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Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value Measurements and Fair Value of Financial Instruments
The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. These levels are:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
Financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, warrant asset, accounts payable, warrant liability, convertible notes, and the loan conversion derivative. Cash and cash equivalents, accounts receivable and accounts payable are stated at their respective carrying amounts, which approximate fair value due to their short-term nature.
The changes in fair value of the warrant liability, convertible notes, and warrant asset are presented within 'Change in fair value of warrant liability', 'Change in fair value of convertible notes', and 'Other expense', respectively, in the condensed consolidated statements of operations.
The fair value of the Level 3 warrant liability was determined using a pricing model with certain significant unobservable market data inputs.
Damon Motors Convertible Note
On October 26, 2023, Legacy Inpixon purchased a convertible note through a private placement in aggregate principal amount of $3.0 million for a purchase price of $3.0 million from Damon Motors Inc. Interest on the convertible note accrues at 12% per annum. The note was subsequently amended. As amended, the note matures on November 30, 2024. The convertible note is subject to certain conversion features which include qualified financing, and/or qualified transaction, as defined in the securities purchase agreement. The note will be required to convert upon Damon Motors Inc. completing a public company event. In addition, Damon Motors Inc. issued a five-year warrant to purchase 1,096,321 shares of Damon Motors Inc. common stock in connection with the note. Management notes the Warrant is freestanding. The exercise price per Common Share is $2.7364. The Warrant provides for cashless exercise after 180 days following the closing of the public company event should there be no effective registration statement. The convertible note receivable is not traded in active markets and its fair value was determined using a present value technique. The convertible note receivable is accounted for as an available-for-sale debt security based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset, with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income (loss). The Warrant is accounted for as an equity security based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset, recorded at fair value with subsequent changes in fair value recorded in earnings. The convertible note's and warrant's values as of September 30, 2024 total $4.0 million and are included in Notes Receivable, $3.6 million, and Warrant asset, $0.4 million, on the condensed consolidated balance sheets.
The Company's assets and liabilities measured at fair value consisted of the following at the periods indicated:
Fair value at September 30, 2024
TotalLevel 1 Level 2Level 3
Assets:
Notes receivable$3,601 $— $— $3,601 
Warrant asset424 — — 424 
Total assets4,025 — — 4,025 
Fair Value at December 31, 2023
TotalLevel 1Level 2Level 3
Liabilities:
Warrant liability$497 $— $— $497 
Convertible notes, at fair value16,804 — — 16,804 
Loan conversion derivatives333 — — 333 
Total liabilities17,634 — — 17,634 
The table below provides a summary of changes in the estimated fair value of the Company's Level 3 assets and liabilities:
Notes receivableWarrant assetWarrant liabilityConvertible notes, at fair valueLoan conversion derivatives
Balance at January 1, 2024$— $— $497 $16,804 $333 
Acquired 3,264 448 920 — — 
Change in fair value— — (398)(12,882)— 
Exchanged / Conversion to Equity— — — (3,922)(333)
Balance at March 31, 2024$3,264 $448 $1,019 $— $— 
Change in fair value38 (24)679 — — 
Accrued interest91 — — — — 
Debt discount recognition49 — — — — 
Exchanged / Conversion to Equity— — (1,698)— — 
Balance at June 30, 2024$3,442 $424 $— $— $— 
Change in fair value20 — — — — 
Accrued interest90 — — — — 
Debt discount recognition49 — — — — 
Balance at September 30, 2024
$3,601 $424 $— $— $—