Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 15, 2021

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number 001-36404
INPIXON
(Exact name of registrant as specified in its charter)
Nevada 88-0434915
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2479 E. Bayshore Road
Suite 195
Palo Alto, CA 94303
(Address of principal executive offices)
(Zip Code)
(408) 702-2167
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on
which each is registered
Common Stock, par value $0.001 INPX The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
x
Smaller reporting company
x
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, Par Value $0.001
124,593,719
(Class)
Outstanding at November 9, 2021


Table of Contents

INPIXON
TABLE OF CONTENTS
Page No.
Special Note Regarding Forward-Looking Statements and Other Information Contained in this Report
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020
Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020
Condensed Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2021 and 2020
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020
Notes to Unaudited Condensed Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Signatures

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
CONTAINED IN THIS REPORT
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
our history of losses;
our ability to achieve profitability;
our limited operating history with recent acquisitions;
risks related to our recent acquisitions;
our ability to successfully integrate companies or technologies we acquire;
emerging competition and rapidly advancing technology in our industry that may outpace our technology;
customer demand for the products and services we develop;
the impact of competitive or alternative products, technologies and pricing;
our ability to manufacture any products we develop;
general economic conditions and events and the impact they may have on us and our potential customers, including, but not limited to supply chain challenges and other impacts resulting from COVID-19;
our ability to obtain adequate financing in the future;
our ability to consummate strategic transactions which may include acquisitions, mergers, dispositions or investments;
our ability to maintain compliance with the continued listing requirements of the Nasdaq Stock Market LLC;
lawsuits and other claims by third parties or investigations by various regulatory agencies that we are and may be become subject to and are required to report, including but not limited to, the U.S. Securities and Exchange Commission;
our success at managing the risks involved in the foregoing items; and
other factors discussed in this Form 10-Q.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or collaborations or strategic partnerships we may enter into.
ii

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You should read this Form 10-Q and the documents that we have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Unless otherwise stated or the context otherwise requires, the terms “Inpixon” “we,” “us,” “our” and the “Company” refer collectively to Inpixon and, where appropriate, its subsidiaries.
Unless indicated otherwise in this Form 10-Q, all references to “$” refer to United States dollars, the lawful currency of the United States of America. References to “CAD” refer to Canadian dollars, the lawful currency of Canada. References to “INR” refer to Indian rupees, the lawful currency of India. References to “EUR” refer to euros, the single currency of Participating Member States of the European Union. References to “GBP” refer to the British pound, the lawful currency of the United Kingdom.






















iii

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PART I — FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information which are the accounting principles that are generally accepted in the United States of America and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

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

The results for the period ended September 30, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our audited consolidated financial statements for the fiscal years December 31, 2020 and 2019 included in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2021.
iv

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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except number of shares and par value data)
As of September 30,
2021
As of December 31,
2020
(Unaudited) (Audited)
Assets
Current Assets
Cash and cash equivalents $ 66,785  $ 17,996 
Accounts receivable, net of allowances of $334 and $235, respectively
3,432  1,739 
Notes and other receivables 888  152 
Inventory, net of reserve of $437 and $138, respectively
1,540  1,243 
Short-term investments 43,223  7,998 
Prepaid expenses and other current assets 1,120  1,197 
Total Current Assets 116,988  30,325 
Property and equipment, net 1,483  1,445 
Operating lease right-of-use asset, net 1,587  2,077 
Software development costs, net 1,893  1,721 
Investments in equity securities 7,655   
Long-term investments 2,500  2,500 
Intangible assets, net 34,775  14,203 
Goodwill 24,017  6,588 
Other assets 139  152 
Total Assets $ 191,037  $ 59,011 
The accompanying notes are an integral part of these financial statements
1

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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except number of shares and par value data)

As of September 30,
2021
As of December 31,
2020
(Unaudited) (Audited)
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable $ 1,394  $ 908 
Accrued liabilities 6,623  2,739 
Income tax liabilities 3,509   
Operating lease obligation, current 587  647 
Deferred revenue 4,474  1,922 
Short-term debt 3,251  5,401 
Acquisition liability 336  500 
Total Current Liabilities 20,174  12,117 
Long Term Liabilities
Operating lease obligation, noncurrent 1,030  1,457 
Other liabilities, noncurrent 28  7 
Acquisition liability, noncurrent 5,425  750 
Total Liabilities 26,657  14,331 
Commitments and Contingencies
Mezzanine Equity
Series 7 Convertible Preferred Stock - 58,750 shares authorized; 49,250 and issued and outstanding as of September 30, 2021 and December 31, 2020, respectively. (Liquidation preference of $49,250,000)
39,495   
Stockholders’ Equity
Preferred Stock -$0.001 par value; 5,000,000 shares authorized
Series 4 Convertible Preferred Stock - 10,415 shares authorized; 1 issued, and 1 outstanding as of September 30, 2021 and December 31, 2020, respectively.
   
