What changed in this filing

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Item 1. Financial Statements

2023-11-20 compared with 2023-08-18 · 396 added, 285 removed, 925 unchanged (42% of the section changed)

3 unchanged sentences

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

The results for the period ended June 30, 2023 are not necessarily indicative of the results of operations for the full year.

The results for the period ended September 30, 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.

3 unchanged sentences

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

As of June 30,

As of September 30,

2023 As of December 31,

2 unchanged sentences

Cash and cash equivalents $ 13,489 $ 10,235

Accounts receivable, net of allowances of $ 237 and $ 272 , respectively

Notes and other receivables 785 86

Accounts receivable, net of allowance for credit losses of $ 237 and $ 272 , respectively

Other receivables 142 86

Inventory 3,355 2,442

Note receivable — 150

Notes receivable 2,068 150

Prepaid expenses and other current assets 1,949 2,803

14 unchanged sentences

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

As of June 30,

As of September 30,

2023 As of December 31,

4 unchanged sentences

Accrued liabilities 3,569 2,619

Warrant liability 1,410 —

Operating lease obligation, current 198 211

2 unchanged sentences

Acquisition liability — 197

Warrant liability 1,500 —

Current liabilities of discontinued operations — 5,218

9 unchanged sentences

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

1 issued and 1 outstanding as of June 30, 2023 and December 31, 2022

1 issued and 1 outstanding as of September 30, 2023 and December 31, 2022

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

126 issued and 126 outstanding as of June 30, 2023 and December 31, 2022

126 issued and 126 outstanding as of September 30, 2023 and December 31, 2022

Common Stock - $ 0.001 par value;

500,000,000 shares authorized;

43,154,195 and 3,570,894 issued and 43,154,194 and 3,570,893 outstanding as of June 30, 2023 and December 31, 2022, respectively.

111,692,178 and 3,570,894 issued and 111,692,177 and 3,570,893 outstanding as of September 30, 2023 and December 31, 2022, respectively.

Additional paid-in capital 358,692 346,668

1 unchanged sentence

( 695 ) ( 695 )

Accumulated other comprehensive (loss) income ( 189 ) 1,061

Accumulated other comprehensive income

Accumulated deficit ( 347,971 ) ( 313,739 )

7 unchanged sentences

(In thousands, except share and per share data)

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

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

2023 2022 2023 2022

13 unchanged sentences

Other (Expense)/Income

Interest (expense)/income, net ( 1,756 ) 168 ( 3,481 ) 169

Interest expense, net ( 818 ) ( 234 ) ( 4,300 ) ( 65 )

Other income/(expense), net ( 44 ) 830 1,169 802

Unrealized gain/(loss) on equity securities 5,791 ( 5,854 ) 5,733 ( 7,110 )

Realized loss on equity securities ( 6,692 ) ( 151 ) ( 6,692 ) ( 151 )

Total Other Expense ( 1,763 ) ( 5,409 ) ( 4,090 ) ( 6,524 )

25 unchanged sentences

(In thousands)

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

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

2023 2022 2023 2022

1 unchanged sentence

Unrealized gain on available for sale debt securities — ( 375 ) — —

Unrealized foreign exchange loss from cumulative translation adjustments 9 281 ( 1,250 ) 180

Unrealized foreign exchange gain (loss) from cumulative translation adjustments

230 1,273 ( 1,020 ) 1,452

Comprehensive Loss $ ( 10,618 ) $ ( 17,095 ) $ ( 36,375 ) $ ( 48,428 )

2 unchanged sentences

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

For the three and six months ended June 30, 2023

For the three and nine months ended September 30, 2023

(In thousands, except share and per share data)

17 unchanged sentences

Balance - June 30, 2023 1 $ — 126 $ — 43,154,195 $ 43 $ 346,799 ( 1 ) $ ( 695 ) $ ( 189 ) $ ( 337,555 ) $ ( 1,866 ) $ 6,537

Stock options granted to employees and consultants for services — — — — — — 227 — — — — — 227

Common shares issued for extinguishment of debt — — — — 18,144,158 18 3,160 — — — — — 3,178

Common shares issued for exercise of warrants — — — — 9,000,000 9 2,421 — — — — 2,430

Common shares issued for net cash proceeds of a public offering — — — — 41,393,825 42 6,085 — — — — — 6,127

Cumulative translation adjustment — — — — — — — — — 230 ( 32 ) 33 231

Net loss — — — — — — — — — — ( 10,384 ) ( 464 ) ( 10,848 )

Balance - September 30, 2023 1 $ — 126 $ — 111,692,178 $ 112 $ 358,692 ( 1 ) $ ( 695 ) $ 41 $ ( 347,971 ) $ ( 2,297 ) $ 7,882

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

1 unchanged sentence

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

For the three and six months ended June 30, 2022

For the three and nine months ended September 30, 2022

(In thousands, except share and per share data)

27 unchanged sentences

Balance - June 30, 2022 — $ — 53,198 $ 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 )

Amortization Premium- modification related to Series 8 Preferred Stock — — — 6,305 — — — — — — 1,265 — — — — — 1,265

Cumulative Translation Adjustment — — — ( 1,265 ) — — — — — — — — — 898 ( 69 ) 68 897

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

Balance - September 30, 2022 — $ — 53,198 $ 53,198 1 $ — 126 $ — 2,250,596 $ 2 $ 331,487 ( 1 ) $ ( 695 ) $ 1,496 $ ( 299,123 ) $ 622 $ 33,790

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

2 unchanged sentences

(In thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash Flows Used in Operating Activities (Unaudited)

9 unchanged sentences

Amortization of debt issuance costs 2,103 121

Accrued interest income, related party — ( 278 )

Unrealized gain on note — 1,870

2 unchanged sentences

Deferred income tax 2,591 ( 1 )

Unrealized loss on equity securities 58 1,256

Unrealized (gain) loss on equity securities ( 5,733 ) 7,110

Impairment of goodwill — 7,570

Gain on fair value of warrant liability 71 —

Realized loss on sale of equity securities 6,692 151

Gain on conversion of note receivable — ( 791 )

Loss on exchange of debt for equity 124 —

Changes in operating assets and liabilities:

13 unchanged sentences

Purchase of convertible note — ( 5,500 )

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Sales of equity securities 323 229

Sales of treasury bills — 43,001

2 unchanged sentences

Net Cash (Used in) Provided By Investing Activities ( 1,829 ) 36,748

INPIXON AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Cash From Financing Activities

1 unchanged sentence

Net proceeds from promissory note 125 5,539

Net proceeds from ATM 20,383 —

Net proceeds from ATM stock offerings 26,510 —

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

2 unchanged sentences

Repayment of CXApp acquisition liability ( 197 ) ( 1,957 )

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 11,718 ( 4,163 )

Common shares issued for exercise of warrants 2,341 —

Net Cash Provided By Financing Activities 20,185 902

Effect of Foreign Exchange Rate on Changes on Cash ( 12 ) ( 34 )

12 unchanged sentences

Common shares issued in exchange for warrants $ — $ 14

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

Noncash exercise of liability classified warrants to common shares $ 90 $ —

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

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 1 - Organization and Nature of Business

1 unchanged sentence

Our solutions and technologies help organizations enable smarter, safer and more secure environments.

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

We specialize in providing real-time location systems (RTLS) for the industrial sector.

6 unchanged sentences

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.

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 organization'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.

24 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

results for all periods presented prior to the completion of the Enterprise Apps Spin-off.

1 unchanged sentence

See Note 25 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.

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

XTI Merger Agreement

On July 24, 2023, Inpixon entered into an Agreement and Plan of Merger with XTI Aircraft Company (the “XTI Merger Agreement”).

See Note 22 and Note 25 for additional information on the XTI Merger Agreement.

Note 2 - Basis of Presentation

2 unchanged sentences

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

Interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the full year ending December 31, 2023.

Interim results for the three and nine months ended September 30, 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 and the recasted audited consolidated financial statements within Exhibit 99.1 on Form 8-k filed with the SEC on June 20, 2023 to reflect the presentation of CXApp operations as discontinued operations to the consolidated financial statements for the years ended December 31, 2022 and 2021.

1 unchanged sentence

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 June 30, 2023, the Company has a working capital surplus of approximately $ 0.02 million, and cash of approximately $ 15.7 million.

For the three and six months ended June 30, 2023, the Company had a net loss of approximately $ 7.3 million and $ 24.5 million, respectively.

During the six months ended June 30, 2023, the Company used approximately $ 15.8 million of cash for operating activities.

