Good afternoon and welcome to Inpixon's Business Update Call. All participants will be in listen-only mode. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet, and is also being recorded for playback purposes. A telephone reply of the call will be available approximately 1-hour after the end of the call through May 20, 2021. I would now like to turn the call over to David Waldman, President and CEO of Crescendo Communications LLC, the Company's Investor Relations firm. Please go ahead, sir.

Good afternoon, and thank you for joining today's conference call to discuss Inpixon's corporate developments and financial results for the three months ended March 31, 2021. With us today are Nadir Ali, the Company's CEO; and Wendy Loundermon, the Company's Chief Financial Officer. Today Inpixon released financial results for the three months ended March 31, 2021. If you have not received Inpixon's earnings release; please visit the company's Investor Relations page at ir.inpixon.com. During the course of this conference call, the Company will be making forward-looking statements. The Company cautions you that any statement that is not a statement of historical fact is a forward-looking statement; this includes any projections of earnings, revenues, cash or other statements relating to the Company's future financial results. Any statements about plans strategies, or objectives of management for future operations, any statements regarding completed or planned acquisitions or strategic partnerships, and the anticipated impact of those transactions on our business, any statements concerning proposed new products or solutions, any statements regarding anticipated new customers, relationships, or agreements, any statements regarding expectations for the success of the company's products in the U.S. and international markets, any statements regarding future economic conditions or performance including but not limited to the impact of COVID-19 on our operations, any statements regarding the valuation attributed to any of our securities instruments, any statements of belief in any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this conference call, and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the Safe Harbor section of today's press release and the public reports the company files with the Securities and Exchange Commission. Investors or potential investors should read these risks, Inpixon assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition to supplement, the GAAP numbers, the company has provided non-GAAP adjusted net loss, and net loss per share information, in addition to non-GAAP adjusted EBITDA information. The company believes that these non-GAAP numbers provide meaningful supplemental information are helpful in assessing our historical and future performance. The table reconciling the GAAP information to non-GAAP information is included in the Company's financial release. I'll now turn the call over to Nadir Ali, Inpixon's CEO. Please go ahead.

All right. Thanks, David and hello, everyone. Thank you for joining us today to hear an update on our recent business activities, and to discuss our financial results for the first quarter of 2021. I'll start by saying it was a very busy first quarter, and we have a lot of exciting developments to cover here today that showcase the momentum we've been experiencing here at Inpixon. So let's get started. First up, our revenue continues to grow on a year-over-year basis; revenues increased by 64% to $3 million in the first quarter of 2021 compared to $1.8 million for the first quarter of last year. Despite lingering effects of the pandemic, we continue to grow our topline as a result of strategic initiatives we've put in place in 2020. We also took advantage of the liquidity in the markets earlier this year and increased our working capital by raising approximately $78 million in net proceeds during the quarter, so we can invest in our growth and do some fantastic M&A transactions that we believe will significantly increase our revenue velocity, our ARR, as well as profitability. We're able to also leapfrog our product roadmap by acquiring some incredible technology from Visualix in augmented reality or AR, computer vision and 3D maps that customers have already started asking for. The CXApp acquisition is also very timely for us because every company around the world is thinking about how they want to manage their return to the office in this new hybrid workforce paradigm, where employees will sometimes work remotely from home and other times from the office; welcome to the new normal because it's not going away. And not only that, it's accelerating the digital transformation of the office; our virtual and physical worlds continue to converge in so many…

Thank you, Nadir. Revenues for the three months ended March 31, 2021 were $3 million, compared to $1.8 million for the comparable period in the prior year for an increase of approximately $1.2 million or 64%. This increase is primarily attributed to the sales related to the Systat and RTLS product lines. Gross profit for the three months ended March 31, 2021 was $2.1 million, compared to $1.3 million for the comparable period in the prior year for an increase of 60%. The gross profit margin for the three months ended March 31, 2021 was 70% compared to 72% for the three months ended March 31, 2020. This decrease in margin is primarily due to lower gross profit margins from the RTLS product line. Net loss attributable to stockholders of Inpixon for the three months ended March 31, 2021 was $12.6 million, compared to $6.2 million for the comparable period in the prior year. This increase in loss of approximately $6.4 million was primarily attributed to increased operating expenses, which includes $2.2 million from the Systat licensing agreement and Nanotron acquisition and approximately $4.7 million of stock-based compensation expense, which was offset by higher gross profit during the first quarter of 2021. Non-GAAP adjusted EBITDA for the three months ended March 31, 2021 was a loss of $5.6 million, compared to a loss of $3.9 million for the prior year period. Non-GAAP adjusted EBITDA is defined as net income or loss before interest provision for income taxes, depreciation and amortization plus adjustments for other income or expense items, non-recurring items, and non-cash items, including stock-based compensation. Pro forma non-GAAP net loss for basic and diluted common share for the three months ended March 31, 2021, with a loss of $0.8 per share, compared to a loss of $0.92 per share for the prior year period. Non-GAAP net loss per share is defined as net income or loss for basic and diluted share, adjusted for non-cash items including stock-based compensation, amortization of intangibles, and onetime charges and other adjustments, including loss and the exchange of debt for equity, provision for valuation allowance, on notes, and acquisition costs. As of March 31, 2021, we had an aggregate of $96.3 million income in cash on hand and short-term investments, which probably include treasury bills and treasury notes. This concludes my comments and now, I'd like to turn the call back over to Nadir.