Series 5 Convertible Preferred Stock - 12,000 shares authorized; 126 issued, and 126 outstanding as of September 30, 2021 and December 31, 2020, respectively.
   
Common Stock - $0.001 par value; 250,000,000 shares authorized; 124,593,720 and 53,178,462 issued and 124,593,719 and 53,178,461 outstanding as of September 30, 2021 and December 31, 2020, respectively.
125  53 
Additional paid-in capital 335,940  225,613 
Treasury stock, at cost, 1 share
(695) (695)
Accumulated other comprehensive (loss) income (352) 660 
Accumulated deficit (212,593) (180,992)
Stockholders’ Equity Attributable to Inpixon 122,425  44,639 
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except number of shares and par value data)

Non-controlling Interest 2,460  41 
Total Stockholders’ Equity 124,885  44,680 
Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 191,037  $ 59,011 
The accompanying notes are an integral part of these financial statements
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Three Months Ended September 30, For the Nine Months Ended
September 30,
2021 2020 2021 2020
(Unaudited)
Revenues $ 4,450  2,554  10,857  $ 5,434 
Cost of Revenues 1,186  645  2,966  1,459 
Gross Profit 3,264  1,909  7,891  3,975 
Operating Expenses
Research and development 3,254  1,717  9,185  4,329
Sales and marketing 2,407  1,703  6,119  3,862
General and administrative 8,571  4,103  26,570  10,371
Acquisition-related costs 93  344  1,098  540
Amortization of intangibles 1,395  288  3,088  1,811
Total Operating Expenses 15,720  8,155  46,060  20,913 
Loss from Operations $ (12,456) (6,246) (38,169) $ (16,938)
Other Income (Expense)
Interest income (expense), net (15) (537) 1,191  (1,934)
Loss on exchange of debt for equity     (30) (132)
Benefit (provision) for valuation allowance on related party loan - held for sale   (679) 7,345  (1,514)
Other income (expense) (47) 11  464  (488)
Gain on related party loan - held for sale     49,817   
Unrealized loss on equity securities (22,285)   (51,250)  
Total Other Income (Expense) (22,347) (1,205) 7,537  (4,068)
Net Loss, before tax (34,803) (7,451) (30,632) (21,006)
Income tax benefit (provision) 854    (1,350) 87 
Net Loss $ (33,949) (7,451) (31,982) $ (20,919)
Net (Loss) Income Attributable to Non-controlling Interest (309) 16  (544) 25 
Net Loss Attributable to Stockholders of Inpixon $ (33,640) $ (7,467) (31,438) $ (20,944)
Net Loss Per Share - Basic and Diluted $ (0.29) $ (0.18) $ (0.31) $ (0.90)
Weighted Average Shares Outstanding
Basic and Diluted 117,753,206  41,544,961  102,387,641  23,203,004 
The accompanying notes are an integral part of these financial statements
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
For the Three Months Ended September 30, For the Nine Months Ended
September 30,
2021 2020 2021 2020
Unaudited
Net Loss $ (33,949) $ (7,451) $ (31,982) $ (20,919)
Unrealized foreign exchange (loss) gain from cumulative translation adjustments (404) 69  (1,012) (226)
Comprehensive Loss $ (34,353) $ (7,382) $ (32,994) $ (21,145)
The accompanying notes are an integral part of these financial statements
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
(In thousands, except per share data)