As of September 30, 2023, the Company has a working capital surplus of approximately $ 3.0 million, and cash of approximately $ 13.5 million.

For the three and nine months ended September 30, 2023, the Company had a net loss of approximately $ 10.8 million and $ 35.4 million, respectively.

During the nine months ended September 30, 2023, the Company used approximately $ 25.1 million of cash for operating activities.

Risks and Uncertainties

1 unchanged sentence

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.

Certain global events, such as 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.

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

These factors can include interest rates;

7 unchanged sentences

There are no assurances that we will 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, including $ 15.7 million cash and cash equivalents on hand plus the $ 1.4 million raised

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 $ 13.5 million cash and cash equivalents on hand, plus based on the terms of the warrant financing the company currently has the potential to raise up to approximately $ 14.1 million, plus the additional

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

under the ATM Offering and $ 2.3 million from warrants exercised since July 1, 2023, approximately $ 6.4 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.

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 have been prepared using the accounting records of Inpixon, Inpixon GmbH, Inpixon Limited, Inpixon Holding UK 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.

10 unchanged sentences

• the valuation of equity securities;

• the valuation of warrant liabilities;

• the valuation allowance for deferred tax assets;

10 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 six months ended June 30, 2023 was approximately $( 0.09 ) million and $( 0.06 ) million, respectively, and for the three and six months ended June 30, 2022 was approximately a gain (loss) of $ 0.2 million and $( 1.3 ) million, respectively.

The unrealized gain on equity securities for the three and nine months ended September 30, 2023 was approximately $ 5.8 million and $ 5.7 million, respectively, and for the three and nine months ended September 30, 2022 was approximately a loss of $( 5.9 ) million and $( 7.1 ) million, respectively.

Revenue Recognition

2 unchanged sentences

Hardware and Software Revenue Recognition

For sales of hardware and software products, the Company’s performance obligation is satisfied at a point in time when they are shipped to the customer.

This is when the customer has title to the product and the risks and rewards of ownership.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

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

For sales of hardware and software products, the Company’s performance obligation is satisfied at a point in time when they are shipped to the customer.

This is when the customer has title to the product and the risks and rewards of ownership.

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

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

23 unchanged sentences

Anticipated losses are recognized as soon as they become known.

For the three and six months ended June 30, 2023 and 2022, the Company did not incur any such losses.

For the three and nine months ended September 30, 2023 and 2022, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

14 unchanged sentences

Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

The Company had deferred revenue of approximately $ 1.1 million and $ 1.3 million as of June 30, 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 had deferred revenue of approximately $ 1.3 million and $ 1.3 million as of September 30, 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.

The Company recognized revenue in the reporting period of $ 0.9 million that was included in the contract liability balance at the beginning of the period, for the period ended June 30, 2023.

The Company recognized revenue in the reporting period of $ 1.1 million that was included in the contract liability balance at the beginning of the period, for the period ended September 30, 2023.

Stock-Based Compensation

5 unchanged sentences

Forfeitures of unvested stock options are recorded when they occur.

The Company incurred stock-based compensation charges of approximately $ 0.2 million and $ 0.6 million, respectively, for the three and six months ended June 30, 2023.

The Company incurred stock-based compensation charges of approximately $ 0.7 million and $ 2.3 million for the three and six months ended June 30, 2022, respectively, which are included in general and administrative expenses.

The Company incurred stock-based compensation charges of approximately $ 0.2 million and $ 0.8 million, respectively, for the three and nine months ended September 30, 2023.

The Company incurred stock-based compensation charges of approximately $ 0.7 million and $ 3.0 million for the three and nine months ended September 30, 2022, respectively, which are included in general and administrative expenses.

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

Net Income (Loss) Per Share

Acquisition-Related Costs

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

The Company recognized acquisition-related costs of approximately $ 1.7 million and $ 2.3 million, respectively, for the three and nine months ended September 30, 2023 primarily related to the XTI transaction outlined in Note 22.

These acquisition-related costs include professional fees incurred by the Company.

The Company recognized acquisition-related costs of approximately $ 0.3 million for the nine months ended September 30, 2022 related to various other acquisitions.

The Company did not record material acquisition-related costs for the three months ended September 30, 2022.

Transaction Costs

The Company recognized transaction costs of approximately $ 1.5 million and $ 3.0 million, respectively, for the three and nine months ended September 30, 2023 related to the Enterprise Apps Spin-off in the form of bonuses paid to Inpixon management, former management and professional fees that were incurred by the Company.

Transaction Bonus Plan in connection with Completed Transaction

On July 24, 2023, the compensation committee of the Inpixon Board (the “Committee”) adopted a Transaction Bonus Plan (the “Completed Transaction Bonus Plan”), which is intended to compensate certain current and former employees and service providers for the successful consummation of the Completed Transaction.

The Completed Transaction Bonus Plan is administered by the Committee.

It will terminate upon the completion of all payments under the terms of the Completed Transaction Bonus Plan, provided, that the Board may terminate the plan as to any participant prior to the completion of all payment to under participant under the plan.

The Completed Transaction is the Enterprise Apps Spin-off and subsequent Business Combination.

The bonuses include a cash bonus equal to 100 % of the individual's aggregate annual base salary and a cash bonus of 4 % of the transaction value.

Net Loss Per Share

The Company computes basic and diluted earnings per share by dividing net loss by the weighted average number of common shares outstanding during the period.

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

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the six months ended June 30, 2023 and 2022:

For the Three Months Ended June 30, For the Six Months Ended June 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 nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

9 unchanged sentences

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

position, are not classified as derivative instruments, and to be recorded under stockholder's equity on the balance sheet of the financial statements.

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

9 unchanged sentences

The effective date of this update is for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The Company is currently assessing

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 3 - Summary of Significant Accounting Policies (continued)

potential impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures.

The Company is currently assessing potential impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures.

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Updated and Simplification Initiative", which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”).

The ASU was issued in response to the SEC’s August 2018 final rule that updated and simplified disclosure requirements.

The new guidance is intended to align U.S.

GAAP requirements with those of the SEC and to facilitate the application of U.S.

GAAP for all entities.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

The Company is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures.

Reclassifications

3 unchanged sentences

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 4 - Disaggregation of Revenue

1 unchanged sentence

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 4 - Disaggregation of Revenue (continued)

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

Revenues consisted of the following (in thousands):

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

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

2023 2022 2023 2022

8 unchanged sentences

Total Revenue $ 2,016 $ 2,435 $ 7,177 $ 7,660

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

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

2023 2022 2023 2022

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 5- Goodwill and Intangible Assets

1 unchanged sentence

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 June 30, 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.

There is no unimpaired goodwill as of June 30, 2023 or December 31, 2022.

Intangibles assets at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

June 30, 2023

As of September 30, 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.

There is no unimpaired goodwill as of September 30, 2023 or December 31, 2022.

Intangibles assets at September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

September 30, 2023

Gross Amount, net of impairment Accumulated Amortization Spin-Off Net Carrying Amount Remaining Weighted Average Useful Life

6 unchanged sentences

December 31, 2022

Gross Amount Accumulated Amortization Impairment Spin-Off Net Carrying Value

Gross Amount Accumulated Amortization Impairment Discontinued Operations Net Carrying Value

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

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

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

Customer Relationships 9,121 ( 2,776 ) ( 749 ) ( 4,636 ) 960

3 unchanged sentences

Amortization Expense:

Amortization expense from continuing operations for the three and six months ended June 30, 2023 was approximately $ 0.2 million and $ 0.4 million, respectively, and for the three and six months ended June 30, 2022 was approximately $ 0.4 million and $ 1.1 million respectively.

Amortization expense from continuing operations for the three and nine months ended September 30, 2023 was approximately $ 0.2 million and $ 0.7 million, respectively, and for the three and nine months ended September 30, 2022 was approximately $ 0.4 million and $ 1.1 million respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 5 - Goodwill and Intangible Assets (continued)

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 6 - Inventory

Inventory as of June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

As of June 30, 2023 As of December 31, 2022

Inventory as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

As of September 30, 2023 As of December 31, 2022

Raw materials $ 414 $ 351

5 unchanged sentences

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

As of June 30, 2023

As of September 30, 2023

As of December 31, 2022

4 unchanged sentences

Total investments in equity securities- fair value $ 59,427 $ 189 $ 65,301 $ 330

As of June 30, 2023, the Company owned equity shares which include approximately 4.5 million shares of FOXO Technologies Inc.

