What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-20 compared with 2023-08-18 · 181 added, 122 removed, 367 unchanged (45% of the section changed)

7 unchanged sentences

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.

20 unchanged sentences

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

We experienced a net loss from continuing operations of approximately $19.7 million and approximately $19.7 million for the six months ended June 30, 2023 and 2022, respectively.

We experienced a net loss from continuing operations of approximately $30.5 million and approximately $27.1 million for the nine months ended September 30, 2023 and 2022, respectively.

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

1 unchanged sentence

Global Events

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

These factors can include interest rates;

12 unchanged sentences

In September of 2022, we entered into an Agreement and Plan of Merger in connection with the spin-off and sale of our enterprise apps business which was consummated on March 14, 2023.

(See “Recent Events” below for more details).

Additionally, on July 24, 2023, the Company entered into an Agreement and Plan of Merger with XTI Aircraft Company (the "XTI Business Combination").

(See "Recent Events" below for more details).

In addition, on or prior to the effective time of the merger with XTI we intend to effect a transaction for the divestiture of our Shoom, SAVES and Game Your Game lines of business and investment securities, as applicable, by any lawful means, which may include a sale to one or more third parties, spin off, plan of arrangement, merger, reorganization, or any combination of these.

Additionally, on July 24, 2023, the Company entered into an Agreement and Plan of Merger with XTI Aircraft Company (the "XTI Merger Agreement").

(See " Recent Events - XTI Transaction " below for more details).

In addition, on or around the effective time of the merger with XTI we intend to effect a transaction for the divestiture of our Shoom, SAVES and Game Your Game lines of business and investment securities, as applicable, by any lawful means, which may include a sale to one or more third parties, spin off, plan of arrangement, merger, reorganization, or any combination of these.

On October 23, 2023, we 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”), in connection with the spin-off of Inpixon Limited which operates our SAVES business in the United Kingdom.

(See " Recent Events - Spin-off - Grafiti Holding, Inc.

" below for more details).

We 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”).

(See " Recent Events - Damon Business Combination " below for more details).

Recent Events

3 unchanged sentences

On June 13, 2023, the Company entered into an amendment to the Sales Agreement with Maxim, pursuant to which the aggregate offering price of the ATM Offering was increased from $25.0 million to approximately $27.4 million.

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.

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.The Company is currently subject to the SEC’s “baby shelf rules,” as of April 17, 2023, which prohibits companies with a public float of less than $75 million from issuing securities under a shelf registration statement in excess of one-third of such company’s public float in a 12-month period.

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 currently subject to the SEC’s “baby shelf rules,” as of April 17, 2023, which prohibits companies with a public float of less than $75 million from issuing securities under a shelf registration statement in excess of one-third of such company’s public float in a 12-month period.

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

Note Exchanges and Amendments

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”).

In exchange for the July 2022 Note Maturity Date Extension, the Company agreed to pay Streeterville an extension fee in the amount of $0.1 million, which was added to the outstanding balance of the July 2022 Note.

1 unchanged sentence

In exchange for the December 2022 Note Maturity Date Extension, the Company agreed to pay the Holder an extension fee in the amount of $0.1 million which was added to the outstanding balance of the December 2022 Note.

During the quarter ended June 30, 2023, the Company entered into exchange agreements with Streeterville, pursuant to which the Company and Streeterville agreed to:

During the three 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 $3.2 million and then cause the outstanding balance of the July 2022 Note to be reduced by approximately $3.2 million;

and (ii) exchange the partitioned notes for the delivery of 18,144,158 shares of the Company’s common stock, at effective prices between $0.1277 and $0.2272 per share.

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).

Compliance with Nasdaq Continued Listing Requirement

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, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

Compliance with Nasdaq Continued Listing Requirements

On April 14, 2023, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days beginning on March 2, 2023, and ending on April 13, 2023, the Company no longer meets the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a period of 180 calendar days, or until October 11, 2023, in which to regain compliance.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a period of 180 calendar days, or until October 11, 2023, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180-day period.

In the event that the Company does not regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that our common stock will be subject to delisting.

The letter does not result in the immediate delisting of our common stock from the Nasdaq Capital Market.

The Company intends to monitor the closing bid price of our common stock and consider its available options in the event that the closing bid price of our common stock remains below $1 per share.

The Company was not able to regain compliance within this 180-day period;

however, on October 12, 2023,the Company received notice from Nasdaq that it was granted an additional 180 calendar days, or until April 8, 2024 to regain compliance with the minimum bid price requirement.

On November 9, 2023, the Company received notice (the “November 9 Letter”) from Nasdaq that Nasdaq had determined that as of November 8, 2023, the Company’s securities had a closing bid price of $0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(c)(3)(A)(iii) which states in part:

if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”).