Series 7 Preferred Stock Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance - January 1, 2021 —  —  1    126    53,178,462  52  225,613  (1) (695) 660  (180,992) 42  44,680 
Common shares issued for registered direct offering —  —  —  —  —  —  15,800,000  16  74,058  —  —  —  —  —  $ 74,074 
Common shares issued for extinguishment of debt —  —  —  —  —  —  893,921  1  1,499  —  —  —  —  —  $ 1,500 
Common shares issued for cashless stock options exercised —  —  —  —  —  —  4,977  —  —  —  —  —  —  —  $ — 
Common shares issued for net proceeds from warrants exercised —  —  —  —  —  —  31,505,088  32  3,747  —  —  —  —  —  $ 3,779 
Stock options granted to employees and consultants for services —  —  —  —  —  —  —  —  5,096  —  —  —  —  —  $ 5,096 
Cumulative translation adjustment —  —  —  —  —  —  —  —  —  —  —  (671) —  —  $ (671)
Net loss —  —  —  —  —  —  —  —  —  —  —  —  (12,557) 18  $ (12,539)
Balance - March 31, 2021 —  —  1    126    101,382,448  $ 101  $ 310,013  (1) $ (695) $ (11) $ (193,549) $ 60  $ 115,919 
Stock options and restricted stock awards granted to employees for services —  —  —  —  —  —  —  —  —  2,053  —  —  —  —  —  —  —  2,053 
Common shares issued for Game Your Game acquisition —  —  —  —  —  —  1,179,077  1  1,402  —  —  —  —  —  —  2,811  4,214 
Common shares issued for Visualix acquisition —  —  —  —  —  —  369,563  —  429  —  —  —  —  —  —  —  429 
Common shares issued for the CXApp —  —  —  —  —  —  8,849,538  9  9,991  —  —  —  —  —  —  —  10,000 
Common shares for cashless stock options exercised —  —  —  —  —  —  414  —  —  —  —  —  —  —  —  —  — 
Common shares issued for restricted stock grants —  —  —  —  —  —  4,672,988  5  (5) —  —  —  —  —  —  —   
Taxes paid on stock based compensation —  —  —  —  —  —  —  —  (1,687) —  —  —  —  —  —  —  (1,687)
Cumulative translation adjustment —  —  —  —  —  —  —  —  —  —  —  —  63  (141) 130  52 
Net income (loss) —  —  —  —  —  —  —  —  —  —  —  —  14,759  (253) 14,506 
Balance - June 30, 2021     1    126    116,454,028  $ 116  $ 322,196  (1) $ (695) $ 52  $ (178,931) $ 2,748  $ 145,486 
Stock options granted to employees and consultants for services —  —  —  —  —  —  —  —  1,664  —  —  —  —  —  1,664 
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Common shares issued for extinguishment of debt —  —  —  —  —  —  877,192  1  999  —  —  —  —  —  1,000 
Preferred Shares issued in public offering —  —  —  —  —  —  —  —  1,589  —  —  —  —  —  1,589 
Series 7 Preferred Stock issued for cash 58,750  48,995  —  —  —  —  —  —  —  —  —  —  —  —  — 
Series 7 Preferred Stock converted to common stock (9,500) (9,500) —  —  —  —  —  —  —  —  —  —  —  —  — 
Common shares issued for conversion of preferred shares —  —  —  —  —  —  7,600,000  8  9,492  —  —  —  —  —  9,500 
Restricted stock grants forfeited —  —  —  —  —  —  (337,500) —  —  —  —  —  —  —  — 
Cumulative translation adjustment —  —  —  —  —  —  —  —  —  —  —  (404) (22) 21  (405)
Net loss —  —  —  —  —  —  —  —  —  —  —  —  (33,640) (309) (33,949)
Balance - September 30, 2021 49,250  39,495  1    126    124,593,720  $ 125  $ 335,940  (1) $ (695) $ (352) $ (212,593) $ 2,460  $ 124,885 
The accompanying notes are an integral part of these financial statements
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
(In thousands, except per share data)

Series 7 Preferred Stock Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance - January 1, 2020 —  —  1  $   126  $   4,234,923  $ 4  $ 158,383  (1) $ (695) $ 96  $ (151,762) $ 26  $ 6,052 
Stock options granted to employees and consultants for services —  —  —  —  —  —  —  —  399  —  —  —  —  —  399 
Common Shares issued for net cash proceeds of a public offering —  —  —  —  —  —  937,010  1  1,251  —  —  —  —  —  1,252 
Common shares issued for extinguishment of debt —  —  —  —  —  —  1,896,557  2  4,192  —  —  —  —  —  4,194 
Cumulative translation adjustment —  —  —  —  —  —  —  —  —  —  —  (613) —  (1) (614)
Net income (loss) —  —  —  —  —  —  —  —  —  —  —  —  (6,158) (10) (6,168)
Balance - March 31, 2020 —  —  1  $   126  $   7,068,490  $ 7  $ 164,225  (1) $ (695) $ (517) $ (157,920) $ 15  $ 5,115 
Stock options granted to employees for services —  —  —  —  —  —  —  —  286  —  —  —  —  —  286 
Common and preferred shares issued for net cash proceeds from a public offering —  —  —  —  —  —  29,033,036  29  40,490  —  —  —  —  —  40,519 
Common shares issued for extinguishment of debt —  —  —  —  —  —  3,889,990  4  4,588  —  —  —  —  —  4,592 
Common shares issued for extinguishment of liability —  —  —  —  —  —  183,486  200  —  —  —  —  200 
Cumulative translation adjustment —  —  —  —  —  —  —  —  —  —  —  318  —  —  318 
Net income (loss) —  —  —  —  —  —  —  —  —  —  —  —  (7,322)