The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis here and throughout this Annual Report on Form 10-K contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements, due to a number of factors, including but not limited to, risks described in the section entitled "Risk Factors." Overview of Our BusinessInpixon is the Indoor Intelligence™ company. Our solutions and technologies help organizations create and redefine exceptional workplace experiences that enable smarter, safer and more secure environments. We leverage our positioning, mapping, analytics and app technologies to achieve higher levels of productivity and performance, increase safety and security, 38
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improve worker and employee satisfaction rates and drive a more connected workplace. We have focused our corporate strategy on being the primary provider of the full range of foundational technologies needed in order to offer a comprehensive suite of solutions that make indoor data available and meaningful to organizations and their employees. Our Indoor Intelligence solutions are used by our customers for a variety of use cases including, but not limited to, employee and visitor experience enhancement through a customer branded app with features such as desk booking, wayfinding and navigation, and the delivery of content to tens of thousands of attendees in hybrid events. Our real time location (RTLS) and asset tracking products offer manufacturing and warehouse logistics optimization and automation, increase workforce productivity, and enhance worker safety and security.
In addition to our Indoor Intelligence technologies and solutions, we also offer:
• Digital solutions (eTearsheets; eInvoice, adDelivery) or cloud-based applications and analytics for the advertising, media and publishing industries y advertising management platform called Shoom by
• A complete set of data analysis and statistical visualization solutions for engineers and scientists, called SAVES by
We report financial results for three segments: Indoor Intelligence, Shoom and SAVES. For Indoor Intelligence, we generate revenue from sales of hardware, software licenses and professional services. For Shoom and SAVES we generate revenue from the sale of software licenses. Revenues increased in the year endedDecember 31, 2021 over the same period in 2020 by approximately$6.7 million which is primarily attributable to an approximate$5.0 million increase in Indoor Intelligence sales, including our smart office app and real time location based technologies, and an increase of approximately$1.7 million of SAVES sales. We expect to continue to grow our Indoor Intelligence product line in 2022. The Indoor Intelligence product line does have long sales cycles, which result from customer-related issues such as budget and procurement processes but also because of the early stages of indoor-positioning technology and the learning curve required for customers to implement such solutions. Customers also often engage in a pilot program first which prolongs sales cycles and is typical of most emerging technology adoption curves. We anticipate sales cycles to improve in 2022 as our customer base moves from early adopters to mainstream customers. The sales cycle is also improving with the increased presence and awareness of beacon and Wi-Fi locationing technologies in the market. Indoor Intelligence sales can be licensed-based with government customers but commercial customers typically prefer a SaaS or subscription model. Our other digital solutions are also delivered on a SaaS model and allow us to generate industry analytics that complement our indoor-positioning solutions. We experienced a net loss of approximately$70.1 million and$29.2 million for the years endedDecember 31, 2021 and 2020, respectively. This increase in loss of approximately$40.9 million was primarily attributable to the increase in operating expenses of$53.8 million primarily as a result of increased operating expenses related to the acquisitions completed in 2021, stock based compensation and a goodwill impairment offset by the higher gross margin of$4.9 million and reduced other loss of$6.6 million . We cannot assure that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, we have supplemented the revenues we earned with proceeds from the sale of our equity and debt securities and proceeds from loans and bank credit lines.
Recent Events
2021 funding
OnJanuary 24, 2021 , we entered into a Securities Purchase Agreement with an institutional investor, pursuant to which we sold and issued in a registered direct offering, 5,800,000 shares of our common stock, and warrants to purchase up to 19,354,838 shares of common stock at an exercise price of$1.55 per share (the "January 2021 Purchase Warrants") for a combined purchase price of$1.55 per share and pre-funded warrants to purchase up to 13,554,838 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of$0.001 per share, at a purchase price of$1.549 per share. At closing, the Company received$27.8 million in net proceeds after deducting placement agent commissions and offering expenses. TheJanuary 2021 Purchase Warrant andJanuary 2021 Pre-funded Warrant is or was immediately exercisable for 39
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one share of common stock for a period until the five year anniversary of the issuance date. TheJanuary 2021 Pre-funded Warrants were exercised in full as ofFebruary 8th, 2021 . In addition, the investor exercised its purchase rights for 3 million shares of common stock pursuant to the theJanuary 2021 Purchase Warrant onFebruary 11, 2021 . OnFebruary 12, 2021 , we entered into a Securities Purchase Agreement with an institutional investor, pursuant to which we sold and issued in a registered direct offering, 7,000,000 shares of our common stock, and warrants to purchase up to 15,000,000 shares of common stock at an exercise price of$2.00 per share (the "FirstFebruary 2021 Purchase Warrants") for a combined purchase price of$2.00 per share and pre-funded warrants to purchase up to 8,000,000 shares of common stock ("FirstFebruary 2021 Pre-funded Warrants") at an exercise price of$0.001 per share, at a purchase price of$1.999 per share. At closing the Company received net proceeds of$27.8 million after deducting placement agent commissions and offering expenses. Each FirstFebruary 2021 Purchase Warrant and FirstFebruary 2021 Pre-funded Warrant is or was immediately exercisable for one share of common stock until the five year anniversary of the issue date. The FirstFebruary 2021 Pre-funded warrants were exercised in full as ofFebruary 18, 2021 . OnFebruary 16, 2021 , we entered into a Securities Purchase Agreement with an institutional investor, pursuant to which we sold and issued in a registered direct offering, 3,000,000 shares of our common stock, and warrants to purchase up to 9,950,250 shares of common stock at an exercise price of$2.01 per share (the "SecondFebruary 2021 Purchase Warrants") for a combined purchase price of$2.01 per share and pre-funded warrants to purchase up to 6,950,250 shares of common stock ("SecondFebruary 2021 Pre-funded Warrants") at an exercise price of$0.001 per share, at a purchase price of$2.009 per share. At clsoing the Company received net proceeds of$18.5 million after deducting placement agent commissions and offering expenses. Each SecondFebruary 2021 Purchase Warrant and SecondFebruary 2021 Pre-funded Warrant is or was immediately exercisable for one share of common stock until the five year anniversary of the issuance date. The SecondFebruary 2021 Pre-funded warrants were exercised in full as ofMarch 1, 2021 . OnSeptember 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 its newly designated Series 7 Convertible Preferred Stock at a stated value of$1,000 per shares ("Stated Value") convertible into 47,000,000 million shares of common stock at a conversion price of$1.25 (ii) related 5 year warrants to purchase up to an aggregate of 47,000,000 shares of common stock (the "Warrants") at an exercise price of$1.25 per share beginning as ofNovember 18, 2021 (the date on which the we effected a "capital event" resulting in sufficient authorized shares to issue the warrant shares. 