12,972,189 shares of its common stock, $ 0.00001 par value per share, and (ii) rights to acquire 3,000,000 additional shares of its common stock pursuant to the terms of the RLA.

The Debt Settlement was entered into in connection with Sysorex’s closing of a reverse triangular merger with TTM Digital Assets & Technologies, Inc.

The Company recorded $ 7.5 million for the release of the previously recorded valuation allowance, $ 1.6 million of interest income, and a gain on settlement of $ 49.8 million equal to the difference in the carry value of the promissory note, including interest and value of the common stock and rights to acquire additional shares received in the settlement.

In connection with the Debt Settlement, the Company also entered into a Registration Rights Agreement, dated as of April 14, 2021 (the “RRA”), with Sysorex and certain other shareholders of Sysorex (the “Holders”).

Pursuant to the terms of the RRA, Sysorex must, subject to certain limitations, register the resale of the shares of common stock held by the Company and the Holders, with the U.S.

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

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

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

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

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

Systat License Agreement

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Note 23 - Related Party Transactions (continued)

Cardinal Venture Holdings Investment

5 unchanged sentences

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

Director Services Agreement

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

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

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

The $ 150,000 loan was repaid on March 15, 2023.

Reimbursable Expenses from New CXApp

In connection with the closing of the Enterprise Apps Spin-off and Business Combination and the terms of the Merger Agreement, New CXAPP was obligated to reimburse the Company for certain transaction expenses related to the Business Combination.

As of March 31, 2023, New CXApp owed the Company approximately $ 1.3 million for reimbursable transaction expenses which is included in the prepaid and other current assets line of the condensed Consolidated Balance Sheets.

During the three months ended March 31, 2023, the Company incurred approximately $ 0.08 million in reimbursable expenses payable in connection with the terms and conditions of the Transition Services Agreement, which is included in other receivables on the Company’s Condensed Consolidated Balance Sheets.

This amount was repaid in April 2023.

Note 22 - Leases

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

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

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

The monthly lease rate is $ 2,642 and $ 1,031 per month.

The Company extended the office lease for six months , expiring on July 31, 2023.

The monthly lease rate is $ 5,776 per month.

As part of the acquisition of IntraNav on December 9, 2021.

3 unchanged sentences

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

The Company early terminated one of its administrative offices in Hyderabad, India which generated an immaterial gain on lease termination which is included in the operating expenses section of the Condensed Consolidated Statements of Operations.

The Company has no other operating or financing leases with terms greater than 12 months.

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 22 - Leases (continued)

As of March 31, 2023 As of December 31, 2022

Palo Alto, CA Office $ 630 $ 630

Hyderabad, India Office 20 —

Coquitlam, Canada Office — 97

Westminster, Canada Office — 10

Toronto, Canada Office 559 949

Ratingen, Germany Office 86 85

Berlin, Germany Office 516 508

Slough, United Kingdom Office — 34

Frankfurt, Germany Office 299 294

Manila, Philippines Office 234 —

Less accumulated amortization ( 1,067 ) ( 986 )

Right-of-use asset, net $ 484 $ 531

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our condensed consolidated statement of income for the three months ended March 31, 2023 and 2022 was $ 0.1 million and $ 0.2 million, respectively.

Lease liability is summarized below (in thousands):

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

As of March 31, 2023 As of December 31, 2022

Total lease liability $ 496 $ 545

2 unchanged sentences

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

Quarter ending December 31, 2022 $ 193

Nines months ending December 31, 2023 $ 162

Year ending December 31, 2024 217

2 unchanged sentences

Year ending December 31, 2027 —

Total $ 1,497

Year ending December 31, 2028 and thereafter —

Present value discount ( 34 )

1 unchanged sentence

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".

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

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

As of March 31, 2023, the weighted average remaining lease term is 2.6 years and the weighted average discount rate used to determine the operating lease liabilities was 4.1 %.

Note 23 - Commitments and Contingencies

2 unchanged sentences

In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 23 - Commitments and Contingencies (continued)

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

2 unchanged sentences

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

Compliance with Nasdaq Continued Listing Requirement

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 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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 24 - Discontinued Operations

On March 14, 2023, the Company completed the Business Combination which divested its Enterprise Apps Business and certain related assets and liabilities through a spin-off of CXApp Holding Corp., a Delaware corporation ("Legacy CXApp") to Inpixon’s shareholders of record as of March 6, 2023 (the “Record Date”) on a pro rata basis.