As of September 30, 2023, the Company owned equity shares which include approximately 1.7 million shares of FOXO Technologies Inc.

common stock and 13.0 million shares of Sysorex common stock.

1 unchanged sentence

common stock and 13.0 million shares of Sysorex common stock.

As of June 30, 2023 and December 31, 2022, the Company owned equity rights which include the right to acquire 3.0 million shares of Sysorex common stock.

For the three months ended June 30, 2023 and 2022, the Company recognized a net unrealized gain (loss) on equity securities of $( 0.09 ) million and $ 0.2 million, respectively.

For the six months ended June 30, 2023 and 2022, the Company recognized a net unrealized gain (loss) on equity securities of $( 0.06 ) million and $( 1.3 ) million, respectively, in the other income/expense section of the condensed consolidated statements of operations.

As of September 30, 2023 and December 31, 2022, the Company owned equity rights which include the right to acquire 3.0 million shares of Sysorex common stock.

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.

9 unchanged sentences

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

On June 20, 2023 (the "Release Effective Date"), the Company entered into a general release agreement (the "General Release Agreement") with FOXO, pursuant to which the Company received 0.67 shares of FOXO Class A Common Stock for every $ 1.00 of subscription amount of the 10 % convertible note purchased on April 27, 2022 in exchange for an agreement by the Company to release, waive and forever discharge FOXO (including its officers, directors, affiliates, etc.) from any causes of action, losses, costs and expenses from the beginning of time through the Release Effective Date.

The Company received 3,685,000 shares of FOXO Class A Common Stock in exchange for such release.

The Company recognized a realized gain on receipt of FOXO securities of $ 1.1 million based on the fair value of the FOXO securities for the nine months ended

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Company to release, waive and forever discharge FOXO (including its officers, directors, affiliates, etc.) from any causes of action, losses, costs and expenses from the beginning of time through the Release Effective Date.

The Company received 3,685,000 shares of FOXO Class A Common Stock in exchange for such release.

The Company recognized a realized gain on receipt of FOXO securities of $ 1.1 million based on the fair value of the FOXO securities for the six months ended June 30, 2023, included in Other income/(expense), net, on the accompanying unaudited condensed consolidated statement of operations.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

September 30, 2023, included in Other income/(expense), net, on the accompanying unaudited condensed consolidated statement of operations.

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 June 30, 2023.

The Company recognized an unrealized gain (loss) on FOXO common stock of $( 0.1 ) million and zero on the income statement for the three months ended June 30, 2023 and 2022, respectively.

The Company recognized an unrealized gain (loss) on FOXO common stock of $( 0.06 ) million and zero on the income statement for the six months ended June 30, 2023 and 2022, respectively.

The fair value was determined by the closing trading price of the security as of September 30, 2023.

The Company recognized an unrealized gain (loss) on FOXO common stock of $ 5.8 million and $( 5.9 ) million on the income statement for the three months ended September 30, 2023 and 2022, respectively.

The Company recognized an unrealized gain (loss) on FOXO common stock of $ 5.7 million and $( 7.1 ) million on the income statement for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, the Company sold 2.8 million shares of FOXO common stock with net proceeds of $ 0.3 million.

The Company recognized a realized loss on the sale of FOXO common stock of $ 6.7 million on the income statement for the three and nine months ended September 30, 2023.

The Company did no t sell any shares of FOXO common stock during the three and nine months ended September 30, 2022.

Note 8 - Other Long Term Investments

2 unchanged sentences

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 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.

2 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, 2022 to December 31, 2022 and January 1, 2023 to June 30, 2023, CVH had no operating results as CVH is a holding company.

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

Ownership interest as of June 30, Ownership interest as of December 31,

The following component represents components of Other long-term investments as of September 30, 2023 and December 31, 2022:

Ownership interest as of September 30, 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 the condensed consolidated balance sheets as a long term asset of approximately $ 0.1 million as of June 30, 2023 and approximately $ 0.7 million as of December 31, 2022.

Inpixon’s investment in equity method eligible entities are represented on the condensed consolidated balance sheets as a long term asset of approximately $ 0.1 million as of September 30, 2023 and approximately $ 0.7 million as of December 31, 2022.

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

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

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

Nadir Ali, the Company’s Chief Executive Officer and director, is also a member in CVH through 3AM, LLC, which is

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

a member of CVH, and which may, in certain circumstances, be entitled to manage the affairs of CVH.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

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 six months ended June 30, 2023.

On August 25, 2023, as part of their distribution rights as holders of CVH Class B Units, the Company received 2.5 million warrants in New CXApp.

The Company determined that the New CXApp warrants are a level 1 marketable security because the warrants are publically traded on the Nasdaq.

Note 9 - Accrued Liabilities

Accrued liabilities as of June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

As of June 30, 2023 As of December 31, 2022

Accrued liabilities as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

As of September 30, 2023 As of December 31, 2022

Accrued compensation and benefits $ 698 $ 655

1 unchanged sentence

Accrued bonus and commissions 469 426

Accrued transaction costs 2,075 —

Accrued other 361 105

2 unchanged sentences

Note 10 - Debt

Debt as of June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

Short-Term Debt Maturity June 30, 2023 December 31, 2022

July 2022 Promissory Note, less debt discount and extension fee of $ 85 and $ 760 , respectively.

Debt as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

Short-Term Debt Maturity September 30, 2023 December 31, 2022

July 2022 Promissory Note, less extension fee of $ 35 .

5/17/2024 $ 1,103 $ 6,045

3 unchanged sentences

Total Short-Term Debt $ 11,165 $ 13,643

Interest expense on the short-term debt totaled approximately $ 1.7 million and $ 0.1 million for the three months ended June 30, 2023 and 2022, respectively, and approximately $ 3.5 million and $ 0.2 million for the six months ended June 30, 2023 and 2022, respectively.

Interest expense on the short-term debt totaled approximately $ 0.8 million and $ 0.2 million for the three months ended September 30, 2023 and 2022, respectively, and approximately $ 4.3 million and $ 0.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Interest expense includes the interest on the outstanding balance of the note and the amortization of deferred financing costs and note discounts recorded at issuance for the Short Term Debt.

Notes Payable

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” 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 the maturity date or otherwise in accordance with the July 2022 Note.

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

March 2020 10 % Note Purchase Agreement and Promissory Note

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 10- Debt (continued)

cover the Holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

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.

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 there was no loss on the exchange for debt for equity.

The March 2020 Note was satisfied in full during the nine months ended September 30, 2023.

July 2022 Note Purchase Agreement and Promissory Note

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

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

8 unchanged sentences

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

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

During the nine months ended September 30, 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 $ 5.7 million and then cause the outstanding balance of the July 2022 Note to be reduced by approximately $ 5.7 million;

and (ii) exchange the partitioned notes for the delivery of 26,429,554 shares of the Company’s common stock, at effective prices between $ 0.1277 and $ 0.9150 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.

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 recorded a $ 0.1 million loss on the exchange for debt for equity which is included in the other income/expense line of the condensed consolidated statement of operations.

On May 16, 2023, the Company entered into an amendment (the “July 2022 Note Amendment”) to the July 2022 Note pursuant to which the maturity date was extended from July 22, 2023 to May 17, 2024 (the “July 2022 Note Maturity Date Extension”).

1 unchanged sentence

The extension was treated as a modification and capitalized and amortized to interest expense over the term of the extension.

During the quarter ended June 30, 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 $ 2.0 million and then cause the outstanding balance of the July 2022 Note to be reduced by approximately $ 2.0 million;

and (ii) exchange the partitioned notes for the delivery of 7,349,420 shares of the Company’s common stock, at effective prices between $ 0.1950 and $ 0.3966 per share.

December 2022 Note Purchase Agreement and Promissory Note

2 unchanged sentences

In exchange for the Note, the Holder paid an aggregate purchase price of $ 6.5 million.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 10- Debt (continued)

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.

2 unchanged sentences

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 10- Debt (continued)

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.

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.

2 unchanged sentences

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.

Under the terms of the December 2022 Note, if the note is still outstanding after 6 months from the issuance date, or as of June 30, 2023, a 10 % monitoring fee would be added to the balance of the note.

On June 30, 2023, a monitoring fee of $ 0.9 million was added to the balance of the note and accrued to interest expense during the nine months ended September 30, 2023 which is included in the other income/expense section of the condensed consolidated statements of operations.

On May 16, 2023, the Company entered into an amendment (the “December 2022 Note Amendment”) to the December 2022 Note pursuant to which the maturity date of the December 2022 Note was extended from December 30, 2023 to May 17, 2024 (the “December 2022 Note Maturity Date Extension”).