As a result, the Staff has issued a letter notifying the Company of its determination to delist the Company’s securities from Nasdaq effective as of the opening of business on November 20, 2023, unless the Company requests an appeal of the Staff’s determination on or prior to November 16, 2023, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the determination described in the November 9 Letter and to address compliance with the Low-Priced Stocks Rule and a hearing was scheduled for February 22, 2024.

The Company may cure the bid price deficiency to regain compliance with the Low Priced Stock Rule by effecting a reverse stock split to increase the price per share of its common stock.

A reverse stock split also would be expected to allow the Company to regain compliance with the minimum bid price requirement.

At a special meeting of stockholders held on September 29, 2023, the Company obtained the necessary stockholder approval of an amendment to the Company’s articles of incorporation to effect a reverse stock split of the Company’s outstanding common stock, at a ratio between 1-for-2 and 1-for-50 (the “Reverse Split Ratio”), to be determined at the discretion of the Company’s board of directors.

The Company also intends to seek an increase in the Reverse Split Ratio for the purpose of satisfying the bid price requirements applicable for initial listing applications in connection with the closing of the XTI transaction.

The proposed transaction between the Company and XTI is anticipated to close prior to the end of this year and as a result, the Company expects that it will be able to cure the bid price deficiencies in connection with the closing of the XTI transaction.

The November 9 Letter has no immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on the Nasdaq Capital Market under the symbol “INPX”.

While the appeal process is pending, the suspension of trading of the Company’s common stock would be stayed and the Company’s common stock would continue to trade on The Nasdaq Capital Market until the hearing process concludes and the Panel issues a written decision.

Amendments to By-Laws

On September 18, 2023, the Company’s Board of Directors(the “Board”) approved two amendments to the Company’s amended and restated by-laws, as amended (the “By-Laws”), effective as of the date of the Board’s approval (“By-Laws Amendment No.

3” and “By-Laws Amendment No.

4,” respectively), pursuant to NRS 78.120(2) of Chapter 78 of the Nevada Revised Statutes (the “NRS”).

By-Laws Amendment No.

3 gives the Board the full power and authority to amend the By-Laws as permitted by the NRS.

By-Laws Amendment No.

4 (i) revises certain By-Laws relating to the removal of directors and the filling of vacancies on the Board to be consistent with NRS 78.335 and (ii) reduces the quorum requirement for all meetings of stockholders (unless otherwise provided by the NRS, the Company’s articles of incorporation or the By-Laws) from the presence, in person or by proxy, of a majority of the outstanding shares of stock entitled to vote to the presence, in person or by proxy, of one-third of the outstanding shares of stock entitled to vote, as permitted pursuant to NRS 78.320(1) and Nasdaq Listing Rule 5620(c).

May 2023 Warrant Purchase Agreement

16 unchanged sentences

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 grant date fair value of the Warrants was determined to be $1.48 million at the date of issuance, and the fair value of the Warrants was determined to be approximately $1.50 million as of June 30, 2023.

The fair value of the Warrants are reflected within Warrant Liability on the Condensed Consolidated Balance Sheet, and the change in fair value as interest expense is reported in 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 warrant offering for which the Company received gross proceeds of approximately $2.3 million.

On June 20, 2023 (the "Release Effective Date"), the Company entered into a 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 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.

XT I Transaction

XTI Transaction

Merger Agreement

On July 24, 2023, the Company entered into an Agreement and Plan of Merger (as it may be amended from time to time, 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”).

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 other closing conditions are satisfied or waived in accordance with the Merger Agreement), 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 (the “Closing,” and the date of the Closing, the “Closing Date”), Inpixon will be renamed “XTI Aerospace, Inc.” (the “Name Change”).

On July 24, 2023, the Company entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “XTI 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”).

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

If the XTI Merger Agreement is approved by Inpixon’s and XTI’s stockholders (and the other closing conditions are satisfied or waived in accordance with the Merger Agreement), 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 “XTI Proposed Transaction”).

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

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

9 unchanged sentences

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.

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.

The foregoing description of the Merger Agreement and the Proposed Transaction does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to this Form 10-Q and incorporated herein by reference.

The foregoing description of the Merger Agreement and the XTI Proposed Transaction does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to this Form 10-Q and incorporated herein by reference.

XTI Promissory Note & Security Agreement

1 unchanged sentence

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

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.

The Security Agreement grants Inpixon a first priority security interest in and lien upon all of XTI’s property to secure the repayment of the Promissory Note.