This Enterprise Apps Spin-off was considered a strategic shift that has a major impact on the Company, and therefore, the results of operations are recorded as a component of "Earnings (loss) from discontinued operations, net of income taxes" in the Condensed Consolidated Statements of Operations for all periods presented.

The Company noted that Legacy CXApp was part of the Company’s Indoor Intelligence segment.

The net assets distributed as a result of the Enterprise Apps Spin-off was $ 24.2 million.

Included within the $ 24.2 million dividend recorded to Additional Paid in Capital as a result of the deconsolidation of CXApp through distribution to shareholders recorded during the three months ended March 31, 2023, is approximately, $ 1.2 million in accumulated other comprehensive income that was recognized as a result of those distributed assets and liabilities included in the foreign operations of CXApp.

The following table summarizes certain selected components of discontinued operations for the spun-off entity:

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Revenues $ 1,620 $ 2,582

Cost of Revenues 483 589

Gross Profit 1,137 1,993

Operating Expenses

Research and development 1,514 1,961

Sales and marketing 988 1,107

General and administrative 1,644 1,446

Earnout compensation benefit — ( 2,827 )

Acquisition related costs — 6

Transaction costs 1,043 —

Amortization of intangibles 805 975

Total Operating Expenses 5,994 2,668

Loss from Operations ( 4,857 ) ( 675 )

Other Income (Expense)

Interest (expense)/income, net 1 1

Total Other Income (Expense) 1 1

Loss from discontinued operations, before tax ( 4,856 ) ( 674 )

Income tax provision $ — ( 100 )

Loss from discontinued operations, net of tax ( 4,856 ) ( 774 )

Cash used in operating activities by the Enterprise Apps Business totaled approximately $ 0.8 million and $ 3.0 million for the three months ended March 31, 2023 and 2022, respectively.

Cash provided by investing activities from the Enterprise Apps Business totaled approximately $ 0.1 million for the three months ended March 31, 2023 and cash used in investing activities by the Enterprise Apps Business totaled approximately $ 0.04 million for the three months ended March 31, 2022.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 24 - Discontinued Operations (continued)

The following table summarizes certain assets and liabilities of discontinued operations:

As of December 31, 2022

Current Assets of Discontinued Operations

Cash and cash equivalents $ 10,000

Accounts receivable 1,338

Prepaid expenses and other current assets 923

Current Assets of Discontinued Operations $ 12,261

Long Term Assets of Discontinued Operations

Property and equipment, net $ 202

Operating Lease Right-of-Use Asset, net 681

Software development costs, net 487

Intangible assets, net 19,289

Other Assets 52

Long Term Assets of Discontinued Operations $ 20,711

Current Liabilities of Discontinued Operations

Accounts payable $ 1,054

Accrued liabilities 1,736

Operating lease obligation, current 266

Deferred revenue 2,162

Current Liabilities of Discontinued Operations $ 5,218

Long Term Liabilities of Discontinued Operations

Operating lease obligation, noncurrent $ 444

Other Liabilities, noncurrent 28

Long Term Liabilities of Discontinued Operations $ 472

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 25 - Subsequent Events

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.

From April 1, 2023 through the date of this filing, the Company exchanged approximately $ 1.2 million of the outstanding principal and interest under the July 2022 10 % Note Purchase Agreement and Promissory Note for 3,260,379 shares of the Company's common stock at prices from $ 0.3336 to $ 0.3966 per share, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

From April 1, 2023 through the date of this filing, the Company sold 12,046,742 shares of common stock at share prices between $ 0.22771 and $ 0.54 per share under the Sales Agreement for gross proceeds of approximately $ 4.1 million.

Warrant Purchase Agreement

On May 15, 2023, the Company entered into a Warrant Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell in a private placement (the “Private Placement”) up to an aggregate of 150,000,000 warrants (the “Warrants”) to purchase up to 150,000,000 shares (the “Warrant Shares”) of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), at an offering price of $ 0.01 per Warrant (subject to adjustment as set forth in the Purchase Agreement) (the “Per Warrant Purchase Price”) for an aggregate warrant offering price equal to $ 1,500,000 .