3 unchanged sentences

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 September 30, 2023.

As of June 30, 2023, the balance owed under the notes was $ 1.2 million.

All of the promissory notes have an interest rate of 8 % and are due on or before November 30, 2023.

As of September 30, 2023, the balance owed under the notes was $ 1.2 million.

Subsequent to September 30, 2023, the promissory notes were converted to 1,461,640 shares of Game Your Game common stock.

See Note 26 for more details.

Note 11 - Capital Raises

6 unchanged sentences

Each share of Series 8 Convertible Preferred Stock is entitled to receive cumulative dividends, payable in the same form as dividends paid on shares of the Company’s common stock.

At any time beginning on October 1, 2022 and ending ninety 90 days thereafter, the holders of the Series 8 Convertible Preferred Stock have the right to redeem all or part of the shares held by such holder in cash for the redemption price equal to the stated value of such share, plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due.

At any time beginning on October 1, 2022 and ending ninety 90 days thereafter, the holders of

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 11- Capital Raises (continued)

the Series 8 Convertible Preferred Stock have the right to redeem all or part of the shares held by such holder in cash for the redemption price equal to the stated value of such share, plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due.

Upon redemption, the holder of the Series 8 Convertible Preferred Stock will forfeit 50 % of the warrants issued in connection therewith.

4 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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 11- Capital Raises (continued)

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.

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.

9 unchanged sentences

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

During the six months ended June 30, 2023, the Company sold 28,981,729 shares of common stock at share prices between $ 0.200034 and $ 1.86 per share under the Sales Agreement for gross proceeds of approximately $ 21.0 million or net proceeds of $ 20.4 million after deducting the placement agency fees and other offering expenses.

During the nine months ended September 30, 2023, the Company sold 70,375,554 shares of common stock at share prices between $ 0.139609 and $ 1.86 per share under the Sales Agreement for gross proceeds of approximately $ 27.4 million or net proceeds of $ 26.5 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.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 12 - Common Stock

10 unchanged sentences

Se e Note 11 .

During the three months ended September 30, 2023, the Company issued 18,144,158 shares of common stock under exchange agreements to settle outstanding balance and interest totaling approximately $ 3.2 million under partitioned notes.

See Note 10 .

During three months ended September 30, 2023 , the Company issued 9,000,000 shares of common stock in connection with the exercise of 9,000,000 warrants with an exercise price of $ 0.26 per share in connection with the May 2023 offering for which the Company received gross proceeds of approximately $2.3 million.

During the three months ended September 30, 2023, the Company issued 41,393,825 shares of common stock in connection with the ATM Offering at per share prices between $ 0.139609 and $ 0.22291 , resulting in gross proceeds to the Company of approximately $ 6.4 million and net proceeds of $ 6.1 million after subtracting sales commissions and other offering expenses.

Se e Note 11 .

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 June 30, 2023, there was 1 share of Series 4 Preferred outstanding.

As of September 30, 2023, there was 1 share of Series 4 Preferred outstanding.

Series 5 Convertible Preferred Stock

1 unchanged sentence

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

The Series 5 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 5 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 11,238.75 .

As of June 30, 2023, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

Series 7 Convertible Preferred Stock

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

The Series 5 Convertible Preferred Stock is convertible

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 13- Preferred Stock (continued)

$ 920 , representing an original issue discount of 8 % of the stated value for an aggregate subscription amount of $ 54.1 million.

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, 2023, there were 126 shares of Series 5 Convertible Preferred Stock outstanding.

Series 7 Convertible Preferred Stock

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

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.

1 unchanged sentence

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 paid of approximately $ 49.3 million.

As of June 30, 2023, there were zero shares of Series 7 Convertible Preferred Stock outstanding.

As of September 30, 2023, there were zero shares of Series 7 Convertible Preferred Stock outstanding.

Series 8 Convertible Preferred Stock

4 unchanged sentences

As of June 30, 2023, there were zero shares of Series 8 Convertible Preferred Stock outstanding.

As of September 30, 2023, there were zero shares of Series 8 Convertible Preferred Stock outstanding.

Note 14 - Stock Award Plans and Stock-Based Compensation

4 unchanged sentences

Incentive stock options granted under the Option Plans are granted at exercise prices not less than 100 % of the estimated fair market value of the underlying common stock at date of grant.

The exercise price per share for incentive stock options may not be less than 110 % of the estimated fair value of the underlying common stock on the grant date for any individual possessing more that 10% of the total outstanding common stock of the Company.

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

The aggregate number of shares that may be awarded under the 2018 Plan as of June 30, 2023 is 52,714,178 .

As of June 30, 2023, 289,818 of stock options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 47 shares under our 2011 Plan) and 52,381,440 options were available for future grant under the 2018 Plan.

Employee Stock Options

During the three months ended June 30, 2023 and 2022, the Company recorded a charge for the amortization of stock options of approximately $ 0.2 million and $ 0.7 million, respectively, and approximately $ 0.5 million and $ 1.6 million, respectively, for

The exercise price per share for incentive stock options may not be less than 110 % of the estimated fair value of the underlying common stock on the grant date for any individual possessing

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

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

the six months ended June 30, 2023 and 2022, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of June 30, 2023, the fair value of non-vested stock options totaled approximately $ 1.5 million, which will be amortized to expense over the weighted average remaining term of 0.99 years.

more that 10% of the total outstanding common stock of the Company.

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, 2023 is 55,714,178 .

As of September 30, 2023, 285,171 of stock options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 41 shares under our 2011 Plan) and 55,386,081 options were available for future grant under the 2018 Plan.

Employee Stock Options

During the three months ended September 30, 2023 and 2022, the Company recorded a charge for the amortization of stock options of approximately $ 0.2 million and $ 0.7 million, respectively, and approximately $ 0.8 million and $ 1.6 million, respectively, for the nine months ended September 30, 2023 and 2022, which is included in the general and administrative section of the condensed consolidated statement of operations.

As of September 30, 2023, the fair value of non-vested stock options totaled approximately $ 1.2 million, which will be amortized to expense over the weighted average remaining term of 0.91 years.

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

5 unchanged sentences

Forfeited — ( 10,534 ) — ( 10,534 )

Ending balance as of June 30, 2023 47 289,770 1 289,818

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 six months ended June 30, 2023.

Ending balance as of September 30, 2023 41 285,129 1 285,171

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.

5 unchanged sentences

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

During the three months ended June 30, 2023 and 2022, the Company recorded a charge of $ 0.01 million and $ 0.04 million, respectively, and $ 0.03 million and $ 0.7 million for the six months ended June 30, 2023 and 2022, respectively, for the amortization of vested restricted stock awards.

During the three months ended September 30, 2023 and 2022, the Company recorded a charge of zero and $ 0.03 million, respectively, and $ 0.03 million and $ 0.7 million for the nine months ended September 30, 2023 and 2022, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock based award activity granted:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

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

Restricted Stock Grants

Beginning balance as of January 1, 2023 42,968

Ending balance as of June 30, 2023 42,968

Ending balance as of September 30, 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.

2 unchanged sentences

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 15 - Warrants (continued)

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.

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 Company accounted for the exchange agreement as a warrant modification.

6 unchanged sentences

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.

As of June 30, 2023, there are no Series 7 Warrants outstanding as they were exchanged under the warrant amendments below.

As of September 30, 2023, there are no Series 7 Warrants outstanding as they were exchanged under the warrant amendments below.

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.

5 unchanged sentences

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.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 15 - Warrants (continued)

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).

4 unchanged sentences

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 15 - Warrants (continued)

than the fair value of the Exchange Shares issued, and therefore, there was no incremental fair value related to the Warrant Amendments.

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.

May 2023 Warrant Purchase Agreement

15 unchanged sentences

As such, the Company recorded the May 2023 Warrants as a liability at fair value on the issuance date.

The fair value of the May 2023 Warrants was determined using level 3 inputs utilizing a Monte-Carlo simulation.

The fair value of the May 2023

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 15 - Warrants (continued)

Warrants was determined using level 3 inputs utilizing a Monte-Carlo simulation.

The May 2023 Warrants are subsequently measured as if the May 2023 Warrants were to be settled on the current redemption value with subsequent changes recognized as interest cost.

The fair value of the Warrants was determined to be $ 1.48 million at the date of issuance, and the redemption value of the Warrants was determined to be approximately $ 1.5 million as of June 30, 2023.