The foregoing description of the Promissory Note and the Security Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of the Promissory Note and the Security Agreement, which are attached as Exhibit 10.12 and Exhibit 10.13, respectively, to this Form 10-Q incorporated herein by reference.

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

The XTI 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 XTI 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 XTI Promissory Note is included in the Company's condensed consolidated balance sheet as of September 30, 2023 in Notes Receivable.

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

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

The outstanding principal amount under the XTI 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 XTI 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 XTI Promissory Note will be forgiven and of no further force if the XTI 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 XTI 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 XTI Promissory Note will be extended to December 31, 2024.

The Security Agreement grants Inpixon a first priority security interest in and lien upon all of XTI’s property to secure the repayment of the XTI Promissory Note.

Transaction Bonus Plan in connection with Completed Transaction

As described in Inpixon’s current report on Form 8-K filed on March 20, 2023, on March 14, 2023, Inpixon completed a reorganization involving the transfer of Inpixon’s CXApp and enterprise app business lines to a subsidiary of Inpixon, followed by a distribution of shares of such subsidiary to Inpixon’s equityholders.

The reorganization was followed by a subsequent business combination transaction between such former subsidiary and KINS Technology Group Inc., a special purpose acquisition company which was renamed CXApp, Inc.

7 unchanged sentences

Loundermon being entitled to 3.5% and 0.5% of such transaction value, respectively.

Subject to the terms described above, the bonus amounts under the Completed Transaction Bonus Plan will be paid prior to September 30, 2023, unless a transaction that results in a change of control is consummated prior to such date, in which case, the bonus amounts will become payable upon the closing date of such change-of-control transaction.

The consummation of the Proposed Transaction would constitute a change-of-control transaction under the Completed Transaction Bonus Plan.

During the three months ended September 30, 2023, the Company paid approximately $3.5 million to the company management and former management under the Transaction Bonus Plan which settled the amount in full and no amounts were owed under the plan as of September 30, 2023.

In addition, if a participant becomes entitled to any payments or benefits from the Completed Transaction Bonus Plan or any other amounts (collectively, the “Company Payments Relating to the Completed Transaction Plan”) that are subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), the company will pay the participant the greater of the following amounts:

7 unchanged sentences

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 Proposed Transaction is expected to qualify as a Contemplated Transaction.

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

Pursuant to the Plan, in connection with the closing of a Contemplated Transaction or a Qualifying Transaction, the participants will be eligible to receive bonuses as described below.

10 unchanged sentences

The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by the terms and conditions of the Plan, a copy of which is attached as Exhibit 10.15 to this Form 10-Q and is incorporated herein by reference.

During the three months ended September 30, 2023, the Company did not pay or accrue any bonuses under the Plan in connection with future strategic transactions.

Spin-off - Grafiti Holding, Inc.

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”), 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 pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the Securities Act of 1933, as amended (the “Securities Act”), as further described below.

Damon Business Combination

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.

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 Damon 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, which will adopt a new name as determined by Damon.

Grafiti, after the Closing, is referred to herein as the “combined

company.” Pursuant to the Business Combination Agreement, the parties will take all necessary action so that at the Closing, the board of directors of the combined company will consist of such directors as Damon may determine, subject to the independent requirements under the Nasdaq rules, and provided that at least one director will be nominated by 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 23, 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 of $3.0 million.

The Bridge Note has a 12% annual interest rate, payable on the maturity date, which is twelve 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”).

The number of shares issued upon conversion due to a Public Company Event will equal the quotient obtained by dividing (x) the outstanding principal and unpaid accrued interest on the date of a Public Company Event (or within ten trading days of a direct listing), if any, by (y) the lesser of the then applicable Conversion Price or Public Company Event Conversion Price, each as defined in the Bridge Note.

The Bridge Note will contain customary covenants relating to Damon’s financials and operations.

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, in each case subject to adjustments for dividends, splits and subsequent equity sales by Damon.

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 and the Bridge Note Warrant will become exercisable for Grafiti Common Shares.

Critical Accounting Policies and Estimates

17 unchanged sentences

We have determined that we will operate and report in three reporting units:

Indoor Intelligence, SAVES, and Shoom.

As of June 30, 2022, the Company's previously recorded goodwill has been fully impaired.

Intelligence, SAVES, and Shoom.

As of September 30, 2023, the Company's previously recorded goodwill has been fully impaired.

