Good afternoon, and welcome to the Inpixon Earnings Conference Call for the Quarter Ended December 31, 2016. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] A replay of the call will be available approximately one hour after the end of call through April 30, 2017. I would like to now turn the conference over to Scott Gordon, President of CORE IR, the company's Investor Relations firm. Please go ahead, sir.

Thank you, Philip, and thank you for joining today's conference call to discuss Inpixon's corporate developments and financial results for the year ended December 31, 2016. With us today are Nadir Ali, the company's CEO; and Kevin Harris. At 4:05 P.M. Eastern Time today, Inpixon released financial results for the year ended December 31, 2017. If you have not received Inpixon's earnings release, please visit the investors page at www.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 concerning proposed new products, any statements regarding anticipated new relationships or agreements, any statements regarding expectations for the success of the company's products in U.S. and international markets, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the forgoing. 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 section of today's press release titled Cautionary Note on Forward-Looking Statements and in the public periodic reports accompany 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 or 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 and are helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in the company's financial release. I will now turn the call over to Nadir Ali, Inpixon's CEO.

Thanks, Scott, and good afternoon, everyone. Welcome to our 2016 fiscal year end earnings call and corporate update, and thank you for joining us. I'm here today with Kevin Harris, our CFO, who will be discussing our financial results for the year ended December 31, 2016, after my opening remarks, and I will return to conclude our prepared remarks and field your questions. Sysorex is now known as Inpixon. On March 1, we re-branded our business to focus on growing our indoor positioning analytics products and services to increase our market share in this combined $12 billion industry, which is expected to grow to $40 billion by 2021. Indoor positioning has become a reality and priority for customers for several reasons. Mobile devices have proliferated making it possible to detect and interact with people in premises, technologies have advanced to provide better positioning, and the need for brick and mortar companies to integrate their physical and digital retail presence has become essential, just as securing IoT devices indoors is a top priority for enterprise and government customers. At Inpixon, we believe we have the most unique and advanced technology for indoor positioning analytics with the combination of our cellular, Wi-Fi and Bluetooth detection along with our real-time analytics to deliver on these requirements. In addition to our government customer base, we have several retail customers, including our largest deployment to date in Q4, 2016, in a flagship mall of one of the premier and larger mall operators in the world, further establishing our foothold in this business. While we incubated and nurtured the development of sophisticated sensor technologies and a super smart analytics engine, we also remain steadfast in the stewardship of the VAR business. Nonetheless, our financial results for the year were impacted by the decline in the Stores…

Thanks, Nadir. Total revenue for the fourth quarter of 2016 was $14.5 million, revenues for the year ended December 31, 2016 were $53.2 million compared to $67 million for the comparable period in the prior year. The decrease of $13.8 or approximately 20% is primarily associated with the decline in the storage and computing strong as Nadir mentioned earlier. Total 2016 revenue included mobile, IoT and big data products revenue of $1.6 million compared to $1.7 million for the prior year period. Storage and computing revenue of $36.1 million versus $50 million for the prior year period and SaaS revenue of $3.3 million versus $3.7 million during the prior year period and professional services revenue of $12.2 million versus $11.6 million during the prior year period. Gross profit for the fourth quarter 2016 was $4.4 million, gross profit for the year ended December 31, 2016 was $14.9 million, compared to $19.3 million in 2015. Fourth quarter 2016, gross margin was approximately 31% the gross profit margin for the year ended December 31, 2016 was approximately 28% compared to 29% for the year ended December 31, 2015. This decrease in margin is primarily based on sales mix or sales of lower margin products and services than in the prior year. GAAP net loss attributable to stockholders for the fourth quarter of 2016 was $13.9 million. GAAP net loss attributable to the stockholders for 2016 was $27.1 million compared to a net loss of $11.7 for 2015. GAAP net loss per share for the fourth quarter of 2016 was $7.51 per share, GAAP net loss per share for 2016 was $15.61 per share compared to a net loss per share of $8.30 for 2015. This increase in net loss was primarily attributable to a decrease in gross profit of approximately $4.4 and…

Thanks, Kevin. I'd now like to touch on what Inpixon will be doing in 2017 to ensure that we see the results we envision. We are organizing the business into two segments, Inpixon Products and Infrastructure, which is our VAR business, and the future financial results will be reported accordingly. The Inpixon IPA product organization will be focused on pipeline building and customer acquisition in both the brick and mortar retail and security markets with our proprietary products. Our Infrastructure VAR segment will concentrate on government and commercial retailer markets. This will facilitate our transition and growth as a product company, while growing Inpixon Federal in the commercial VAR business. I remain confident that our company is on the path to profitability and success that we have all invested in. With that, Phil, I think we're ready to open the call to any questions.

At this time we have allotted 30 minutes to address questions from participants. [Operator Instructions] Okay, our first question comes from Josh Nichols of B. Riley. Please go ahead.

-- sort of an update on what's going on with the Daruna ramp…

Josh, sorry, you cut off at the beginning of your question.

Sorry, yes. I was wondering if you could provide us with a little bit of an update of what's going on with the Daruna ramp for the $91 million project that was scheduled to start up soon.