The Warrants have an initial exercise price which is equal to the Minimum Price as defined in Nasdaq Listing Rule 5635(d) (subject to adjustment as set forth in the Warrants) (the “Initial Exercise Price”), payable in cash or the cancellation of indebtedness.

Upon receipt of stockholder approval, the exercise price will equal the lower of (i) the Initial Exercise Price and (ii) 90 % of the lowest VWAP (as defined in the Purchase Agreement) of the Common Stock for the five Trading Days (as defined in the Purchase Agreement) immediately prior to the date on which a Notice of Exercise is submitted to the Company (the “Adjusted Exercise Price” and together with the Initial Price, as applicable, the “Exercise Price”);

provided, however, that any exercise of the Warrants with an Adjusted Exercise Price will be subject to the Company’s consent unless the trading price of the Common Stock as of the time the Notice of Exercise is delivered to the Company is at least 10 % or more above the prior Trading Day’s Nasdaq Official Closing Price.

The Purchaser may not exercise the Warrants to the extent such exercise would cause such Purchaser, together with its affiliates and attribution parties, to beneficially own a number of shares of Common Stock which would exceed 9.99 % of the Company’s then outstanding Common Stock following such exercise.

Each Warrant is immediately exercisable for one share of Common Stock and will expire one year from the issuance date (the “Termination Date”) unless extended by the Company with the consent of the Warrant holder.

Pursuant to the terms of the Warrants, at any time prior to the Termination Date, the Company may, in its sole discretion, redeem any portion of a Warrant that has not been exercised, in cash, at the Per Warrant Purchase Price, plus all liquidated damages and other costs, expenses or amounts due in respect of the Warrants (the “ Redemption Amount ”) upon five Trading Days’ written notice to the Warrant holder (the “ Redemption Date ”).

On the Termination Date, the Company will be required to redeem any portion of the Warrants that has not been exercised or redeemed prior to such date through payment of the Redemption Amount in cash.

The Company will be required to pay any Redemption Amount within five Trading Days after the Redemption Date or the Termination Date, as applicable.

Subject to the satisfaction of certain conditions set forth in the Warrants during a period of seven consecutive Trading Days (the “Measurement Period”), the Company may, within one Trading Day of the end of such Measurement Period (the “Forced Exercise Eligibility Date”), force the holder to exercise its Warrants into up to such aggregate number of Warrant Shares equal to 25% of the quotient obtained by dividing the Traded Value (as defined in the Warrants) by the Exercise Price then in effect (less any Warrant Shares voluntarily exercised by the holder during such Measurement Period or at any time thereafter and prior to the applicable Forced Exercise Date (as defined in the Warrants) (the “Maximum Forced Exercise Share Amount”) as designated in the applicable Forced Exercise Notice (as defined in the Warrants) (each, a “Forced Exercise”).

Following any Forced Exercise, a minimum of seven Trading Days must elapse after the Forced Exercise Date prior to the Company sending the Holders a new Forced Exercise Notice.

The Company’s right to a Forced Exercise shall be exercised ratably among the Warrant holders based on each Holder’s initial purchase of Warrants.

On May 15, 2023, the Company and Maxim Group LLC (the “Placement Agent”) entered into a Placement Agency Agreement (the “Placement Agency Agreement”), whereby the Placement Agent, in connection with the Private Placement, agreed to act as the Company’s exclusive placement agent on a reasonable best efforts basis.

Pursuant to the Placement Agency Agreement, the Company agreed to pay to the Placement Agent (i) a cash fee equal to 2.75 % of the gross proceeds received by the Company from the Purchasers at the Closing, to be paid on the Closing Date and (ii) a cash fee equal to 5.5 % of the gross proceeds received by the Company from a Purchaser upon the exercise of Warrants for cash, to be paid on a weekly basis

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Note 27 - Subsequent Events (continued)

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.

during the exercise period of the Warrants as to any exercise proceeds received by the Company from a Purchaser pursuant to the exercise of Warrants for cash during the preceding week (the "Exercise Cash Fee").

The Company is not required to pay the Exercise Cash Fee to the extent that a Purchaser exercises its Warrants through the cancellation of indebtedness owed by the Company to such Purchaser.

The Company has also agreed to reimburse the Placement Agent up to $ 50,000 for certain expenses and legal fees incurred by the Placement Agent.

The Placement Agency Agreement contains customary representations and warranties and agreements of the Company and the Placement Agent and customary indemnification rights and obligations of the parties.

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