R ESULTS OF O PERATIONS

Three Months Ended June 30, 2023 compared to the Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 compared to the Three Months Ended September 30, 2022

The following table sets forth selected consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages) Amount % of

6 unchanged sentences

Loss from operations $ (9,082) (450) % $ (5,463) (224) % $ (3,619) (66) %

Other income (expense) $ (665) (32) % $ 430 17 % $ (1,095) (255) %

Other expense $ (1,763) (87) % $ (5,409) (222) % $ 3,646 67 %

Provision for income taxes $ (3) — % $ — — % $ (3) — %

1 unchanged sentence

Loss from discontinued operations, net of tax $ — — % $ (7,121) (292) % $ 7,121 100 %

Net income (loss) attributable to stockholders of Inpixon $ (6,966) (339) % $ (19,872) (771) % $ 12,906 65 %

Net loss attributable to stockholders of Inpixon $ (10,384) (515) % $ (17,591) (722) % $ 7,207 41 %

* Amounts used to calculate dollar and percentage changes are based on numbers in the thousands.

Accordingly, calculations in this item, which may be rounded to the nearest hundred thousand, may not produce the same results.

Revenues for the three months ended June 30, 2023 were $2.1 million compared to $2.6 million for the comparable period in the prior year for a decrease of approximately $0.5 million, or approximately 20%.

This decrease is primarily attributable to the decrease in Indoor Intelligence sales due to delayed shipments and lower sales for the SAVES product line.

Revenues for the three months ended September 30, 2023 were $2.0 million compared to $2.4 million for the comparable period in the prior year for a decrease of approximately $0.4 million, or approximately 17%.

This decrease is primarily attributable to the decrease in Indoor Intelligence sales due to longer sales cycles.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2023 were $0.4 million compared to $0.9 million for the comparable period in the prior year.

This decrease in cost of revenues of approximately $0.5 million, or approximately 54%, was primarily attributable to lower revenues during the quarter.

The gross profit margin for the three months ended June 30, 2023 was 81% compared to 67% for the three months ended June 30, 2022.

Cost of revenues for the three months ended September 30, 2023 were $0.5 million compared to $0.8 million for the comparable period in the prior year.

This decrease in cost of revenues of approximately $0.3 million, or approximately 40%, was primarily attributable to lower cost of revenues on the SAVES product line and lower revenue in the IIOT business.

The gross profit margin for the three months ended September 30, 2023 was 78% compared to 69% for the three months ended September 30, 2022.

This increase in margin is primarily due to lower cost of goods on the SAVES and indoor intelligence product lines during the year.

Operating Expenses

Operating expenses for the three months ended June 30, 2023 were $8.3 million and $11.1 million for the comparable period ended June 30, 2022.

This decrease of approximately $2.8 million is primarily attributable to the $2.0 million of goodwill impairment in the three month ended June 30,2022 and lower compensation, professional fees and legal expenses in the three months ended June 30, 2023.

Operating expenses for the three months ended September 30, 2023 were $10.6 million and $7.1 million for the comparable period ended September 30, 2022.

This increase of approximately $3.5 million is primarily attributable to the acquisition and transaction costs incurred in the three months ended September 30, 2023.

Other Income (Expense)

Other income/expense for the three months ended June 30, 2023 was a loss of $0.7 million compared to income of $0.4 million for the comparable period in the prior year.

This increase in loss of approximately $1.1 million is primarily attributable to increased interest expense on long term debt and lower unrealized gain on equity securities in the three months ended June 30, 2023.

Other income/expense for the three months ended September 30, 2023 was a loss of $1.8 million compared to a loss of $5.4 million for the comparable period in the prior year.

This decrease in loss of approximately $3.6 million is primarily attributable to the unrealized loss on the FOXO shares in the three months ended September 30, 2022.

Provision for Income Taxes

The provision for income tax for the three months ended June 30, 2023 and 2022 was immaterial.

The provision for income tax for the three months ended September 30, 2023 and 2022 was immaterial.

Loss from Discontinued Operations, net of tax

Loss from discontinued operations, net of tax, for the three months ended June 30, 2023 was zero compared to $11.4 million for the comparable period in the prior year.

There is no loss from discontinued operations in the three months ended June 30, 2023 as those operations were spun off in the three months ended March 31, 2023 period.

Six Months Ended June 30, 2023 compared to the Six Months Ended June 30, 2022

Loss from discontinued operations, net of tax, for the three months ended September 30, 2023 was zero compared to $7.1 million for the comparable period in the prior year.

There is no loss from discontinued operations in the three months ended September 30, 2023 as those operations were spun off in the three months ended March 31, 2023 period.

Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022

The following table sets forth selected condensed consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in thousands, except percentages) Amount % of

6 unchanged sentences

Loss from operations $ (23,921) (333) % $ (20,548) (268) % $ (3,373) (16) %

Other income (expense) $ (2,327) (45) % $ (1,115) (21) % $ (1,212) (109) %

Other expense $ (4,090) (57) % $ (6,524) (85) % $ 2,434 37 %

Provision for income taxes $ (2,488) (35) % $ (22) — % $ (2,466) — %

4 unchanged sentences

Accordingly, calculations in this item, which may be rounded to the nearest hundred thousand, may not produce the same results.