The fair value of the Warrants are reflected within Warrant Liability on the Condensed Consolidated Balance Sheet.

An immediate loss was recognized on the initial measurement date of $ 71,250 as a result of the difference between fair value and net proceeds.

The change in fair value of Warrants of $ 71,250 for the three and six months ended June 30, 2023 was reported as other expense on the Condensed Consolidated Statement of Operations.

The interest cost of $ 20,000 for the three and six months ended June 30, 2022 was included in interest expense, net on the Condensed Consolidated Statement of Operations.

The change in fair value of Warrants of $ 71,250 for the three and nine months ended September 30, 2023 was reported as other expense on the Condensed Consolidated Statement of Operations.

The interest cost of $ 20,000 for the three and nine months ended September 30, 2022 was included in interest expense, net on the Condensed Consolidated Statement of Operations.

During July 2023, the Company issued 9,000,000 shares of common stock in connection with the exercise of 9,000,000 warrants with an exercise price of $ 0.26 per share in connection with the May 2023 offering for which the Company received gross proceeds of approximately $ 2.3 million.

The following table summarizes the activity to warrants outstanding:

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 15 - Warrants (continued)

Number of Warrants

4 unchanged sentences

Exchanged ( 984,542 )

Ending balance as of June 30, 2023 153,846,260

Exercisable as of June 30, 2023 153,846,260

Ending balance as of September 30, 2023 144,846,260

Exercisable as of September 30, 2023 144,846,260

Note 16- Income Taxes

There is an income tax expense of approximately $ 0.007 million and $ 0.02 million for the three months ended June 30, 2023 and 2022, respectively, and $ 2.5 million and $ 0.02 million for the six months ended June 30, 2023 and 2022, respectively.

The income tax expense in the six months ended June 30, 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.

There is an income tax expense of approximately $ 0.003 million and zero for the three months ended September 30, 2023 and 2022, respectively, and $ 2.5 million and $ 0.02 million for the nine months ended September 30, 2023 and 2022, respectively.

The income tax expense in the nine months ended September 30, 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.

Note 17 - Credit Risk and Concentrations

4 unchanged sentences

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 June 30, 2023 and December 31, 2022 was immaterial.

Cash in foreign financial institutions as of September 30, 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 six months ended June 30, 2023 and 2022, two customers and two customers accounted for at least 10% of revenue, respectively.

As of June 30, 2023, two customers represented approximately 38 % of total accounts receivable.

As of June 30, 2022, two customers represented approximately 42 % of total accounts receivable.

As of June 30, 2023, two vendors represented approximately 48 % of total gross accounts payable.

Purchases from these vendors during the six months ended June 30, 2023 was approximately $ 1.2 million.

As of June 30, 2022, three vendors represented approximately 47 % of total gross accounts payable.

Purchases from these vendors during the six months ended June 30, 2022 was approximately $ 0.6 million.

For the six months ended June 30, 2023, one vendor represented approximately 17 % of total purchases.

For the six months ended June 30, 2022, one vendor represented approximately 33 % 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.

For the three months ended September 30, 2023, there is one single customer who accounts for 17 % of the Company's revenue totaling $ 0.3 million with $ 0.3 million accounts receivable at September 30, 2023.

This customer represents 19 % of the total accounts receivable balance as of September 30, 2023.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 18 - Segments (continued)

For the nine months ended September 30, 2023, there are two customers who account for 14 % and 10 % of the Company's revenue totaling $ 1.0 million and $ 0.7 million.

These customers represent $ 0.3 million or 19 % and $ 0.0 million or — % of accounts receivable at September 30, 2023.

An additional customer, which does not account for 10% of revenue in the three or nine months ended September 30, 2023, accounts for 11 % or $ 0.2 million of the total accounts receivable balance as of September 30, 2023.

For the three months ended September 30, 2022, there are two customers who account for 15 % and 13 % of the Company's revenue totaling $ 0.4 million and $ 0.3 million.

These customers represent 22 % or $ 0.4 million and 8 % or $ 0.1 million of accounts receivable at September 30, 2022.

For the nine months ended September 30, 2022, there is one single customer who accounts for 14 % of the Company's revenue totaling $ 1.1 million.

This customer represents $ 0.4 million or 22 % of accounts receivable at September 30, 2022.

An additional customer, which does not account for 10% of revenue in the three or nine months ended September 30, 2022, accounts for 12 % or $ 0.2 million of the total accounts receivable balance as of September 30, 2022.

For the three months ended September 30, 2023, there is one single vendor who accounts for 21 % of the Company's purchases totaling $ 0.9 million.

This vendor represents 5 % or $ 0.1 million of accounts payable at September 30, 2023.

For the nine months ended September 30, 2023, there is one single vendor who accounts for 13 % of the Company's purchases totaling $ 2.2 million.

This vendor had no accounts payable at September 30, 2023.

Two additional vendors, which do not account for 10% of purchases in the three or nine months ended September 30, 2023, account for 20 % or $ 0.4 million and 10 % or $ 0.2 million of the total accounts payable balance as of September 30, 2023.

For the three months ended September 30, 2022, there are two vendors who account for 18 % and 13 % of the Company's purchases totaling $ 1.0 million and $ 0.7 million.

These vendors represent 26 % or $ 0.6 million and — % or $ 0.0 million of the total accounts payable balance as of September 30, 2022.

For the nine months ended September 30, 2022, there is one single vendor who accounts for 37 % of the Company's purchases totaling $ 6.8 million.

This vendor had no accounts payable at September 30, 2022.

One additional vendor, which did not account for 10% of purchases in the three or nine months ended September 30, 2022, accounts for 11 % or $ 0.3 million of the total accounts payable balance as of September 30, 2022.

Note 18 - Segments

Indoor Intelligence, SAVES, and Shoom.

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

6 unchanged sentences

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

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

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 18 - Segments (continued)

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

2023 2022 2023 2022

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 June 30, 2023 and December 31, 2022:

Fair Value at June 30, 2023

The Company's assets measured at fair value consisted of the following at September 30, 2023 and December 31, 2022:

Fair Value at September 30, 2023

Total Level 1 Level 2 Level 3

10 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 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 June 30, 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 June 30, 2023:

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 nine months ended September 30, 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 nine months ended September 30, 2023:

Level 3 Investments

1 unchanged sentence

Unrealized loss on equity securities —

Balance at June 30, 2023 $ 11

Balance at September 30, 2023 $ 11

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 20 - Foreign Operations

4 unchanged sentences

States Canada India Germany United Kingdom Ireland Philippines Eliminations Total

For the Three Months Ended June 30, 2023:

For the Three Months Ended September 30, 2023:

Revenues by geographic area $ 1,304 $ — $ 367 $ 725 $ 98 $ 6 $ — $ ( 484 ) $ 2,016

1 unchanged sentence

Net (loss) income from continuing operations by geographic area $ ( 9,346 ) $ — $ 41 $ ( 1,274 ) $ ( 6 ) $ ( 263 ) $ — $ — $ ( 10,848 )

For the Three Months Ended June 30, 2022:

For the Three Months Ended September 30, 2022:

Revenues by geographic area $ 1,495 $ — $ 78 $ 880 $ 88 $ — $ — $ ( 106 ) $ 2,435

1 unchanged sentence

Net (loss) income from continuing operations by geographic area $ ( 8,642 ) $ — $ ( 31 ) $ ( 1,926 ) $ 19 $ ( 292 ) $ — $ — $ ( 10,872 )

For the Six months ended June 30, 2023:

For the Nine months ended September 30, 2023:

Revenues by geographic area $ 4,559 $ — $ 1,160 $ 2,643 $ 327 $ 10 $ — $ ( 1,522 ) $ 7,177

1 unchanged sentence

Net (loss) income from continuing operations by geographic area $ ( 27,031 ) $ — $ 165 $ ( 3,085 ) $ ( 11 ) $ ( 538 ) $ — $ 1 $ ( 30,499 )

For the Six Months Ended June 30, 2022:

For the Nine Months Ended September 30, 2022:

Revenues by geographic area $ 4,465 $ — $ 345 $ 2,851 $ 331 $ 6 $ — $ ( 338 ) $ 7,660

1 unchanged sentence

Net (loss) income from continuing operations by geographic area $ ( 20,531 ) $ — $ 53 $ ( 5,938 ) $ 78 $ ( 756 ) $ — $ — $ ( 27,094 )

As of June 30, 2023:

As of September 30, 2023:

Identifiable assets by geographic area $ 51,204 $ — $ 755 $ 19,580 $ 406 $ 80 $ — $ ( 44,378 ) $ 27,647

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 21 - Related Party Transactions

9 unchanged sentences

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 June 30, 2023, New CXApp owed the Company approximately $ 1.0 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 and six months ended June 30, 2023, the Company incurred approximately $ 0.2 million and $ 0.3 million, respectively, in reimbursable expenses payable in connection with the terms and conditions of the Transition Services Agreement, of which $ 0.2 million remains outstanding as of June 30, 2023 and is included in other receivables on the Company’s Condensed Consolidated Balance Sheets.

