On March 14, 2023, Inpixon completed the Enterprise Apps Spin-off and subsequent Business Combination (the "Closing"). In connection with the Closing, KINS was renamed CXApp Inc. (“New CXApp”). Pursuant to the Transaction Agreements, Inpixon contributed to CXApp cash and certain assets and liabilities constituting the Enterprise Apps Business, including certain related subsidiaries of Inpixon, to CXApp (the “Contribution”). In consideration for the Contribution, CXApp issued to Inpixon additional shares of CXApp common stock such that the number of shares of CXApp common stock then outstanding equaled the number of shares of CXApp common stock necessary to effect the Distribution. Pursuant to the Distribution, Inpixon shareholders as of the Record Date received one share of CXApp common stock for each share of Inpixon common stock held as of such date.

This Enterprise Apps Spin-off was considered a strategic shift that has a major impact on the Company, and therefore, the results of operations are recorded as a component of "Earnings (loss) from discontinued operations, net of income taxes" in the Consolidated Statements of Operations for all periods presented. The Company noted that Legacy CXApp was part of the Company’s Indoor Intelligence segment. The net assets distributed as a result of the Enterprise Apps Spin-off was $24.2 million. Included within the $24.2 million dividend recorded to Additional Paid in Capital as a result of the deconsolidation of CXApp through distribution to shareholders recorded during the three months ended March 31, 2023, is approximately $1.2 million in accumulated other comprehensive income that was recognized as a result of those distributed assets and liabilities included in the foreign operations of CXApp.

On October 23, 2023, Inpixon entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among Inpixon, Damon Motors Inc., a British Columbia corporation (“Damon”), Grafiti Holding, and 1444842 B.C. Ltd., a British Columbia corporation and a newly formed wholly-owned subsidiary of Grafiti Holding (“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 Holding (the “Damon Business Combination”). The Damon Business Combination is subject to material conditions, including approval of the Damon Business Combination by securities holders of Damon, approval of the issuance of Grafiti Holding Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British Columbia court after a hearing upon the fairness of the terms and conditions of the Business Combination Agreement as required by the exemption from registration provided by Section 3(a)(10) under the Securities Act, and approval of the listing of the Grafiti Holding 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 Holding.

Holders of Grafiti Holding Common Shares, including Participating Security holders and management that hold Grafiti Holding 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 entered into a Separation and Distribution Agreement (the “Separation Agreement”) with Grafiti Holding Inc. (“Grafiti Holding”), a then wholly owned subsidiary of Inpixon. Inpixon contributed the assets and liabilities of Inpixon UK, a wholly owned subsidiary of Inpixon, to the then Inpixon wholly owned subsidiary Grafiti Holding in accordance with the Separation Agreement. On December 27, 2023, the Company entered into a Liquidating Trust Agreement (the “Liquidating Trust Agreement”) by and among the Company, Grafiti Holding and the sole original trustee named therein, who is a current employee of the Company (collectively with any additional trustees duly appointed under the Liquidating Trust Agreement from time to time, the “Trustees”). The Liquidating Trust Agreement provided for the distribution by the Company of its Grafiti Holding Common Shares to a liquidating trust, titled the Grafiti Holding Inc. Liquidating Trust (the “Trust”), which will hold the Grafiti Holding Common Shares for the benefit of the Participating Security holders until the Registration Statement is declared effective by the SEC. Promptly following the effective time of the Registration Statement, the Trust will deliver the Grafiti Holding Common Shares to the Participating Security holders, as beneficiaries of the Trust, pro rata in accordance with their ownership of shares or underlying shares of Common Stock as of the Record Date. The Trustees will be empowered to liquidate the Grafiti Holding Common Shares and distribute the proceeds thereof to the Participating Security holders if the Registration Statement is not declared effective prior to the second anniversary of the date of the Liquidating Trust Agreement.

This transfer, along with the Grafiti LLC divestiture outlined below, were in the aggregate considered a strategic shift that has or will have a major effect on the Company's operations and financial results, and therefore met the criteria to be classified as discontinued operations. Accordingly, the results of its operations are recorded as a component of "Net loss from discontinued operations, net of tax" in the Consolidated Statements of Operations for all periods presented. The net assets distributed as a result of the Grafiti Holding Divestiture were $0.02 million.