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 aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, was approximately$50.6 million . If anytime after the effective date of the capital event (i) the volume weighted average price for each of any 10 consecutive trading day period following such event, exceeds$2.00 per share (subject to adjustments for splits, dividends, and the like); (ii) the volume for each trading day during any such period exceeds$2,000,000 of shares of common stock per trading day; and (iii) we satisfy certain Equity Conditions (as defined in the Certificate of Designation), we may elect to mandatorily convert all or a portion of the outstanding shares of Series 7 Preferred Stock (any such portion to be pro-rated across all holders thereof) at the then prevailing conversion price. In addition, at any time beginning on the 6-month anniversary of the date the Series 7 Preferred Stock was issued (the "Redemption Triggering Date") and ending ninety (90) days thereafter, each holder of such shares may require us to redeem all or part of the shares then held by such holder in cash for a redemption price per share equal to the Stated Value plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses, or amounts due in respect of such shares (the "Redemption Amount"), provided that in connection with certain events of default described in the Certificate of Designation, the Redemption Amount is increased to 110% of the Stated Value plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses, or amounts due in respect of such shares. If we fail to pay the full Redemption Amount timely, we will be obligated to pay interest thereon at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, accruing daily from the due date until the redemption amount and all interest thereon are paid in full. Correspondingly, beginning on the Redemption Triggering Date for so long as the Shares remain outstanding the Company has the right to redeem all or part of the Shares then held by a holder for the Redemption Amount, subject to Equity Conditions. In the event, the Company elects to exercise its redemption right, the holder will have an option to convert such shares subject to redemption into the common stock within thirty (30) days following a written notice sent to the holder. Upon the receipt of the pertinent Redemption Amount, the holder of the Shares will forfeit 75% of the Warrants issued. 40
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Until the earlier of the conversion or redemption of all Shares andJune 14, 2022 , the Company is also required to maintain a cash balance (in the form of cash and cash equivalents equal to the sum of (i) the Stated Value of all of the Series 7 Preferred Stock then outstanding, (ii) the aggregate amount of any debt (including trade payables) and other securities that are issued that are senior to, or pari passu with, the Shares, and (iii) the aggregate amount of monetary judgments with respect to the Company and its subsidiaries or any of their respective property or assets.
Strategic Operations 2021
Game Your Game Acquisition of a majority stake
OnApril 9, 2021 we acquired 522,000 shares of common stock ofGame Your Game, Inc. , aDelaware corporation ("GYG"), which represent 55.4% of the outstanding shares of common stock of GYG, pursuant to that certain Stock Purchase Agreement, dated as ofMarch 25, 2021 (the "Purchase Agreement"), with GYG and certain selling stockholders. At the closing,Nadir Ali , the Company's Chief Executive Officer and member of the Company's board of directors, was appointed as the sole member of GYG's board of directors. In connection with the closing of the transaction, we entered into a Stockholders' Agreement (the "Stockholders' Agreement"), with GYG and certain other minority stockholders of GYG, pursuant to which the minority stockholders agreed to vote their shares to (i) ensure that GYG's board of directors is comprised of one director and (ii) elect the person the Company designates from time to time to serve as GYG's sole director. In addition, we were granted a right of first refusal in the event a minority stockholder wants to transfer shares to a third party, as well as customary drag-along rights in the event a third party offers to purchase all of GYG's outstanding capital stock, in addition to an option to purchase all of the remaining outstanding capital stock of GYG,. The purchase pption is exercisable by the Company at any time prior to the 3rd anniversary of the transaction closing date at a capped purchase price, subject to a downward adjustment if GYG is unable to achieve certain financial-based performance targets during a specified period of time.
GYG’s business is to develop and deliver solutions using sports data and analytics.
Systat Call Option Exercise
OnFebruary 22, 2021 , we entered into a Second Amendment to the Exclusive Software License and Distribution Agreement, as amended onJune 30, 2020 (as amended, the "License Agreement"), with Cranes Software International Ltd. andSystat Software, Inc. ("Systat") to allow for the exercise of the option to purchase software and other assets underlying the License Agreement, in whole or in part, any time during the purchase option period and to provide for cash consideration in lieu of an assignment of the Sysorex Note at our option. In addition, we exercised our option to purchase a portion of the underlying assets, including certain software, trademarks, solutions, domain names and websites from Systat in exchange for consideration in an amount equal to$900,000 .
Sysorex Securities Settlement Agreement
OnApril 14, 2021 , we entered into a Securities Settlement Agreement (the "SSA") and a Rights Letter Agreement (the "RLA"), each with Sysorex, whereby Sysorex agreed to satisfy in full its outstanding debt, in the aggregate amount of$9,088,175.97 as ofMarch 31, 2021 , owed to us under that certain secured promissory note, originally datedDecember 31, 2018 , as amended from time to time, and in connection with that certain settlement agreement, datedFebruary 20, 2019 , by and among us, Sysorex andAtlas Technology Group, LLC (the "Debt Settlement"). To effect the Debt Settlement, Sysorex agreed to issue to us (i) pursuant to the terms of the SSA, 12,972,189 shares of its common stock,$0.00001 par value per share, and (ii) rights to acquire 3,000,000 additional shares of its common stock pursuant to the terms of the RLA. The Debt Settlement was entered into in connection with Sysorex's closing of a reverse triangular merger withTTM Digital Assets & Technologies, Inc. Nadir Ali , our Chief Executive Officer and a member of our board of directors, resigned as a director of Sysorex, as ofMay 14, 2021 .Nadir Ali entered into a consulting agreement with Sysorex, pursuant to which he agreed to provide certain business services specified in the agreement for the benefit of Sysorex in exchange for shares of Sysorex's common stock. 41
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Visualix Asset Purchase Agreement
OnApril 23, 2021 , we entered into an asset purchase agreement (the "Asset Purchase Agreement") by and among the Company,Visualix GmbH i.L. (the "Visualix"),Darius Vahdat-Pajouh andMichal Bucko (each, a "Founder," and collectively, the "Founders"), andFuture Energy Ventures Management GmbH ("FEVM") pursuant to which we acquired certain computer vision, robust localization, large-scale navigation, mapping, and 3D reconstruction software technologies and intellectual property (collectively, the "Visualix Assets"). In accordance with the terms of the Asset Purchase Agreement, we purchased the Visualix Assets and certain patent applications related to the Visualix Assets from FEVM.