As of September 30, 2023, New CXApp owed the Company approximately $ 0.9 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 and nine months ended September 30, 2023, the Company incurred approximately $ 0.02 million and $ 0.3 million, respectively, in reimbursable expenses payable in connection with the terms and conditions of the Transition Services Agreement and was charged by CXApp for $ 0.02 million of reimbursable expenses under the Transition Services Agreement during the three months ended September 30, 2023, of which a net amount of $ 0.02 million was owed by CXApp to the Company as of September 30, 2023 and is included in other receivables on the Company’s Condensed Consolidated Balance Sheets.

Note 22 - XTI Merger Agreement

On July 24, 2023, Inpixon entered into an Agreement and Plan of Merger with XTI Aircraft Company (the “XTI Merger Agreement”).

Subject to the terms and conditions of the Merger Agreement, at the effective time of the merger (the “Effective Time”):

(i) Each share of XTI common stock outstanding immediately prior to the Effective Time (excluding any shares to be canceled pursuant to the Merger Agreement and shares held by holders of XTI common stock who have exercised and perfected appraisal rights) will automatically be converted into the right to receive a number of shares of Inpixon common stock equal to the Exchange Ratio (as described below).

Prior to the Effective Time, subject to obtaining the consent of requisite note holders, all outstanding XTI convertible notes will be converted into XTI common stock and will participate in the merger on the same basis as the other shares of XTI common stock, except for (1) a promissory note dated April 1, 2023, in the initial principal amount of $ 1,817,980 , which will be amended to extend the maturity date thereof until no sooner than December 31, 2026 and be assumed by the combined company at the Closing to become convertible into the shares of common stock of the combined company, and (2) a promissory note dated December 31, 2021, in the initial principal amount of $ 1,007,323 , which will provide for, at Closing, payment in cash of $ 507,323 of the principal plus interest accrued to the date of payment, and the conversion of the remaining $ 500,000 of outstanding principal into shares of common stock of the combined company (collectively, the “Note Amendments”).

(ii) Each option to purchase shares of XTI common stock outstanding and unexercised immediately prior to the Effective Time will be assumed by Inpixon and will become an option, subject to any applicable vesting conditions, to purchase shares of Inpixon common stock with the number of shares of Inpixon common stock underlying the unexercised portions of such options and the exercise prices for such options to be adjusted to reflect the Exchange Ratio.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 22 - XTI Merger Agreement (continued)

shares of Inpixon common stock underlying such warrants and the exercise prices for such warrants will be adjusted to reflect the Exchange Ratio.

Subject to adjustment pursuant to the formula for the Exchange Ratio set forth in Exhibit A of the Merger Agreement, the Exchange Ratio will be determined based on (a) the fully diluted capitalization of each of Inpixon and XTI immediately prior to the Effective Time, provided, however, that for this purpose the calculation of Inpixon’s fully diluted capitalization will not take into account any shares of Inpixon common stock issuable after Closing for cash consideration upon conversion, exercise or exchange of derivative securities that are issued by Inpixon in Inpixon Permitted Issuances.

“Inpixon Permitted Issuances” are any issuances of common stock or derivative securities by Inpixon for financing or debt cancellation purposes that are permitted under the Merger Agreement and occur after the date of the Merger Agreement but before the Closing.

The Exchange Ratio will be subject to certain adjustments to the extent that Inpixon’s Net Cash (as such term is defined on Exhibit A of the Merger Agreement) is greater than or less than $ 21.5 million and/or any principal and accrued or unpaid interest remains outstanding under those certain promissory notes issued by Inpixon to Streeterville Capital, LLC on July 22, 2022 and December 30, 2022.

After application of the Exchange Ratio and subject to those certain adjustments described above, Inpixon stockholders immediately prior to the Effective Time are anticipated to retain approximately 40 % of the issued and outstanding capital stock of the combined company and XTI security holders are anticipated to retain approximately 60 % of the issued and outstanding capital stock of the combined company.

It is expected that Inpixon’s Chief Executive Officer, Nadir Ali, and Chief Financial Officer, Wendy Loundermon, will resign upon the Closing, effective as of the Closing Date.

As a condition to closing the transactions contemplated by the XTI Merger Agreement (the “Proposed XTI Transaction”), Inpixon is required to complete the divestiture of its Shoom, SAVES and Game Your Game lines of business and investment securities, as applicable, by any lawful means, including a sale to one or more third parties, spin off, plan of arrangement, merger, reorganization, or any combination of the foregoing (the “Solutions Divestiture”).

The Distribution (as defined below), if completed, would constitute part of the Solutions Divestiture.

On October 23, 2023, Inpixon entered into a Separation and Distribution Agreement (the “Separation Agreement”) with Grafiti Holding Inc., a British Columbia corporation and newly formed wholly-owned subsidiary of Inpixon (“Grafiti”).

Additionally, on October 23, 2023, Inpixon entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among Inpixon, Damon Motors Inc., a British Columbia corporation (“Damon”), Grafiti, and 1444842 B.C.

Ltd., a British Columbia corporation and a newly formed wholly-owned subsidiary of Grafiti (“Amalco Sub”).

Both the Separation Agreement and the Business Combination Agreement are outlined in Note 26.

XTI Promissory Note & Security Agreement

Pursuant to the Merger Agreement, on the first calendar day of the month following the date of the Merger Agreement and on the first calendar day of each month thereafter until the earlier of (i) four months following the date of the Merger Agreement and (ii) the Closing Date, Inpixon shall provide loans to XTI on a senior secured basis (each, a “Future Loan”), in such amounts requested by XTI in writing prior to the first calendar day of each such month.

Each Future Loan will be in the principal amount of up to $ 500,000 , and the aggregate amount of the Future Loans will be up to approximately $ 1.8 million (or such greater amount as Inpixon shall otherwise agree in its sole and absolute discretion).

These Future Loans and security will be evidenced by a Senior Secured Promissory Note (the “Promissory Note”) and a Security and Pledge Agreement (the “Security Agreement”).

The Promissory Note provides an aggregate principal amount up to $ 2,313,407 , which amount includes the principal sum of $ 525,000 which Inpixon previously advanced to XTI (the “Existing Loans”, collectively with the Future Loans, the “Inpixon Loans to XTI”) plus accrued interest on such amount, and the aggregate principal amount of the Future Loans.

The Promissory Note will bear interest at 10 % per annum, compounded annually, and for each Future Loan, beginning on the date the Future Loan is advanced to XTI.

The Promissory Note balance and accrued interest as of September 30, 2023 is approximately $ 2.03 million and $ 0.04 million, respectively, and is included in the Company's condensed consolidated balance sheet in Notes and Other Receivables.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 22 - XTI Merger Agreement (continued)

The outstanding principal amount under the Promissory Note, together with all accrued and unpaid interest, shall be due and payable upon the earlier of (a) December 31, 2023, (b) when declared due and payable by Inpixon upon the occurrence of an event of default, or (c) within three business days following termination of the Merger Agreement (i) by XTI because the XTI Board adopts a superior proposal prior to delivering the XTI Stockholder Consent, or (ii) by Inpixon because the XTI Board has made a change in recommendation, or XTI has breached or failed to perform in any material respect any of its covenants and agreements regarding obtaining its required stockholder approval or non-solicitation.

The Promissory Note will be forgiven and of no further force if the Merger Agreement is terminated by the Inpixon Board because it adopts a superior proposal prior to obtaining the required Inpixon stockholder approval, subject to Inpixon’s rights and remedies under the Promissory Note, the Security Agreement, and the Merger Agreement.

If the Merger Agreement is terminated by XTI because the Inpixon Board makes a change in recommendation or Inpixon is in material breach of its covenants and agreements regarding obtaining its required stockholder approval or non-solicitation, the maturity date of the Promissory Note will be extended to December 31, 2024.

Transaction Bonus Plan

On July 24, 2023, the Committee adopted a Transaction Bonus Plan (the “Plan”), which is intended to provide incentives to certain employees and other service providers to remain with Inpixon through the consummation of a Contemplated Transaction or Qualifying Transaction (each as defined below) and to maximize the value of the company with respect to such transaction for the benefit of its stockholders.