Revenues are essentially flat across the product lines as for the six months ended June 30, 2023 they were $5.161 million compared to $5.225 million for the comparable period in the prior year for an decrease of approximately $0.064 million, or approximately 1%.

Revenues for the nine months ended September 30, 2023 were $7.2 million compared to $7.7 million for the comparable period in the prior year for an decrease of approximately $0.5 million, or approximately 6%.

This decrease is primarily due to longer sales cycles of the IIOT business.

Cost of Revenues

Cost of revenues for the six months ended June 30, 2023 and 2022 were $1.2 million and $1.7 million, respectfully.

This decrease in cost of revenues of approximately $(473) million, or approximately 54%, was primarily attributable to lower cost of revenues on the SAVES product line.

The gross profit margin for the six months ended June 30, 2023 was 77% compared to 68% for the six months ended June 30, 2022.

This increase in gross profit margin is primarily due to lower cost of goods on the SAVES and product line during the year.

Cost of revenues for the nine months ended September 30, 2023 and 2022 were $1.6 million and $2.4 million, respectfully.

This decrease in cost of revenues of approximately $0.8 million, or approximately 32%, was primarily attributable to lower cost of revenues on the SAVES product line and lower revenue in the IIOT business.

The gross profit margin for the nine months ended September 30, 2023 was 77% compared to 69% for the nine months ended September 30, 2022.

This increase in gross profit margin is primarily due to lower cost of goods on the SAVES product line during the year.

Operating Expenses

Operating expenses for the six months ended June 30, 2023 were $18.8 million and $22.2 million for the comparable period ended June 30, 2022.

This decrease of $3.4 million is primarily attributable to the $2.0 million of goodwill impairment in the six months ended June 30, 2022, lower stock based compensation and professional fees in the six months ended June 30, 2023 offset by $1.4 million of transaction costs in the 2023 period.

Other Income (Expense)

Other income/expense for the six months ended June 30, 2023 was a loss of $2.3 million as compared to a loss of $1.1 million for the six months ended June 30, 2022.

The six months ended June 30, 2023 included higher interest expense on short term debt and the six months ended June 30, 2022 included an approximate $1.3 million unrealized loss on equity securities.

Operating expenses for the nine months ended September 30, 2023 were $29.5 million and $25.8 million for the comparable period ended September 30, 2022.

This increase of $3.7 million is primarily attributable the acquisition costs and transactions costs in the nine months ended September 30, 2023 offset by the $2.0 million attributable to goodwill impairment in the nine months ended September 30, 2022.

Other (Expense) Income

Other expense for the nine months ended September 30, 2023 was a loss of $4.1 million as compared to a loss of $6.5 million for the nine months ended September 30, 2022.

The nine months ended September 30, 2023 included higher interest expense on short term debt and the nine months ended September 30, 2022 included an approximate $7.1 million unrealized loss on FOXO and Sysorex equity securities.

Provision for Income Taxes

There is an income tax expense of approximately $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.

Income tax expense totaled approximately $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.

Loss from Discontinued Operations, Net of Tax

Loss from discontinued operations, net of tax for the six months ended June 30, 2023 was $4.9 million compared to a loss of $12.1 million for the six months ended June 30, 2022.

This decrease in loss of $7.3 million was primarily due to with the spin off occurring in March 2023, there are only 3 months of discontinued operations in the six months ended June 30, 2023 with there being 6 months of discontinued operations in the six months ended June 30, 2022.

Additionally, the June 2022 period includes approximately $5.5 million of goodwill impairment which is offset by a $2.8 million earnout compensation benefit.

Loss from discontinued operations, net of tax for the nine months ended September 30, 2023 was $4.9 million compared to a loss of $22.8 million for the nine months ended September 30, 2022.

The decrease in loss from discontinued operations was $17.9 million from the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 because the enterprise apps spin off occurred in March 2023, therefore there are only 3 months of discontinued operations in the nine months ended September 30, 2023 and nine months of discontinued operations in the nine months ended September 30, 2022.

Additionally, the September 2022 period of discontinued operations includes approximately $5.5 million of goodwill impairment which is offset by a $2.8 million earnout compensation benefit.

Non-GAAP Financial information

2 unchanged sentences

It is defined as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.

Adjusted EBITDA for the three months ended June 30, 2023 was a loss of $5.0 million million compared to a loss of $5.2 million million for the prior year period.