In light of the transactions contemplated by the Asset Purchase Agreement, we:
(i) delivered a cash payment in the amount of
(ii) issued 316,768 common shares to Visualix; and
(iii) issued 52,795 common shares to FEVM.
The Asset Purchase Agreement includes customary representations and warranties, as well as certain covenants, including, inter alia, that the Founders are hired as employees ofInpixon GmbH and Visualix and the Founders shall not, for a period of two (2) years following the closing date, directly or indirectly, compete with us in the sectors of Mapping and Localization Technology (as defined in the Asset Purchase Agreement).
Acquired CXApp
OnApril 30, 2021 , we completed the acquisition of over 99.9% of the outstanding capital stock ofDesign Reactor, Inc. , dba The CXApp, aCalifornia corporation ("The CXApp"), pursuant to the terms of that certain Stock Purchase Agreement, dated as of the Closing Date (the "Stock Purchase Agreement"), by and among us, The CXApp, the sellers set forth on the signature page thereto and each other person who owns outstanding capital stock of The CXApp ("CXApp Shares") and executes a Joinder to Stock Purchase Agreement (collectively, the "Sellers"), andLeon Papkoff , as Sellers' Representative (the "Sellers' Representative"). The CXApp is a leading SaaS app platform that enables corporate enterprise organizations to provide a custom-branded, location-aware employee app focused on enhancing the workplace experience and hosting virtual and hybrid events. On the closing date, the Sellers sold all of their CXApp Shares to us in exchange for consideration of (i) approximately$22,500,000 in cash, minus The CXApp's transaction expenses, plus The CXApp's closing cash, minus stock option payouts, minus the amount that equals 70% of deferred revenue as of the Closing Date, subject to such other adjustments set forth in the Stock Purchase Agreement, including a post-closing working capital adjustment (such amount, the "Cash Purchase Price"), of which$4,875,000 (the "Holdback Amount") was retained from the Cash Purchase Price to secure the Sellers' indemnification obligations under the Purchase Agreement, for a period of 18 months from the closing date and (ii) 8,820,239 shares of our common stock, which were valued at approximately$10,000,000 based on a share price of$1.13 (the "Per Share Price"), which was the closing price of our common stock immediately prior to executing the Stock Purchase Agreement (such shares, the "Purchaser Shares" and together with the Cash Purchase Price, the "Consideration"). In addition, we agreed to pay up to$12,500,000 in contingent earnout payments, subject to certain adjustments (the "Earnout Payment" and together with the Cash Purchase Price and the Purchaser Shares, the "Aggregate Purchase Price"), payable in shares of Common Stock at the Per Share Price (the "Earnout Shares"). OnMay 10, 2021 , we, The CXApp and the non-signing Seller executed a Joinder to Stock Purchase Agreement pursuant to which we purchased such Non-Signing Seller's CXApp Shares in exchange for approximately$50,000 in cash and 29,299 shares of our Common Stock. As of such time, the Company now owns 100% of The CXApp. OnDecember 30, 2021 , we entered into an Amendment to the Stock Purchase Agreement (the "Amendment"), with the Sellers' Representative, pursuant to which the parties to the Stock Purchase Agreement agreed to: (i) amend the amount of the earnout target (as defined in the Stock Purchase Agreement) from$8,270,000 to$4,200,000 in revenue; (ii) amend the 42
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duration of the earnout period from the period from the closing date through the twelve (12) month anniversary of the closing date to the period from the closing date throughDecember 31, 2021 ; and (iii) eliminate the Sellers' Representative's right to accelerate the Earnout Payment upon a sale or change of control of the Company. The amendments are anticipated to result in certain tax advantageous benefits for the Company in addition to aiding in facilitating the integration of business operations. OnMarch 3, 2022 , we entered into a Second Amendment to the Stock Purchase Agreement with the Sellers' Representative, pursuant to which the parties agreed that withholding taxes payable by the Sellers, as applicable, in connection with the issuance of the Earnout Shares would be offset up to the aggregate amount payable to such Seller by the Company from the Holdback Amount and the Holdback Amount would be reduced by an equal amount. OnMarch 3, 2022 , the Company issued 10,873,886 shares of Common Stock to the Sellers in connection with the satisfaction of the Earnout Payment.
Share increase authorized
OnNovember 18, 2021 , the Company filed a certificate of amendment to the Company's articles of incorporation, as amended, with the Secretary of State of theState of Nevada to increase the number of authorized shares of Common Stock from 250,000,000 to 2,000,000,000 shares effective as ofNovember 18, 2021 .