The Plan will be administered by the Committee.

It will automatically terminate upon the earlier of (i) the one-year anniversary of the adoption date, (ii) the completion of all payments under the terms of the Plan, or (iii) at any time by the Committee, provided, however, that the Plan may not be amended or terminated following the consummation of a Contemplated Transaction or Qualifying Transaction without the consent of each participant being affected, except as required by any applicable law.

A “Contemplated Transaction” refers to a strategic alternative transaction including an asset sale, merger, reorganization, spin-off or similar transaction (a “Strategic Transaction”) that results in a change of control as defined in the Plan.

A Qualifying Transaction refers to a Strategic Transaction that does not result in a change of control for which bonuses may be paid pursuant to the Plan as approved by the Committee.

The XTI Proposed Transaction is expected to qualify as a Contemplated Transaction.

The bonuses included in the Plan include a cash bonus equal to 100 % of the individual's aggregate annual base salary and target bonus amounts, a cash bonus equal to an aggregate amount of 4 % of the applicable transaction value, and an equity-based bonus, such as options or restricted stock.

Note 23 - Leases

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

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

The monthly lease rate is $ 5,756 per month.

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

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 23 - Leases (continued)

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Palo Alto, CA Office $ 630 $ 630

6 unchanged sentences

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 condensed consolidated statement of income for the three months ended June 30, 2023 and 2022 was $ 0.2 million and $ 0.1 million, respectively, and for the six months ended June 30, 2023 and 2022 was $ 0.3 million and $ 0.3 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 September 30, 2023 and 2022 was $ 0.2 million and $ 0.1 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $ 0.5 million and $ 0.5 million, respectively.

Lease liability is summarized below (in thousands):

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Total lease liability $ 386 $ 545

2 unchanged sentences

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

Six months ending December 31, 2023 $ 108

Three months ending December 31, 2023 $ 53

Year ending December 31, 2024 210

7 unchanged sentences

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

As of June 30, 2023, the weighted average remaining lease term is 2.4 years and the weighted average discount rate used to determine the operating lease liabilities was 4.0 %.

As of September 30, 2023, the weighted average remaining lease term is 2.2 years and the weighted average discount rate used to determine the operating lease liabilities was 3.9 %.

Note 24 - Commitments and Contingencies

1 unchanged sentence

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

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.

In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 24 - Commitments and Contingencies (continued)

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.

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.

On August 21, 2023, a purported Inpixon shareholder filed a lawsuit in the United States District Court for the Northern District of California against Inpixon and its directors.

Another shareholder filed a substantially similar suit in the same court against the same parties on August 24, 2023.

The cases are styled Busby v.

Inpixon, Case No.

3:23-cv-04249 (N.D.

Cal.) and Panovski v.

Inpixon, Case No.

4:23-cv-04330-KAW (N.D.

Both suits allege that Inpixon filed a purportedly misleading Form S-4 on August 14, 2023 that omits material information regarding the process leading to the XTI transaction as described in Note 22 to the Condensed Consolidated Financial Statements and the analysis performed by Inpixon’s financial advisor in connection with the merger.

The suits assert claims under Section 14(a) and Section 20 of the Securities Exchange Act and seek injunctive relief, damages, costs, attorneys’ fees, and other relief.

Inpixon has also received demand letters from multiple purported Inpixon shareholders alleging that the Form S-4 omits or misstates material information regarding similar topics as alleged in the lawsuits, as well as material information pertaining to other topics, including information pertaining to the compensation and business or financial relationships of Inpixon’s financial advisor for the proposed transaction.

The letters demand that Inpixon make supplemental disclosures to correct the alleged misstatements and omissions.

It is possible that Inpixon may be named in additional suits or receive additional demand letters containing similar allegations or asserting additional allegations or claims regarding the XTI business combination.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 25 - 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.

On March 14, 2023, the Company completed the divestiture of 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.

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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.

Three Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Revenues $ 1,742 $ 1,620 $ 6,473

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Loss from discontinued operations, net of tax $ ( 7,121 ) $ ( 4,856 ) $ ( 22,786 )

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.

Cash used in operating activities by the Enterprise Apps Business totaled approximately $ 0.8 million and $ 14.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash provided by investing activities from the Enterprise Apps Business totaled approximately $ 0.1 million for the nine months ended September 30, 2023 and cash used in investing activities by the Enterprise Apps Business totaled approximately $ 0.4 million for the nine months ended September 30, 2022.

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 25 - Discontinued Operations (continued)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 26 - Subsequent Events

From July 1, 2023 through the date of this filing, the Company exchanged approximately $ 2.5 million of the outstanding principal and interest under the July 2022 10 % Note Purchase Agreement and Promissory Note for 13,369,256 shares of the Company's common stock at prices from $ 0.1523 to $ 0.2272 per share, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

From July 1, 2023 through the date of this filing, the Company sold 6,520,000 shares of common stock at share prices between $ 0.200725 and $ 0.22291 per share under the Sales Agreement for gross proceeds of approximately $ 1.4 million.

During July 2023, the Company issued 9,000,000 shares of common stock in connection with the exercise of 9,000,000 warrants with an exercise price of $ 0.26 per share in connection with the May 2023 warrant offering for which the Company received gross proceeds of approximately $ 2.3 million.

XTI Transaction

On July 24, 2023, the Company entered into an Agreement and Plan of Merger ( the “Merger Agreement”) by and among Inpixon, Superfly Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Inpixon (“Merger Sub”), and XTI Aircraft Company, a Delaware corporation (“XTI”).

Shares of XTI common stock are not publicly traded.

The Merger Agreement was unanimously approved by Inpixon’s and XTI’s board of directors.

If the Merger Agreement is approved by Inpixon’s and XTI’s stockholders, and the transactions contemplated by the Merger Agreement are consummated, Merger Sub will merge with and into XTI, with XTI surviving the merger as a wholly-owned subsidiary of Inpixon (collectively, the “Proposed Transaction”).

In addition, upon the consummation of the Proposed Transaction, Inpixon will be renamed “XTI Aerospace, Inc.” (the “Name Change”).

Inpixon upon the closing is referred to herein as the “combined company.”

Subject to the terms and conditions of the Merger Agreement, at the effective time of the merger (the “Effective Time”):

(i) Each share of XTI common stock outstanding immediately prior to the Effective Time will automatically be converted into the right to receive a number of shares of Inpixon common stock equal to the Exchange Ratio (as described below).

(iii) Each warrant to purchase shares of XTI common stock outstanding and unexercised immediately prior to the Effective Time will be assumed by Inpixon and will become a warrant to purchase shares of Inpixon common stock with the number of shares of Inpixon common stock underlying such warrants and the exercise prices for such warrants will be adjusted to reflect the Exchange Ratio.

From October 1, 2023 through the date of this filing, the Company exchanged approximately $ 1.6 million of the outstanding principal and interest under the July 2022 10 % Note Purchase Agreement and Promissory Note for 15,996,373 shares of the Company's common stock at prices from $ 0.0984 to $ 0.1044 per share.

Third Party Note Payable

On October 31, 2023, Game Your Game, Inc., a subsidiary of Inpixon, entered into a Note Conversion Agreement with Rick Clemmer (the "Holder") pursuant to which the approximately $ 1.5 million outstanding principal and interest balance of the promissory notes held by the Holder will be converted into 1,461,640 shares of Game Your Game, Inc.

common stock, par value $ 0.001 per share.

As of September 30, 2023, the outstanding principal on the promissory notes is $ 1.2 million and is reflected within short-term debt on the Condensed Consolidated Balance Sheet and the outstanding interest on the promissory notes is $ 0.3 million and is included within accrued liabilities on the Condensed Consolidated Balance Sheet.

Change in Ownership Percentage of Game Your Game, Inc.

On October 31, 2023, the Company entered into a Note Conversion Agreement with Game Your Game, Inc.

pursuant to which approximately $ 5.2 million outstanding principal balance of the related party notes held by the Company will be converted to 5,207,595 shares of Game Your Game, Inc.

common stock, par value $ 0.001 per share.

As of September 30, 2023, the Company owned 55.4 % of Game Your Game, Inc.

After the conversion, the Company owns 75.4 % of Game Your Game, Inc.

Divestiture of SAVES Line of Business and Subsequent Business Combination with Damon Motors Inc.

As discussed in Note 22, on July 24, 2023, Inpixon entered into an Agreement and Plan of Merger with XTI Aircraft Company.