Adjusted EBITDA for the six months ended June 30, 2023 was a loss of $9.9 million compared to a loss of $11.7 million for the prior year period.

The following table presents a reconciliation of net income (loss) attributable to stockholders of Inpixon, which is our GAAP operating performance measure, to Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022 (in thousands):

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

Adjusted EBITDA for the three months ended September 30, 2023 was a loss of $4.1 million compared to a loss of $1.4 million for the prior year period.

Adjusted EBITDA for the nine months ended September 30, 2023 was a loss of $14.0 million compared to a loss of $9.4 million for the prior year period.

The following table presents a reconciliation of net income (loss) attributable to stockholders of Inpixon, which is our GAAP operating performance measure, to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

1 unchanged sentence

Loss from discontinued operations, net of tax — 7,121 4,856 22,786

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

Interest expense, net 818 234 4,300 65

Income tax provision 3 — 2,488 22

4 unchanged sentences

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

Unrealized gain on note — 153 — 325

Acquisition transaction/financing costs 1,656 2 2,343 254

9 unchanged sentences

Gain on equity securities — — (1,142) —

Loss on exchange of debt for equity 124 — 124 —

Unrealized foreign exchange (gains)/losses 354 1,019 209 1,143

28 unchanged sentences

Proforma Non-GAAP Net Income (Loss) per Share

Basic and diluted net loss per share for the three months ended June 30, 2023 was $0.19 compared to loss of $12.87 for the prior year period.

Basic and diluted net loss per share for the six months ended June 30, 2023 was $1.16 compared to loss of $20.91 for the prior year period.

Proforma non-GAAP net income (loss) per share is used by our Company’s management as an evaluation tool as it manages the business and is defined as net income (loss) per basic and diluted share adjusted for non-cash items including stock based compensation, amortization of intangibles and one time charges including gain on the settlement of obligations, severance costs, provision for doubtful accounts, change in the fair value of shares to be issued, acquisition costs and the costs associated with the public offering.

Proforma non-GAAP net loss per basic and diluted common share for the three months ended June 30, 2023 was $0.18 per share compared to a loss of $2.72 per share for the prior year period.

Proforma non-GAAP net loss per basic and diluted common share for the six months ended June 30, 2023 was a loss of $0.79 per share compared to a loss of $5.88 per share for the prior year period.

Basic and diluted net loss per share for the three months ended September 30, 2023 was $0.16 compared to loss of $10.21 for the prior year period.

Basic and diluted net loss per share for the nine months ended September 30, 2023 was $0.96 compared to loss of $31.08 for the prior year period.

severance costs, provision for doubtful accounts, change in the fair value of shares to be issued, acquisition costs and the costs associated with the public offering.

Proforma non-GAAP net loss per basic and diluted common share for the three months ended September 30, 2023 was $0.08 per share compared to a loss of $0.84 per share for the prior year period.

Proforma non-GAAP net loss per basic and diluted common share for the nine months ended September 30, 2023 was a loss of $0.60 per share compared to a loss of $4.78 per share for the prior year period.

The following table presents a reconciliation of net loss per basic and diluted share, which is our GAAP operating performance measure, to proforma non-GAAP net loss per share for the periods reflected (in thousands, except per share data):

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

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

(thousands, except per share data) 2023 2022 2023 2022

3 unchanged sentences

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

Unrealized gain on note — 153 — 325

Acquisition transaction/financing costs 1,656 2 2,343 254

9 unchanged sentences

Gain on equity securities — — (1,142) —

Loss on exchange of debt for equity 124 — 124 —

Unrealized foreign exchange (gains)/losses 354 1,019 209 1,143

17 unchanged sentences

• We believe that the use of proforma non-GAAP net income (loss) per share is helpful to compare our results to other companies.

Liquidity and Capital Resources as of June 30, 2023

Our current capital resources and operating results as of and through June 30, 2023, consist of:

Liquidity and Capital Resources as of September 30, 2023

Our current capital resources and operating results as of and through September 30, 2023, consist of:

1) an overall working capital surplus of approximately $3.0 million;

2) cash and cash equivalents of approximately $13.5 million;

3) net cash used by operating activities for the six months ended June 30, 2023 of $15.8 million.

The breakdown of our overall working capital surplus as of June 30, 2023 is as follows (in thousands):

3) net cash used by operating activities for the nine months ended September 30, 2023 of $25.1 million.

The breakdown of our overall working capital surplus as of September 30, 2023 is as follows (in thousands):

Working Capital Assets Liabilities Net

12 unchanged sentences

Our contractual obligations consists of operating lease liabilities and acquisition liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding.