Warrant and Note Exchanges
OnJanuary 28, 2022 , we entered into an exchange agreement with the holder (the "Warrant Holder") of certain existing warrants to purchase up to an aggregate of 49,305,088 shares of our common stock (the "Existing Warrants"), pursuant to which we agreed to issue an aggregate of 13,811,407 shares of common stock (collectively, the "Exchange Common Shares") and rights (the "Rights") to receive an aggregate of 3,938,424 shares of common stock (collectively, the "Reserved Shares" and together with the Exchange Common Shares, the "Exchange Shares") to such warrant holder in exchange for the cancellation of the Existing Warrants (the "Warrant Exchange"). Subject to the terms of the Exchange Agreement, the Rights may be exercised by the Warrant Holder for the Reserved Shares, in whole or in part, at any time or times on or after the date of the Exchange Agreement, subject to certain beneficial ownership limitations. On any Trading Day (as defined in the Existing Warrants) during the period commencing on the date of of the exchange agreement and ending onMarch 29, 2022 (such period, the "Restricted Period"), the warrant holder will not sell on such Trading Day, in the aggregate, any Exchange Shares in an aggregate amount representing more than 10% of the daily composite trading volume of common stock as reported by Bloomberg, LP on such applicable Trading Day. OnFebruary 1, 2022 , we entered into an exchange agreement with the holder of that certain outstanding unsecured promissory note, issued onMarch 18, 2020 in an aggregate initial principal amount of$6,465,000 (the "Original Note"), pursuant to which we and the holder agreed to: (i) partition a new promissory note in the form of the Original Note equal to$500,000 and then cause the outstanding balance of the Original Note to be reduced by$500,000 ; and (ii) exchange the partitioned note for the delivery of 1,191,611 shares of the Company's Common Stock, at an effective price per share equal to$0.4196 , which was equal to Nasdaq's "minimum price" as defined by Nasdaq Listing Rule 5635(d). OnFebruary 18, 2022 , the Company entered into an exchange agreement with the holder of the Original Note, pursuant to which the Company and the holder agreed to: (i) partition a new promissory note in the form of the Original Note equal to$350,000 and then cause the outstanding balance of the Original Note to be reduced by$350,000 ; and (ii) exchange the partitioned note for the delivery of 966,317 shares of the Company's Common Stock, at an effective price per share equal to$0.3622 , which was equal to Nasdaq's "minimum price" as defined by Nasdaq Listing Rule 5635(d). OnMarch 15, 2022 , the Company entered into an exchange agreement with the holder of the Original Note, pursuant to which the Company and the holder agreed to: (i) partition a new promissory note in the form of the Original Note equal to$650,000 and then cause the outstanding balance of the Original Note to be reduced by$650,000 ; and (ii) exchange the partitioned note for the delivery of 2,152,317 shares of the Company's Common Stock, at an effective price per share equal to$0.3020 , was equal to to Nasdaq's "minimum price" as defined by Nasdaq Listing Rule 5635(d).
Significant Accounting Policies and Estimates
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Our consolidated financial statements are prepared in accordance withU.S. Generally Accepted Accounting Principles ("GAAP"). In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Our significant accounting policies are discussed in Note 2 of the audited consolidated financial statements for the years endedDecember 31, 2021 and 2020 which are included elsewhere in this Annual Report on Form 10-K. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. There have been no changes to estimates during the periods presented in the filing. Historically changes in management estimates have not been material.
Revenue recognition
The Company recognizes revenue when control of promised products or services is transferred to its customers, for an amount that reflects the consideration to which the Company expects to be entitled 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.
Our contracts with customers often include promises to transfer multiple distinct products and services. Our licenses are sold as perpetual or term licenses and the arrangements typically contain various combinations of maintenance and professional services, which are accounted for as separate performance obligations. In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates within the revenue recognition process. The most critical judgements required in applying ASC 606 Revenue Recognition from Customers, and our revenue recognition policy relate to the determination of distinct performance obligations.
• We receive fixed consideration for sales of hardware and software products. Revenue is recognized when the customer holds title to the product and the risks and rewards of ownership have been transferred.
•Software as a service contract revenue is recognized over time using the release method (days of software delivered) as we provide continued access to its service.
•Design and implementation revenue is accounted for using the percentage of
completion method. As soon as the outcome of a contract can be estimated
reliably, contract revenue is recognized in the consolidated statement of
operations in proportion to the stage of completion of the contract. Accounting
for these contracts involves the use of estimates to determine total contract
costs to be incurred.
•Professional services revenue under fixed fee contracts is recognized over time
using the input method (direct labor hours) to recognize revenue over the term
of the contract. We have elected the practical expedient to recognize revenue
for the right to invoice because our right to consideration corresponds directly
with the value to the customer of the performance completed to date.
•We recognize revenue related to Maintenance Services evenly over time using the
output method (days of software provided) because we provide continuous service,
and the customer simultaneously receives and consumes the benefits provided by
our performance as the services are performed.
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We also consider whether an arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations. We offer discounts in the form of prompt payment discounts and rebates for a decrease in service level percentages. We have determined that the most likely amount method is most useful for contracts that provides these discounts and rebates as the contracts have two potential outcomes and a significant reversal in the amount of cumulative revenue recognized is not expected to occur. Discounts have not historically been significant, but we continue to monitor and evaluate these estimates based on historical experience, anticipated performance, and our best judgment. Renewals or extensions of licenses are evaluated as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. If any of these judgments were to change it could cause a material increase or decrease in the amount of revenue we report in a particular period.
Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of our long-lived assets by comparing their net carrying value to the sum of undiscounted estimated future cash flows directly associated with and arising from our use and eventual disposition of the assets. If the net carrying value of a group of long-lived assets exceeds the sum of related undiscounted estimated future cash flows, we would be required to record an impairment charge equal to the excess, if any, of net carrying value over fair value. When assessing the recoverability of our long-lived assets, which include property and equipment and finite-lived intangible assets, we make assumptions regarding estimated future cash flows and other factors. Some of these assumptions involve a high degree of judgment and bear a significant impact on the assessment conclusions. Included among these assumptions are estimating undiscounted future cash flows, including the projection of comparable sales, operating expenses, capital requirements for maintaining property and equipment and residual value of asset groups. We formulate estimates from historical experience and assumptions of future performance, based on business plans and forecasts, recent economic and business trends, and competitive conditions. In the event that our estimates or related assumptions change in the future, we may be required to record an impairment charge. Based on our evaluation we did not record a charge for impairment for the years endedDecember 31, 2021 and 2020. We evaluate the remaining useful lives of long-lived assets and identifiable intangible assets whenever events or circumstances indicate that a revision to the remaining period of amortization is warranted. Such events or circumstances may include (but are not limited to): the effects of obsolescence, demand, competition, and/or other economic factors including the stability of the industry in which we operate, known technological