On February 21, 2024, the Company completed the disposition of the remaining portion of the Shoom, SAVES, and GYG business lines and assets that were excluded from the Grafiti Holding Transaction in accordance with the terms and conditions of an Equity Purchase Agreement, dated February 16, 2024. This transaction was considered probable as of December 31, 2023, and along with the Grafiti Holding divestiture outlined above, represent a strategic shift that has a major impact on the Company's operations and financial results. Therefore, Grafiti LLC met the criteria to be classified as discontinued operations. Accordingly, the results of operations are recorded as a component of "Net loss from discontinued operations, net of tax" on the Consolidated Statements of Operations for all periods presented. In connection with the discontinued operations classification, the Company recognized a loss on discontinued operations of $2.3 million, which has been included in "Net loss from discontinued operations, net of tax" on the Consolidated Statements of Operations for the year ended December 31, 2023. The assets and liabilities of Grafiti LLC are included in the current assets and current liabilities of discontinued operations on the Consolidated Balance Sheet as of December 31, 2023.


	For the Year Ended December 31, 2023						For the Year Ended December 31, 2022
	CXApp Divestiture		Grafiti Holding and Grafiti LLC Divestiture		Total Discontinued Operations		CXApp Divestiture		Grafiti Holding an Grafiti LLC Divestiture		Total Discontinued Operations
Revenues	$	1,620	$	4,840	$	6,460	$	8,470	$	4,839	$	13,309
Cost of Revenues	483		681		1,164		2,064		1,304		3,368
Gross Profit	1,137		4,159		5,296		6,406		3,535		9,941

Operating Expenses
Research and development	1,514		4,081		5,595		9,323		3,854		13,177
Sales and marketing	988		1,896		2,884		4,996		1,662		6,658
General and administrative	1,644		1,325		2,969		10,540		1,466		12,006
Acquisition related costs	—		—		—		16		—		16
Transaction costs	1,043		—		1,043		—		—		—
Impairment of goodwill and intangibles	—		—		—		5,540		5,476		11,016
Amortization of intangibles	805		—		805		3,885		639		4,524
Total Operating Expenses	5,994		7,302		13,296		34,300		13,097		47,397

Loss from Operations	(4,857)		(3,143)		(8,000)		(27,894)		(9,562)		(37,456)

Interest income/(expense), net	1		3		4		4		(77)		(73)
Other income/(expense)	—		1,315		1,315		(1)		712		711
Unrealized gain (loss) on equity securities	—		5,609		5,609		—		(7,904)		(7,904)
Realized loss on investment	—		(6,692)		(6,692)		—		—		—
Unrealized loss on equity method investment	—		—		—		—		(1,784)		(1,784)
Loss on discontinued operations	—		(2,303)		(2,303)		—		—		—
Total Other Income (Expense)	1		(2,068)		(2,067)		3		(9,053)		(9,050)

Loss from discontinued operations, before tax	(4,856)		(5,211)		(10,067)		(27,891)		(18,615)		(46,506)
Income tax provision	(2,478)		(205)		(2,683)		(80)		(36)		(116)
Loss from discontinued operations, net of tax	$	(7,334)	$	(5,416)	$	(12,750)	$	(27,971)	$	(18,651)	$	(46,622)

The Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. Cash used in operating activities of discontinued operations totaled approximately 0.5 million and $24.1 million for the year ended December 31 2023 and 2022, respectively. Cash used in investing activities from discontinued operations totaled approximately $0.05 million and $0.3 million for the years ended December 31, 2023 and 2022, respectively.


	For the Year Ended December 31, 2023						For the Year Ended December 31, 2022
	CXApp Divestiture		Grafiti LLC Divestiture		Total Discontinued Operations		CXApp Divestiture		Grafiti LLC Divestiture		Total Discontinued Operations
Current Assets of Discontinued Operations
Cash and cash equivalents	$	—	$	1,121	$	1,121	$	10,000	$	951	$	10,951
Accounts receivable	—		1,036		1,036		1,338		702		2,040
Other receivables	—		2		2		273		3		276
Inventory	—		1,212		1,212		—		445		445
Prepaid expenses and other current assets	—		251		251		650		112		762
Property and equipment, net	—		700		700		—		—		—
Operating Lease Right-of-Use Asset, net	—		8		8		—		—		—
Software development costs, net	—		605		605		—		—		—
Investment in equity securities	—		65		65		—		—		—
Long term investments	—		50		50		—		—		—
Other Assets	—		21		21		—		—		—
Allowance on current assets classified as discontinued operations	—		(2,303)		(2,303)		—		—		—
Current Assets of Discontinued Operations	$	—	$	2,768	$	2,768	$	12,261	$	2,213	$	14,474

Long Term Assets of Discontinued Operations
Property and equipment, net	$	—	$	—	$	—	$	202	$	722	$	924
Operating Lease Right-of-Use Asset, net	—		—		—		681		4		685
Software development costs, net	—		—		—		487		741		1,228
Investment in equity securities	—		—		—		—		330		330
Long term investments	—		—		—		—		50		50
Intangible assets, net	—		—		—		19,289		—		19,289
Other Assets	—		—		—		52		15		67
Long Term Assets of Discontinued Operations	$	—	$	—	$	—	$	20,711	$	1,862	$	22,573
Current Liabilities of Discontinued Operations
Accounts payable	$	—	$	734	$	734	$	1,054	$	783	$	1,837