All right. Thanks, Wendy. David, would you please lead us through the Q&A discussion?

Yes, thanks, Nadir. Like last quarter, in our earnings announcement press release, we suggested interested parties submit questions in advance. We'd like to address those questions for you now. Some of them were duplicative, so we did our best to reconcile those were possible. If you have any further questions after the call, please feel free to follow up with Investor Relations, and we'll be sure to respond as quickly as possible. Our first question, Inpixon recently acquired Visualix for indoor augmented reality around the same time that Google Maps launched their indoor augmented reality tool Live View. Can you provide color on the similarities and differences between these two offerings?

Sure. So AR is really hot right now. Google, like Apple, Samsung, and many other have major plays in the AR space and we believe this will help drive user demand. Google's Live View is similar to our AR in that digital artifacts such as ARs or data labels can be presented on the user screen, overlaying the live camera view. The Google's Live View is primarily for public spaces. Inpixon AR, on the other hand, is primarily for corporate indoor spaces. While Google is likely going to offer a standardized version served from their platform, Inpixon can offer unique experiences for our customers by deeply integrating with customers' other devices and systems. Imagine going to Google and asking them to change their app for you, that's just not their business model. So, we're quite different in that respect. We don't really look at the major players as competitors, per se. The all this activity is stimulating marketing demand and our technology supports both the AR core from Google as well as the AR kit from Apple for customers that request it. You also asked about our plans, we haven't announced anything specific yet, but I'll share this much, we are already working to integrate AR into our mapping platform. This will enable unique capabilities such as navigation, using helpful digital artifacts to guide the way, sharing of that navigation experience with others, and presenting digital overlays of information onto the physical world, for instance, a warehouse worker can point their tablet at a box and see a list of the box's contents. We'll also be exploring the exploring the ability to create a map of a space using nothing but the phone's camera with our Computer Vision technology. Computer vision is a type of artificial intelligence and has numerous potential applications for our customers. Of course, we are now exploring integration opportunities with the CXApp product line. So, there are a number of leading-edge technologies that came into picture with the Visualix transaction and we're looking forward to sharing more information about them in the future and I would just add that one of the most notable differences in our solution is that it's fully customizable. Organizations can create their own 3D representations of their building, campus, or event space, and apply branded content upon allowing employees and visitors to interact with the premises.

Great, thank you. Our next question is, can you provide additional color on the Sysorex transaction. For example, was the Sysorex note receivable previously written down to zero on Inpixon's balance sheet? What's the approximate value of the Sysorex shareholding today and will that value gain be recorded as income in Q2? What is the company's plan to monetize this holding?

All right, so that's a lot there. I think, I've covered most of that on the call, but just to kind of summarize it, we did sell a note receivable plus certain other amounts payable to Inpixon by Sysorex relating to that spin off in 2018, which totaled approximately $9 million. We received approximately 12.9 million shares of common stock and the rights to acquire 3 million additional shares of its common stock. Prior to this transaction, we did record a full valuation allowance against that note due to the uncertainty of repayment. Because, it's a second-quarter event, this transaction happened in April, the impact of the transaction on our balance sheet is not reflected in our current financial statements and we're working with our accounting advisors to assess how the transaction and shares will ultimately be valued and recorded. However, based on the closing price of Sysorex's shares on May 12, the shares have a market value of approximately $105 million today. Regarding our plans to monetize, we've not made any decisions at this time in terms of monetizing the note and the board is considering all its options, so I'll leave it at that.

Great, thank you. Our next question, over the past year, the company has completed several acquisitions, which nicely fills out the overall product suite. Do you now foresee additional acquisitions or will the main focus be to now align the various product teams to now go and dominate the end market?