June 30, 2023, the total obligation for capitalized operating leases is approximately $0.5 million, of which approximately $0.2 million is expected to be paid in the next twelve months.

As of June 30, 2023, we owed approximately $13.8 million in principal under promissory notes with third parties.

September 30, 2023, the total obligation for capitalized operating leases is approximately $0.4 million, of which approximately $0.2 million is expected to be paid in the next twelve months.

As of September 30, 2023, we owed approximately $11.2 million in principal under promissory notes with third parties.

This balance excludes intercompany amounts that are eliminated in the financial statements.

1 unchanged sentence

See Note 10 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q.

In addition, as of June 30, 2023, we have accrued a liability for outstanding warrants, of $1.5 million.

In addition, as of September 30, 2023, we have accrued a liability for outstanding warrants, of $1.4 million.

Each warrant is immediately exercisable for one share of Common Stock and will expire one year from the issuance date in May 2023 unless extended by the Company with the consent of the warrant holder.

See Note 15 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q.

Net cash used in operating activities during the six months ended June 30, 2023 of $15.8 million consists of a net loss of $24.5 million offset by non-cash adjustments of approximately $6.4 million less net cash changes in operating assets and liabilities of approximately $2.3 million.

Although the Company has sustained significant losses during six months ended June 30, 2023, in addition to the cash we had on hand, we raised gross proceeds of approximately $21.0 million in connection with the ATM Offering described above and received $2.3 million from warrants exercised since January 1, 2023.

As part of the XTI merger transaction, the Company agreed to provide XTI with $2.3 million in exchange for a senior secured promissory note.

On November 14, 2023, the principal amount under this note was increased to approximately $3.1 million.

As of September 30, 2023, the Company has provided approximately $2.0 million in principal of that balance.

In addition, the Company agreed to make a best effort to have $10 million cash on hand at closing, inclusive of the $2.3 million convertible note.

Additionally, at the signing of the business combination agreement with Damon on October 23, 2023, the Company agreed to and purchased a convertible note from Damon in an aggregate principal amount of $3.0 million.

Net cash used in operating activities during the nine months ended September 30, 2023 of $25.1 million consists of a net loss of $35.4 million offset by non-cash adjustments of approximately $8.9 million less net cash changes in operating assets and liabilities of approximately $1.4 million.

Although the Company has sustained significant losses during nine months ended September 30, 2023, in addition to the cash we had on hand, we raised gross proceeds of approximately $27.4 million in connection with the ATM Offering described above and received $2.3 million from warrants exercised since January 1, 2023.

Given our current cash balances, financing facilities and budgeted cash flow requirements, the Company believes such funds are sufficient to satisfy its working capital needs, capital asset purchases, debt repayments and other liquidity requirements associated with its existing operations for the next 12 months from the issuance date of the financial statements.

11 unchanged sentences

Liquidity and Capital Resources

The Company’s net cash flows used in operating, investing and financing activities for the six months ended June 30, 2023 and 2022 and certain balances as of the end of those periods are as follows (in thousands):

For the Six Months Ended June 30,

The Company’s net cash flows used in operating, investing and financing activities for the nine months ended September 30, 2023 and 2022 and certain balances as of the end of those periods are as follows (in thousands):

For the Nine Months Ended September 30,

Net cash used in operating activities $ (25,090) $ (26,943)

Net cash (used in) provided by investing activities (1,829) 36,748

Net cash provided by (used in) financing activities 11,718 (4,163)

Net cash provided financing activities 20,185 902

Effect of foreign exchange rate changes on cash (12) (34)

Net (decrease)/increase in cash and cash equivalents $ (6,746) $ 10,673

As of June 30,

As of September 30,

2023 As of December 31,

1 unchanged sentence

Working capital surplus $ 2,986 $ 5,152

Operating Activities for the six months ended June 30, 2023

Net cash used in operating activities during the six months ended June 30, 2023 was approximately $15.8 million.

The cash flows related to the six months ended June 30, 2023 consisted of the following (in thousands):

Net income (loss) $ (24,507)

Operating Activities for the nine months ended September 30, 2023

Net cash used in operating activities during the nine months ended September 30, 2023 was approximately $25.1 million.

The cash flows related to the nine months ended September 30, 2023 consisted of the following (in thousands):

Net loss $ (35,355)

Non-cash income and expenses 8,905

9 unchanged sentences

2,591 Deferred income tax

58 Unrealized loss on equity securities

(5,733) Unrealized gain on equity securities

6,692 Realized loss on sales of equity securities

$ 8,781 Total non-cash expenses

7 unchanged sentences

$ 1,360 Net cash used in the changes in operating assets and liabilities

Operating Activities for the six months ended June 30, 2022

Net cash used in operating activities during the six months ended June 30, 2022 was approximately $19.5 million.