advances, legislative actions, or changes in the regulatory environment. If the estimated remaining useful lives change, the remaining carrying amount of the long-lived assets and identifiable intangible assets would be amortized prospectively over that revised remaining useful life. We have determined that there were no events or circumstances during the years endedDecember 31, 2021 and 2020, which would indicate a revision to the remaining amortization period related to any of our long-lived assets. Accordingly, we believe that the current estimated useful lives of long-lived assets reflect the period over which they are expected to contribute to future cash flows and are therefore deemed appropriate. We have recorded goodwill and other indefinite-lived assets in connection with our acquisitions of Shoom, Locality, Jibestream, GTX, the Systat Parties, Nanotron, CXApp, Game Your Game and IntraNav.Goodwill , which represents the excess of acquisition cost over the fair value of the net tangible and intangible assets of the acquired company, is not amortized. Indefinite-lived intangible assets are stated at fair value as of the date acquired in a business combination. The recoverability of goodwill is evaluated at least annually and when events or changes in circumstances indicate that the carrying amount may not be recoverable. We have determined that it operates and reports in three reporting units: Indoor Intelligence, Saves, and Shoom. We analyzed goodwill first to assess qualitative factors, such as macroeconomic conditions, changes in the business environment and reporting unit specific events, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a detailed goodwill impairment test as required. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. 45
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If we bypass the qualitative assessment or conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. We calculate the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, we use internally developed discounted cash flow models that include the following assumptions, among others made by management: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, we use internal analyses based primarily on market comparables. We base these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Due to the variables inherent in our estimates of fair value, differences in assumptions may have a material effect on the result of our impairment analysis. For example, a 100 basis points increase or decrease in only the discount rate utilized as part of the discounted cash flow method (income approach) related to the Indoor Intelligence reporting unit could impact the overall fair value of the reporting unit, on a weighted average, by approximately$2.0 million (decrease) and$2.5 million (increase), respectively. We performed the annual impairment test and has recorded impairment of goodwill of$14.8 million and zero during the years endedDecember 31, 2021 and 2020, respectively. Deferred Income Taxes In accordance with ASC 740 "Income Taxes" ("ASC 740"), management routinely evaluates the likelihood of the realization of its income tax benefits and the recognition of its deferred tax assets. In evaluating the need for any valuation allowance, management will assess whether it is more likely than not that some portion, or all, of the deferred tax asset may not be realized on a jurisdictional basis. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In performing its analyses, management considers both positive and negative evidence including historical financial performance, previous earnings patterns, future earnings forecasts, tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards within a reasonable timeframe. To this end, management considered (i) that we have had historical losses in the prior years and cannot anticipate generating a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning strategies; and (iii) the adequacy of future income as of and for the year endedDecember 31, 2021 , based upon certain economic conditions and historical losses throughDecember 31, 2021 . After consideration of these factors, management deemed it appropriate to establish a full valuation allowance with respect to the deferred tax assets forInpixon , Inpixon Canada,Nanotron GmbH ,Intranav GmbH andActive Mind Technology LTD. A liability for "unrecognized tax benefits" is recorded for any tax benefits claimed in the Company's tax filings that do not meet these recognition and measurement standards. As ofDecember 31, 2021 and 2020, no liability for unrecognized tax benefits was required to be reported. The guidance also discusses the classification of related interest and penalties on income taxes. The Company's policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. No interest or penalties were recorded during the years endedDecember 31, 2021 and 2020.
Business combinations
We account for business combinations using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. Any changes in the estimated fair values of the net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will change the amount of the purchase price allocable to goodwill. Any subsequent changes to any purchase price allocations that are material to our consolidated financial results will be adjusted. All acquisition costs are expensed as incurred and in-process research and development costs are recorded at fair value as an indefinite-lived intangible asset and assessed for impairment thereafter until completion, at which point the asset is amortized over its expected useful life. Separately recognized transactions associated with business combinations are generally expensed subsequent to the acquisition date. The application of business combination and impairment accounting requires the use of significant estimates and assumptions.
Upon acquisition, the accounts and results of operations are consolidated from the date of acquisition and are included in our consolidated financial statements from the date of acquisition.
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RESULTS OF OPERATIONS
Year ended
The following table presents certain consolidated financial data as a percentage of our revenues and the percentage change from period to period:
For the Years Ended
2021 2020
% of % of %
(in thousands, except percentages) Amount Revenues Amount Revenues $ Change Change*
Revenues $ 15,995 100 % $ 9,297 100 % $ 6,698 72 %
Cost of revenues $ 4,374 27 % $ 2,613 28 % $ 1,761 67 %
Gross profit $ 11,621 73 % $ 6,684 72 % $ 4,937 74 %
Operating expenses $ 84,238 527 % $ 30,478 328 % $ 53,760 176 %
Loss from operations $ (72,617) (454) % $ (23,794) (256) % $ (48,823) (205) %
Net loss $ (70,130) (438) % $ (29,214) (314) % $ (40,916) (140) %
Net loss attributable to
stockholders of Inpixon $ (69,155) (432) % $ (29,229) (314) % $ (39,926) (137) %
* 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.
Revenue
Revenues for the year endedDecember 31, 2021 were$16.0 million compared to$9.3 million for the comparable period in the prior year for an increase of approximately$6.7 million , or approximately 72%. This increase is primarily attributable to an approximate$5.0 million increase in Indoor Intelligence sales, including our smart office app and real time location based technologies, and an increase of approximately$1.7 million of SAVES sales. The increase in Indoor Intelligence sales of$5.0 million was driven by a$4.4 million increase in revenue due to the acquisitions of CXApp, Game Your Game, and IntraNav.
Gross margin
Cost of revenues for the year endedDecember 31, 2021 were$4.4 million compared to$2.6 million for the comparable period in the prior year. This increase in cost of revenues of approximately$1.8 million , or approximately 67%, was primarily attributable to the increased sales during the year. The gross profit margin for the year endedDecember 31, 2021 was 73% compared to 72% for the year endedDecember 31, 2020 . This increased margin is primarily due to the sales mix during the year.
Functionnary costs
Operating expenses for the year endedDecember 31, 2021 were$84.2 million and$30.5 million for the comparable period endedDecember 31, 2020 . This increase of$53.8 million is primarily attributable to increased operating expenses of the Indoor Intelligence segment by approximately$6.2 million due to the CXApp, Game Your Game, SAVES and, Nanotron acquisitions, approximately$6.5 million of accrued earnout compensation expense,$9.7 million of additional stock based compensation,$14.8 million impairment of goodwill and increases in other expenses including amortization of intangibles due to the acquisitions, professional fees and compensation costs as we are scaling for growth.
Operating loss
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Loss from operations for the year endedDecember 31, 2021 was$72.6 million as compared to$23.8 million for the comparable period in the prior year. This increase in loss of$48.8 million is primarily attributable to increased operating expenses of$53.8 million as detailed above offset by the increased gross profit margin of approximately$4.9 million .