On October 23, 2023, Inpixon entered into a Separation and Distribution Agreement (the “Separation Agreement”) with Grafiti Holding Inc.

(“Grafiti”), pursuant to which Inpixon plans to transfer to Grafiti all of the outstanding shares of Inpixon Ltd., a United Kingdom (the “UK”) limited company that operates Inpixon’s SAVES line of business in the UK (“Inpixon UK”), such that Inpixon UK will become a wholly-owned subsidiary of Grafiti (the “Reorganization”).

Following the Reorganization and subject to conditions in the Separation Agreement, Inpixon will spin off Grafiti (the “Spin-off”) by distributing to Inpixon stockholders and certain securities holders as of a record date to be determined (the “Participating Security holders”) on a pro rata basis all of the outstanding common shares of Grafiti (the “Grafiti Common Shares”) owned by Inpixon (the “Distribution”), subject to certain lock-up restrictions and subject to registration of the Grafiti Common Shares, as further described below.

On October 23, 2023, Inpixon also entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among Inpixon, Damon Motors Inc., a British Columbia corporation (“Damon”), Grafiti, and 1444842 B.C.

Ltd., a British Columbia corporation and a newly formed wholly-owned subsidiary of Grafiti (“Amalco Sub”), pursuant to which it is proposed that Amalco Sub and Damon amalgamate under the laws of British Columbia, Canada with the amalgamated company (the “Damon Surviving Corporation”) continuing as a wholly-owned subsidiary of Grafiti (the “Damon Business Combination”).

The Damon Business Combination is subject to material conditions, including approval of the Damon Business Combination by securities holders of Damon, approval of the issuance of Grafiti Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British Columbia court after a hearing upon the fairness of the terms and conditions of the Business Combination Agreement as required by the exemption from registration provided by Section 3(a)(10) under the Securities Act, and approval of the listing of the Grafiti Common Shares on the Nasdaq Stock Market (“Nasdaq”) after giving effect to the Damon Business Combination.

Upon the consummation of the Damon Business Combination (the “Closing”), both Inpixon UK and the Damon Surviving Corporation will be wholly-owned subsidiaries of Grafiti.

Holders of Grafiti Common Shares, including Participating Security holders and management that hold Grafiti Common Shares immediately prior to the closing of the Damon Business Combination, are anticipated to retain approximately 18.75 % of the outstanding capital stock of the combined company determined on a fully diluted basis, which includes up to 5 % in equity incentives which may be issued to Inpixon management.

On October 26, 2023, Inpixon purchased a convertible note from Damon in an aggregate principal amount of $ 3.0 million (the “Bridge Note”) together with the Bridge Note Warrant (as defined below) pursuant to a private placement, for a purchase price

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Note 26 - Subsequent Events (continued)

The Exchange Ratio will be subject to certain adjustments to the extent that Inpixon’s net cash is greater than or less than $ 21.5 million and/or any principal and accrued or unpaid interest remains outstanding under those certain promissory notes issued by Inpixon to Streeterville Capital, LLC on July 22, 2022 and December 30, 2022.

After application of the Exchange Ratio and subject to those certain adjustments described above, Inpixon stockholders immediately prior to the Effective Time will retain approximately 40 % of the issued and outstanding capital stock of the combined company and XTI security holders will retain approximately 60 % of the issued and outstanding capital stock of the combined company.

At or prior to the Effective Time, Inpixon will effect transactions for the divestiture of its Shoom, SAVES and Game Your Game lines of business and investment securities, as applicable, by any lawful means, including a sale to one or more third parties, spin off, plan of arrangement, merger, reorganization, or any combination of these.

The Proposed Transaction is anticipated to be accounted for using the acquisition method (as a reverse acquisition) in accordance with GAAP.

Although the Company is the legal acquirer and will issue shares of its common stock to effect the merger with XTI, XTI is expected to be the accounting acquirer.

Under this method of accounting, the Company is expected to be treated as the “acquired” company for financial reporting purposes.

XTI has been determined to be the accounting acquirer because XTI is expected to maintain control of the Board of Directors and management of the combined company, and the preexisting shareholders of XTI are expected to have majority voting rights of the combined company.

For accounting purposes, the acquirer is the entity that has obtained control of another entity and, those consummated a business combination.

Under the acquisition method of accounting (as a reverse acquisition), XTI’s assets and liabilities will be recorded at carrying value and the assets and liabilities associated with the Company will be recorded at estimated fair value as of the acquisition date.

The excess of the purchase price over the estimated fair values of the net assets acquired, if applicable will be recognized as goodwill.

In order to consummate the Proposed Transaction, the Company's stockholders must approve (i) the issuance of shares of the Company's common stock to stockholders of XTI pursuant to the terms of the Merger Agreement and the change of control of Inpixon resulting from the merger under The Nasdaq Stock Market LLC rules (the Nasdaq Stock Issuance Proposal).

The Proposed Transaction cannot be consummated without the approval of the Nasdaq Stock Issuance Proposal.

The Company anticipates that the Proposed Transaction will occur shortly after the Company's special meeting to be held for stockholder approval, but currently cannot predict the exact timing.

It is expected that Inpixon’s Chief Executive Officer, Nadir Ali, and Chief Financial Officer, Wendy Loundermon, will resign upon the Closing, effective as of the Closing Date.

In addition, pursuant to a Financial Advisory and Investment Banking Services Agreement dated May 16, 2023, between Inpixon and Maxim Group LLC (“Maxim”) (the “Maxim Agreement”), as part of compensation for Maxim’s services in connection with the transaction, Inpixon has agreed to pay to Maxim, upon Closing, a cash fee equal to $ 800,000 (the “Cash Fee”), and to issue to Maxim (or its designees) registered common stock of Inpixon pursuant to the applicable registration statement on Form S-4 for the transaction, if permitted under SEC rules, or unregistered stock if not permitted, equal to the quotient obtained by dividing $1,000,000 by the closing price of Inpixon common stock as reported by Nasdaq on the date immediately preceding the announcement of the transaction, at the closing of the transaction.

However, to the extent that Maxim would beneficially own more than 4.99% of the number of shares of Inpixon common stock outstanding immediately after giving effect to such issuance, then Maxim will receive rights to such remaining amount of shares in accordance with a rights to shares agreement, in such form reasonably acceptable to the parties.

Based on the closing price of Inpixon common stock as of July 24, 2023, which equals $ 0.1523 per share, Maxim will be entitled to approximately 6,565,988 shares of Inpixon common stock in connection with the Closing of the Proposed Transaction.

These shares will be issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act, if they are not registered.

of $ 3.0 million.

The Bridge Note has a 12 % annual interest rate, payable 12 months from June 16, 2023.

The full principal balance and interest on the Bridge Note will automatically convert into common shares of Damon upon the public listing of Damon or a successor issuer thereof on a national securities exchange (a “Public Company Event”).

Inpixon will receive a five-year warrant to purchase 1,096,321 Damon Common Shares in connection with the Bridge Note (“Bridge Note Warrant”) at an exercise price as defined in the Bridge Note Warrant.

The Bridge Note Warrant contains a cashless exercise option if the warrant shares are not covered by an effective registration statement within 180 days following the consummation of the Public Company Event, and also a full ratchet price protection feature.

If the Damon Business Combination is consummated, the Bridge Note will be converted into Grafiti Common Shares upon consummation of the Damon Business Combination and the Bridge Note Warrant will become exercisable for Grafiti Common Shares.

XTI Promissory Note & Security Agreement

Each Future Loan will be in the principal amount of up to $ 500,000 , and the aggregate amount of the Future Loans will be up to $ 1,775,000 (or such greater

INPIXON AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Note 27 - Subsequent Events (continued)

amount as Inpixon shall otherwise agree in its sole and absolute discretion).

These Future Loans and security will be evidenced by a Senior Secured Promissory Note (the “Promissory Note”) and a Security and Pledge Agreement (the “Security Agreement”).

The Promissory Note will bear interest at 10 % per annum, compounded annually, and for each Future Loan, beginning on the date the Future Loan is advanced to XTI.

The Promissory Note is included in the Company's condensed consolidated balance sheet as of June 30, 2023 in Notes and Other Receivables.

As discussed in Note 22, Inpixon is providing loans to XTI on a senior secured basis.

On November 14, 2023, the maximum principal amount under the XTI Promissory Note was increased to $ 3.1 million.

As of the filing date of these financial statements, the principal balance on the loan to XTI is approximately $ 2.7 million.

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