Accrued liabilities	—		520		520		1,736		783		2,519
Operating lease obligation, current	—		9		9		266		4		270
Deferred revenue	—		697		697		2,162		777		2,939
Short term debt	—		—		—		$	—	1,078		1,078
Current Liabilities of Discontinued Operations	$	—	$	1,960	$	1,960	$	5,218	$	3,425	$	8,643
Long Term Liabilities of Discontinued Operations
Operating lease obligation, noncurrent	$	—	$	—	$	—	$	444	$	—	$	444
Other Liabilities, noncurrent	—		—		—		28		—		28
Long Term Liabilities of Discontinued Operations	$	—	$	—	$	—	$	472	$	—	$	472

Investment securities—fair value consist primarily of investments in equity securities and are carried at fair value in accordance with ASC 321, Investments-Equity Securities (“ASC 321”). These securities are marked to market based on the respective publicly quoted market prices of the equity securities adjusted for liquidity, as necessary. These securities transactions are recorded on a trade date basis. Any unrealized appreciation or depreciation on investment securities is reported in the Consolidated Statement of Operations within Unrealized Loss on Equity Securities. The unrealized gain/loss on equity securities was a gain of $5.6 million, and loss of $7.9 million, for the years ended December 31, 2023 and 2022, respectively.

On April 27, 2022, the Company purchased a 10% convertible note in aggregate principal amount of $6,050,000 for a purchase price of $5,500,000 from FOXO Technologies Operating Company, formerly FOXO Technologies Inc. (“FOXO Legacy”), pursuant to the terms of a securities purchase agreement between FOXO Legacy and the Company (the “April 2022 Purchase Agreement”).

FOXO common stock is traded in active markets, as the security is trading under “FOXO” on the NYSE American. FOXO common stock is accounted for as available-for-sale equity securities based on “Level 1” inputs, which consist of quoted prices in active markets, with unrealized holding gains and losses included in earnings. The fair value was determined by the closing

The Company invests in certain equity-method investments: When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under U.S. GAAP. The Company accounted for its equity investment under the equity method of accounting, as the Company is deemed to have significant influence. The Company generally recognizes its share of the equity method investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely from the Company’s reporting period. The Company evaluates an equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.

In 2020, the Company paid $1.8 million for 599,999 Class A Units and 1,800,000 Class B Units of Cardinal Ventures Holdings LLC (“CVH”). The Company is a member of CVH. The underlying subscription agreement provides that each Class A Unit and each Class B Unit represents the right of the Company to receive any distributions made by the Sponsor on account of the Class A Interests and Class B Interests, respectively, of the Sponsor.

On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees and directors (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020. The Company recorded approximately $0.7 million of compensation expense for the fair market value of the shares transferred to the Transferees which is included in the operating expenses section of the consolidated statement of operations in the year ended December 31, 2023.

Nadir Ali, the Company's Chief Executive Officer and director prior to his resignation at the time of the XTI transaction, is also a member in CVH through 3AM, LLC ("3AM"), which may, in certain circumstances, be entitled to manage the affairs of CVH. Mr. Ali’s relationship may create conflicts of interest between Mr. Ali’s obligations to our company and its shareholders and his economic interests and possible fiduciary obligations in CVH through 3AM. For example, Mr. Ali may be in a position to influence or manage the affairs of CVH in a manner that may be viewed as contrary to the best interests of either the Company or CVH and their respective stakeholders. On July 1, 2022, the Company loaned approximately $0.15 million to CVH. The $0.15 million loan was repaid on March 15, 2023.

The Company's estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. We classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy.

Investments in equity securities are marked to market based on the respective publicly quoted market prices of the equity securities adjusted for liquidity. The fair value for Level 1 equity investments was determined using quoted prices of the security in active markets. The fair value for Level 3 equity investments was determined using a pricing model with certain significant unobservable market data inputs.


	Level 3
Level 3 Investments
Balance at January 1, 2022	$	1,838
Transfers in - FOXO Technologies, Inc. convertible note	6,050
Transfers in - FOXO Technologies, Inc. original issue discount on convertible note	(550)
Amortization of original issue discount on convertible note	206
Change in fair value on debt securities	791
Transfers out - FOXO Technologies, Inc. conversion of note to marketable equity securities	(6,497)
Unrealized loss on equity securities	(1,827)
Balance at December 31, 2022	$	11