Other income/(expenses)
Other income/expense for the year endedDecember 31, 2021 was income of$1.1 million compared to a loss of$5.5 million for the comparable period in the prior year. This increase in other income of approximately$6.6 million is primarily attributable to a discounted net gain of approximately$49.8 million on the Sysorex note, a$7.3 million benefit from the release of the valuation allowance on the Sysorex note and approximately$1.6 million of interest received on the Sysorex note offset by the$57.1 million unrealized loss on the Sysorex note. Provision for Income Taxes There was an income tax benefit of approximately$1.4 million for the year endedDecember 31, 2021 compared to a income tax benefit of$0.1 million for the comparable period in the prior year. The net income tax benefit for the current year is related to a current income tax expense of$1.2 million primarily from the gain on the Sysorex note offset by a$2.6 million deferred tax benefit primarily related to the release of a valuation allowance following the acquisition of intangibles of Design Reactor. The income tax benefit of$0.1 million for the year endedDecember 31, 2020 related to intangibles and net operating losses of Jibestream amalgamated with Inpixon Canada during the period.
Net income (loss) attributable to non-controlling interest
Net income or loss attributable to non-controlling interest for the years endedDecember 31, 2021 and 2020 was a loss of$1.0 million and a income of$0.02 million , respectively. The increase in loss of approximately$1.0 million was mainly attributable to the loss of the Game Your Game entity.
Net loss attributable to shareholders of
Net loss attributable to stockholders for the year endedDecember 31, 2021 was$69.2 million compared to$29.2 million for the comparable period in the prior year. This increase in loss of approximately$39.9 million was primarily attributable to the increase in operating expenses of$53.8 million offset by the higher gross margin of$4.9 million and reduced other loss of$6.6 million .
Non-GAAP Financial Information
EBITDA
EBITDA is defined as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Adjusted EBITDA is used by our management as the matrix in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.
Adjusted EBITDA for the year ended
compared to a loss of
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The following table presents a reconciliation of net income/loss attributable to stockholders ofInpixon , which is our GAAP operating performance measure, to Adjusted EBITDA for the years endedDecember 31, 2021 and 2020 (in thousands):
For the years ended
2021 2020 Net loss attributable to common stockholders$ (77,316) $ (29,229) Adjustments: Non-recurring one-time charges: Loss on exchange of debt for equity 30 210
(Reversal) Valuation allowance on loan held for sale
(7,345) 2,370
Provision for impairment on related receivables
- 648 Gain on related party loan held for sale (49,817) - Unrealized loss on equity securities 57,067 - Acquisition transaction/financing costs 1,248 1,057 Earnout compensation expense 6,524 - Professional service fees 1,366 - Accretion of series 7 preferred stock 8,161 - Impairment of goodwill 14,789 - Unrealized gains on notes, loans, investments 241 - Bad debts expense/provision 121 956 Reserve for inventory obsolescense 300 - Stock-based compensation - compensation and related benefits 10,879 1,194 Severance costs 294 - Interest expense, net (1,183) 2,426 Income tax benefit (1,412) (87) Depreciation and amortization 6,451 3,371 Adjusted EBITDA$ (29,602) $ (17,084)
We rely on Adjusted EBITDA, which is a non-GAAP financial measure for the following:
• Review and evaluate our company’s operational performance, as permitted by ASC Topic 280, Segment Reporting;
• Compare our current operating results with corresponding periods and with the operating results of other companies in our industry;
•As a basis for allocating resources to various projects;
•As a measure to assess the potential economic results of acquisitions, operational alternatives and strategic decisions; and
• Internally evaluate the performance of our staff.
We have presented Adjusted EBITDA above because we believe it conveys useful
information to investors regarding our operating results. We believe it provides
an additional way for investors to view our operations, when considered with
both our GAAP results and the reconciliation to net income (loss). By including
this information, we can provide investors with a more complete understanding of
our business. Specifically, we present Adjusted EBITDA as supplemental
disclosure because of the following:
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•We believe Adjusted EBITDA is a useful tool for investors to assess the operating performance of our business without the effect of interest, income taxes, depreciation and amortization and other non-cash items including stock based compensation, amortization of intangibles, change in the fair value of shares to be issued, change in the fair value of derivative liability, impairment of goodwill and one time charges including gain/loss on the settlement of obligations, severance costs, provision for doubtful accounts, acquisition costs and the costs associated with the public offering.
•We believe it is useful to provide investors with a standard operational measure used by management to assess our operational performance; and
•We believe the use of Adjusted EBITDA is useful in comparing our results to those of other companies.
Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net income (loss) and the other consolidated statement of operations data prepared in accordance with GAAP. Some of these limitations include the fact that:
• Adjusted EBITDA does not reflect our cash outlays or future capital expenditure requirements or contractual commitments;
•Adjusted EBITDA does not reflect changes or cash requirements for our working capital requirements;
•Adjusted EBITDA does not reflect significant interest expense or cash requirements to service interest or principal payments on our debt;
•Although depreciation and amortization are non-cash charges, depreciated assets will often need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirement for such replacements;
• Adjusted EBITDA does not reflect income or other taxes or cash requirements to make tax payments; and
• Other companies in our industry may calculate Adjusted EBITDA differently from us, potentially limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and providing Adjusted EBITDA only as supplemental information.