Yes, look, right now our primary focus is aggressively penetrating the market with our solutions and driving organic growth. We have a lot of momentum with the CXApp products and one to invest in support the CXApp and go after the hybrid events market that I talked about pretty aggressively. So, what we're looking to do that as well as grow our existing product lines organically. Of course, however, will always be open to exploring strategic transactions opportunistically that we believe will create long term shareholder value, but the primary focus is going to be on the organic growth.

Thank you. Our next question, CXApp appears to be a growing company that represents the largest acquisition Inpixon has done, why did CXApp choose to align with Inpixon instead of pursuing an alternate path like private equity or a SPAC?

That's a fair question and it's good question. They certainly did have some other options. They are a fast-growing company and that's exactly why they chose to move forward with Inpixon instead of some of the other options they had. I'll paraphrase Leon Papkoff, the Founder and CEO of CXApp, here a bit, what he said to me during our negotiations is that he sees that Inpixon can help him immediately scale his business to meet the overwhelming demand that they're experiencing. Yes, we bring the capital to the table like the other parties do as well, but we already have the people and processes, organizational structure, and the partners to put to work immediately and he saw value in that. With other options, such as private equity or VCs or even SPAC, the capital resources may have been available. But, all these other things, I mentioned, would take time to find, recruiting takes a long time and you got to build all of these things, and you don't always get it right the first time. We had it all in place to help them execute right away. Also, remember, we've been working with the CXApp team on several customer engagements using our maps or on device positioning products, so our teams know each, other work well together, and we understand each other's products and the market. I think it just made a lot more sense for them to partner with somebody like us.

Great, thank you. Our next question, can you provide color on the growth outlook of CXApp and their ability to meet the revenue performance achievements as laid out in the transaction?

I touched on this earlier, but as I said on that call, the tremendous growth the CXApp is experiencing is pretty incredible. I've mentioned that their bookings and revenue are about doubling over the last 12-month period ending March, 31, and we see that trend continuing. This is the right product, at the right time, as companies around the world looks to get back into the office. This demand is what drove their need to find a strategic and financial partner like us and we're confident that we can accelerate their growth with the additional resources we have. We've turned on some of those levers already from lead gen to customer delivery to support the growth that they're experiencing. We also plan to invest in the hybrid events business, as I mentioned, so that's a huge and fast-growing market, as the pundits are all pointing out, and so, that's going to create additional revenue opportunities Inpixon. Both of the solutions from CXApp, whether the Campus App or the Events Piece, leveraging Inpixon's other products significantly and help us really improve the intelligence experience we're trying to deliver to our customers. I should also just mentioned that, you probably saw the press release this week, that CXApp was just awarded the best smart building solution for return to work in the Connected Real Estate Tech Awards Program and they stated our combined solution with CXApp delivers an exceptional technology solution contributing to the improvement of the return to work transition. That's the focus right now across the globe and definitely here in the US, and we've got the right products to help companies be really successful and deliver that wonderful experience, that best employee experience.

Thank you. Our next question. Can you comment on your customer activity and revenue potential now that businesses are reopening following COVID and people are going back to the office? Is there no more need for tracking and tracing in the office or companies now need these solutions more than ever as they prepare a new hybrid office environment business model?

Yes, it's definitely the later. Companies need CXApp, maps, OTP solutions, now more than ever. What started with contact tracing and social distancing, has transitioned to managing employees in this new hybrid workforce model and the events business is also a growth opportunity as we've said repeatedly. Some of our hardware solutions may take more time as they require on-site installations and need people back in the office first before those can be deployed, whereas the other solutions like our CXApp or the maps and an on-device positioning are needed now before the employees come back into the office. I mentioned this in the call earlier, but I feel really confident about our revenue growth potential. I believe the time is now and I believe, we have the technology to deliver what the markets want and need in a way that others can't.

All right, thank you, Nadir. That concludes the Q&A. I'll turn it back over to you for the close.

Thanks, David. All right, so before we close, I just want to reiterate how important the last few months and weeks have for us. We continue to differentiate ourselves from other players with the ability to deliver full stack indoor intelligence technologies. We believe that our competitors can't truly deliver the unique experience customers desire without being in control of all of the critical technology components, including the app, maps, 3D, AR, on-device positioning, real-time location services, and all of the APIs and SDKs and developer tools as well as our analytics. We've been pursuing this path over the last two years and we've achieved the milestones we've set out to accomplish and have all the pieces in place as I just mentioned. We think the time is now. I'm confident about our prospects and based on the opportunities we're pursuing, I believe we are in a significant growth trajectory. With that, I'd like to thank all of our shareholders, customers, partners, and our fantastic employees across the globe for your continued support. Also, I want to give a warm welcome to our new employees from Visualix and the CXApp to the Inpixon team. I couldn't be more excited about what we're going to accomplish together. Thank you everyone, stay safe and take care.

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.