The cash flows related to the six months ended June 30, 2022 consisted of the following (in thousands):

Net income (loss) $ (31,887)

Operating Activities for the nine months ended September 30, 2022

Net cash used in operating activities during the nine months ended September 30, 2022 was approximately $26.9 million.

The cash flows related to the nine months ended September 30, 2022 consisted of the following (in thousands):

Net loss $ (49,880)

Non-cash income and expenses 22,192

8 unchanged sentences

1,870 Unrealized gain/loss on note

(791) Loss on conversion of note receivable

(278) Accrued interest income, related party

5 Provision for doubtful accounts

(1) Deferred income tax

5 unchanged sentences

571 Decrease in inventory, prepaid expenses and other current assets and other assets

(1,498) Decrease in accounts payable

237 Increase in accounts payable

1,021 Increase in accrued liabilities, income tax liabilities and other liabilities

2 unchanged sentences

$ 745 Net use of cash used in the changes in operating assets and liabilities

Cash Flows from Investing Activities as of June 30, 2023 and 2022

Net cash flows used in investing activities during the six months ended June 30, 2023 was approximately $0.5 million compared to net cash flows provided by investing activities during the six months ended June 30, 2022 of approximately $37.1 million.

Cash flows related to investing activities during the six months ended June 30, 2023 include $0.05 million for the purchase of property and equipment, $0.1 million for investment in capitalized software, $0.5 million for the issuance of a note receivable, and $0.2 million of proceeds from a note receivable.

Cash flows related to investing activities during the six months ended June 30, 2022 include $0.1 million for the purchase of property and equipment, $0.3 million investment in capitalized software, $5.5 million for the purchase of a convertible note and $43.0 million from sales of treasury bills.

Cash Flows from Financing Activities as of June 30, 2023 and 2022

Net cash flows provided by financing activities during the six months ended June 30, 2023 was $11.7 million.

Net cash flows used in financing activities during the six months ended June 30, 2022 was $4.2 million.

During the six months ended June 30, 2023, the Company received incoming cash flows of $0.1 million from a promissory note, received $20.4 million from a registered direct offering, received $1.4 million from the issuance of warrants, paid $0.2 million of the CXApp acquisition liability, and distributed $10.0 million to the shareholders related to the spin-off of CXApp.

During the six months ended June 30, 2022, the Company received incoming cash flows $46.9 million for the issuance of preferred series 8 stock and warrants, paid $49.3 million for the redemption of preferred series 7 stock, paid $1.8 million of the CXApp acquisition liability, received $0.4 million of net proceeds from promissory notes and paid $0.3 million of taxes related to the net share settlement of restricted stock units.

Cash Flows from Investing Activities as of September 30, 2023 and 2022

Net cash flows used in investing activities during the nine months ended September 30, 2023 was approximately $1.8 million compared to net cash flows provided by investing activities during the nine months ended September 30, 2022 of approximately $36.7 million.

Cash flows related to investing activities during the nine months ended September 30, 2023 include $0.1 million for the purchase of property and equipment, $0.1 million for investment in capitalized software, $2.0 million for the issuance of a note receivable, $0.3 million from the sales of securities and $0.2 million of proceeds from a note receivable.

Cash flows related to investing activities during the nine months ended September 30, 2022 include $0.2 million for the purchase of property and equipment, $0.6 million investment in capitalized software, $5.5 million for the purchase of a convertible note, $0.2 million from the sales of equity securities, $0.2 million for the issuance of a note receivable and $43.0 million from sales of treasury bills.

Cash Flows from Financing Activities as of September 30, 2023 and 2022

Net cash flows provided by financing activities during the nine months ended September 30, 2023 was $20.2 million.

Net cash flows provided by financing activities during the nine months ended September 30, 2022 was $0.9 million.

During the nine months ended September 30, 2023, the Company received incoming cash flows of $0.1 million from a promissory note, received $26.5 million from a registered direct offering, received $1.4 million from the issuance of warrants, received $2.3 million from the exercise of warrants, paid $0.2 million of the CXApp acquisition liability, and distributed $10.0 million to the

shareholders related to the spin-off of CXApp.

During the nine months ended September 30, 2022, the Company received incoming cash flows $46.9 million for the issuance of preferred stock, paid $49.3 million for the redemption of preferred series 7 stock, paid $2.0 million of the CXApp acquisition liability, received $5.5 million of net proceeds from promissory notes and paid $0.3 million of taxes related to the net share settlement of restricted stock units.

Off-Balance Sheet Arrangements

6 unchanged sentences

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 2. Management’s Discussion and Analysis