Pro forma non-GAAP net loss per share
Basic and diluted net loss per share for the year endedDecember 31, 2021 was ($0.72 ) compared to ($1.01 ) for the prior year period. The decreased loss per share in 2021 was attributable to the changes discussed in our results of operations. 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 year endedDecember 31, 2021 was ($0.26 ) compared to a loss of ($0.71 ) per share for the prior year period. 50
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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 Years Ended December 31,
(thousands, except per share data) 2021 2020
Net loss attributable to common stockholders $ (77,316) $ (29,229)
Adjustments:
Non-recurring one-time charges:
Loss on the exchange of debt for equity 30 210
(Reversal) Valuation allowance on loan held for sale
(7,345) 2,370
Provision for impairment on related receivables
- 648 Gain on related party loan held for sale (49,817) - Unrealized loss on equity securities 57,067 - Acquisition transaction/financing costs 1,248 1,057 Earnout compensation expense 6,524 - Professional service fees 1,366 - Accretion of series 7 preferred stock 8,161 - Impairment of goodwill 14,789 - Unrealized gains on notes, loans, investments 241 - Bad debts expense/provision 121 956 Reserve for inventory obsolescense 300 - Stock-based compensation - compensation and related benefits 10,879 1,194 Severance costs 294 - Amortization of intangibles 5,107 2,306 Proforma non-GAAP net loss $ (28,351)$ (20,488) Proforma non-GAAP net loss per basic and diluted common share $ (0.26)$ (0.71) Weighted average basic and diluted common shares outstanding 107,981,441 28,800,493
We rely on pro forma non-GAAP net loss per share, which is a non-GAAP financial measure:
• Review and evaluate our company’s operational performance, as permitted by ASC Topic 280, Segment Reporting;
• Compare our current operating results with corresponding periods and with the operating results of other companies in our industry;
•As a measure to assess the potential economic results of acquisitions, operational alternatives and strategic decisions; and
• Internally evaluate the performance of our staff.
We have presented proforma non-GAAP net loss per share above because we believe
it conveys useful information to investors regarding our operating results. We
believe it provides an additional way for investors to view our operations, when
considered with both our GAAP results and the reconciliation to net income
(loss), and that by including this information we can provide investors with a
more complete understanding of our business. Specifically, we present proforma
non-GAAP net loss per share as supplemental disclosure because:
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•We believe proforma non-GAAP net loss per share is a useful tool for investors to assess the operating performance of our business without the effect of 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.
•We believe it is useful to provide investors with a standard operational measure used by management to assess our operational performance; and
•We believe that the use of non-GAAP pro forma net loss per share is useful in comparing our results to those of other companies.
Cash and capital resources at
Our current capital resources and results of operations as of
1) an overall working capital surplus of approximately
2) species of about
3) net cash used by operating activities for the year ended
The breakdown of our overall working capital surplus is as follows (in thousands): Working Capital Assets Liabilities Net Cash and cash equivalents$ 52,480 $ -$ 52,480 Accounts receivable, net / accounts payable 3,218 2,414 804 Inventory 1,976 - 1,976 Short-term investments 43,125 - 43,125 Accrued liabilities - 10,665 (10,665) Operating lease obligation - 643 (643) Deferred revenue - 4,805 (4,805) Notes and other receivables / Short-term debt 321 3,490 (3,169) Other 4,842 5,114 (272) Total$ 105,962 $ 27,131 $ 78,831
Contractual obligations and commitments
Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. 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. As ofDecember 31, 2021 , the total obligation for operating leases is approximately$1.9 million , of which approximately$0.7 million is expected to be paid in the next twelve months. Our vendor commitments are approximately$0.5 million all of which is expected in the next twelve months. As ofDecember 31, 2021 , our obligation for acquisition liabilities is approximately$5.3 million of which approximately$5.1 million is expected to be paid in the next twelve months. In addition, at any time beginning on the Redemption Triggering Date and ending ninety (90) days thereafter, each holder of our Series 7 Preferred Stock may require us to redeem all or part of the shares then held by such holder in cash for a redemption price per share equal to the Redemption Amount (which may be increased in the event of certain events of default). Any holder that elects to redeem its shares of Series 7 Preferred Stock will be required to forfeit 75% of the corresponding warrants held by such holder. The aggregate Redemption Amount that we may be required to pay is equal to$49.25 million . As ofMarch 15, 2022 , we received redemption notices in an aggregate amount equal to$33.0 million and as of the date of this filing have redeemed 33,000 shares of Preferred Stock and 19,800,000 corresponding warrants have been forfeited. 52
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promissory notes
As ofMarch 16, 2022 , the Company owed approximately$2.1 million in principal under promissory notes with approximately$3.5 million payable within the next twelve months inclusive of interest owed. The interest rate charged under the notes range from 8% to 10%. See Note 20 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Net cash used in operating activities during the year endedDecember 31, 2021 of$37.1 million consists of net loss of$70.1 million offset by non-cash adjustments of approximately$35.8 million less net cash changes in operating assets and liabilities of approximately$2.8 million . Although the Company has sustained significant losses during the 2021 year, during the twelve months endedDecember 31, 2021 we raised net proceeds of approximately$128 million from the sale of our securities in connection with registered direct offerings and the exercise of warrants. Given our current cash balances 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. However, general economic or other conditions resulting from COVID 19 or other events materially may impact the liquidity of our common stock or our ability to continue to access capital from the sale of our securities to support our growth plans. Our business has been impacted by the COVID-19 pandemic and may continue to be impacted. While we have been able to continue operations remotely, we have and continue to experience supply chain cost increases and constraints and delays in the receipt of certain components of our products impacting delivery times for our products. We have also seen some impact in the demand of certain products and delays in certain projects and customer orders either because they require onsite services which could not be performed as a result of new rules and regulations resulting from the pandemic, customer facilities being partially or fully closed during the pandemic or because of the uncertainty of the customer's financial position and ability to invest in our technology. Despite these challenges, including a decline in revenue for certain existing product lines, we were able to realize growth in total revenue for the year endedDecember 31, 2021 when compared to the year ended 2020, as a result of the addition of new product lines including a full year of sales associated with our SAVES and RTLS product lines, the addition of the CXApp and Game Your Game product lines during the second quarter of 2021 and the addition of the IIoT product line in the fourth quarter of 2021. The total impact that COVID-19 will have on general economic conditions is continuously evolving and the impact it may continue to have on our results of operations continues to remain uncertain and there are no assurances that we will be able to continue to experience the same growth or not be materially adversely effected. The Company may continue to pursue strategic transactions and may raise such additional capital as needed, using our equity securities and/or cash and debt financings in combinations appropriate for each acquisition.
Cash and capital resources at
The Company’s net cash flows used in operating, investing and financing activities for the years ended
For the
Completed exercises
2021 2020 Net cash used in operating activities$ (37,131) $ (20,601) Net cash used in investing activities (53,508) (23,507) Net cash provided by financing activities 125,037 57,259 Effect of foreign exchange rate changes on cash 86 (4) Net increase in cash and cash equivalents $
34,484
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As of December 31, As of December 31,
2021 2020
Cash and cash equivalents $ 52,480 $ 17,996
Working capital surplus $ 78,831 $ 18,208
Operating activities for the year ended
Net cash used in operating activities during the year ended
was approximately
$ (70,130) Non-cash income and expenses 35,847
Net change in operating assets and liabilities (2,848) Net cash used in operating activities
$ (37,131)
Non-monetary income and expenses of approximately
Depreciation and amortization expenses (including
amortization of intangible assets)
primarily attributable to the Shoom, AirPatrol,
LightMiner, Locality, GTX,
Jibestream, Systat, Ten Degrees, Nanotron, Game Your
Game, Visualix, CXApp and
IntraNav, which were acquired effectiveAugust 31, 2013 ,
November 21, 2016 ,May 21, 2019 ,June 27, 2019 , August
15, 2019,
2020,August 19, 2020 ,October 6, 2020 ,April 9, 2021 ,April 23, 2021 , April$ 6,451 30, 2021, andDecember 9, 2021 , respectively.
677 Amortization of right of use
(1,627) Accrued interest income, related party
Stock-based compensation expense attributable to
warrants and options issued
10,879 as part of Company operations
30 Loss on exchange of debt for equity
224 Amortization of debt discount
300 Provision for inventory obsolescence
(49,817) Gain on settlement of related party promissory note
121 Provision for doubtful accounts
(92) Unrealized gain/loss on note
(7,345) Recovery for valuation allowance for held for sale loan
(2,593) Deferred income tax
57,067 Unrealized loss on equity securities
14,789 Impairment of goodwill
6,524 Earnout payment expense
24 Loss on disposal of property and equipment
235 Other
$ 35,847 Total non-cash expenses
Net cash used in changes in operating assets and liabilities totaled approximately
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$ (313) Increase in accounts receivable and other receivables (3,919) Increase in inventory, other current assets and other assets 391 Increase in accounts payable 834 Increase in accrued liabilities and other liabilities (658) Decrease in operating lease liabilities 817 Increase in deferred revenue$ (2,848) Net cash used in the changes in operating assets and liabilities
Operating activities for the year ended
Net cash used in operating activities during the years ended
was approximately
Net loss$ (29,214) Non-cash income and expenses 11,846
Net change in operating assets and liabilities (3,233) Net cash used in operating activities
$ (20,601)
Non-monetary income and expenses of approximately
Depreciation and amortization expenses (including
amortization of intangible assets)
primarily attributable to the Shoom, AirPatrol,
LightMiner, Locality, GTX,
Jibestream, Systat, Ten Degrees and Nanotron, which were
effective acquisition
August 31, 2013 ,April 16, 2014 ,November 21, 2016 , May
21, 2019,
2019,August 15, 2019 ,June 30, 2020 ,August 19, 2020 andOctober 6, 2020 ,$ 3,371 respectively.
490 Amortization of right of use
(32) Amortization of technology
Stock-based compensation expense attributable to
warrants and options issued
1,194 as part of Company operations and for the Jibestream acquisition
210 Loss on exchange of debt for equity
2,594 Amortization of debt discount
2,370 Provision for the valuation allowance held for sale loan
(87) Income tax benefit
956 Provision for doubtful accounts
138 Provision for inventory obsolescence
648 Provision for the valuation allowance related party receivable
(6) Other
$ 11,846 Total non-cash expenses
The net use of cash in the change in operating assets and liabilities aggregated
approximately $3.2 million and consisted primarily of the following (in
thousands):
$ (964) Increase in accounts receivable and other receivables
(928) Increase in inventory, other current assets and other assets
(1,815) Decrease in accounts payable
722 Increase in accrued liabilities and other liabilities
(490) Decrease in operating lease liabilities
242 Increase in deferred revenue
$ (3,233) Net use of cash in the changes in operating assets and liabilities
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Cash flow from investing activities at
Net cash flows used in investing activities during 2021 was approximately$53.5 million compared to net cash flows used in investing activities during 2020 of approximately$23.5 million . Cash flows related to investing activities during the year endedDecember 31, 2021 include$0.3 million for the purchase of property and equipment,$1.0 million for investment in capitalized software,$63.4 million for the purchase of treasury bills,$2.0 million for the purchase of short term investments,$28.0 million sales of treasury bills,$2.0 million sale of short term investments,$0.9 million for the purchase of the Systat licensing agreement,$0.2 million received from the acquisition of Game Your Game,$15.0 million paid for the acquisition of CXApp,$61,000 paid for acquisition of Visualix, and$1.0 million paid for acquisition of IntraNav. Cash flows related to investing activities during the year endedDecember 31, 2020 include$1.0 million for the purchase of property and equipment,$0.9 million for investment in capitalized software,$8.0 million for a short term investments,$2.2 million for cash paid the in Systat License Agreement,$1.5 million for cash paid for the Ten Degrees acquisition,$7.8 million for cash paid for the Nanotron acquisition,$0.3 million of cash acquired in the Nanotron acquisition, and$2.5 million for a long term investment.
Cash flow from financing activities at
Net cash flows provided by financing activities during the year endedDecember 31, 2021 was$125.0 million . Net cash flows provided by financing activities during the year endedDecember 31, 2020 was$57.3 million . During the year endedDecember 31, 2021 , the Company received incoming cash flows of$128.4 million for the issuance of common stock, preferred stock and warrants, loaned$0.1 million to related parties, paid$1.9 million of taxes related to the net share settlement of restricted stock units, paid a$0.5 million liability related to the CXApp acquisition, paid a$0.5 million acquisition liability to the pre-acquisition shareholders of Nanotron and paid a$0.5 million acquisition liability to the pre-acquisition shareholders of Locality. During the year endedDecember 31, 2020 , the Company received incoming cash flows of$55.4 million for the issuance of common stock, preferred stock and warrants, repaid$0.1 million of notes payable, loaned$2.6 million to related parties, received$0.2 million of repayments from related parties, received$5.0 million of net proceeds from promissory notes, paid a$0.5 million acquisition liability to the pre-acquisition shareholders of Locality, and made$0.2 million of repayments to a bank facility.
Off-balance sheet arrangements
We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Recently issued accounting standards
For a discussion of recently issued accounting pronouncements, please refer to Note 2 of our financial statements, which are included in this report beginning on page F-1.
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