Yes. We've had some recent conversations with them. As you are aware, that's a project that's been delayed due to construction issues, but they are expecting to get that started here in the next few weeks. So we definitely expect to see those revenues to start to kick in this year, I would say towards the end of Q2 or early Q3 given the delays that they've had. But we're still confident that they will get started here shortly.

And then similarly, how about the $4 million upfront AirPatrol installation, how much of that has actually been realized to date?

We've done a partial shipment on that. And we're expecting the rest of that to go out later this year as well. So we're -- I think it's probably less than 15% that we've already taken care of and shipped out, but the balance will happen most likely in the latter part of 2017, with possibly some deliveries in early 2018.

Yes, and then lastly, what could you tell us about the preliminary results for how things are going with the mall operator, any data points you could provide or plans for expansion within that mall or another?

Well, without getting into too many specifics, we can share with you that the customer has absolutely been getting significant volume of data. And I think they're realizing just as some of our other customers have, that the granularity and the amount of data is much more than they expected. So I think there's a lot to be learned and insights to be gathered from the data. We are optimistic about expanding that relationship. We've had several discussions with customers around that. So we're looking forward to updating you on the progress of that.

Thanks guys, I appreciate it.

Thanks, Josh.

Okay, our next question comes from Ross Silver of Sylva International. Please go ahead.

Thanks for taking the question. So it seems to me, so I've been following the company now for a few years. And it seems like you're truly at an inflection point here. And the other part is, the information that you are gathering for your customers is critical information, and as such there seems like there's definitely going to be a recurring element to your revenues on a go-forward basis. So, I guess the question I have for you is, you look at these markets and they're massive, they're in the billions. Where would you say the company is at this point in terms of customer adoption? I know you've done a considerable amount of beta testing, you have some orders. Is it something where we're going to start to see a significant number of orders now start to come forward here in the coming quarters here, or is it still early-ish stage where you see kind of like ones and two-ies. Like, how would you describe it from your vantage point in terms of the adoption from customers?

Hi, Ross, thanks. Good question. Look, we certainly have been investing some time into this, and I referred to the pilot that we're doing with our customers. We are -- I think you're right, we said at a inflection point or pivotal point where we're going to take these early adopters and pilot that we have done so, and will continue to do so in 2017, and start scaling them out. So I think there is absolutely an opportunity to ramp this up as -- most of these mall operators that we're in discussions with have multiple properties, right, in the tens of hundreds. And so we expect the ramp up after you get through the pilot to be pretty fast after that, right. So that's what we're looking at. This is a reoccurring revenue stream that we're going to start monetizing day one. And then as I talked about in the call, more monetization opportunities will present themselves as we capture more and more data. So this is something that will continue to build and generate a substantial reoccurring revenue stream. But I think we are at that inflection point. I think we're going to start scaling this faster. And part of that is the challenge I mentioned of just creating awareness of our technology, and the company, and our products and capabilities. So the marketing efforts that we've put in, we've hired a new CMO, we've engaged a PR firm. You guys have seen that news, and you're starting to see some pieces out there talking about our capabilities viz-a-viz other technologies which can't deliver the solution as comprehensively as we can. But sometimes a lot of our customers don't know we exist, and so we're going to do a better job of that to scale this up.

And that's just one of the things that's compelling for me just as an investor speaking here, is obviously the more people that know about your products and services the better. And so, for you to have this mall operator, who I know is one of the largest in the world, just to kind of as much, and I know the person before asked you a little bit about this. I mean, where do you stand with them in terms of sort of the adoption curve again, is it still early stage and then you start to see sort of a mass deployment, let's say, in the next four to five quarters, or is it two to three quarters, I mean, how would you describe that?

No, I mean I don't -- so we've been through the pilot, if you will, with them. So I think that it's sooner rather than later with the expansion for that customer. New customers, obviously you do a pilot and then you get the rollout follow-on, right. But we have customers in various stages in our pipeline. And I think we've established several good strong retail mall operator-type customers that will scale. And by the way, not only the retail customers, there are also enterprise and government customers that just -- I've talked about one of our government agencies in the past, where we started with one building, and now we're in eight or nine of their buildings, right? So, on both products -- on the security application as well as in marketing there are opportunities to expand. And I think we'll start seeing that -- that's why when I'm talking about the square footage, and we've got 50 acres or so under out belt, but a pipeline of 500-plus acres approximately, that's what we're talking about, is closing more and more of those indoor spaces and rolling this out faster.

Well, great. Well thanks for that. I appreciate it. And definitely it sounds like an exciting time for the company. Thanks for taking my questions.

Thanks, Ross.

Okay, our next question comes from Richard Molinsky [ph] of Max Ventures. Please go ahead, Richard.

How are you doing, guys?

Hi, Rich. How are you?

Hi, Rich.

Good, thanks. As I hear the story again, and you think about the technology you have with a market cap of I guess less than $15 million, it's kind of shocking. But I also try to wonder, is there a way to try to sell off any non-core assets to try to help improve the balance sheet, so we also do any bad financing and is there any opportunity maybe showing people in the industry how unique your system is and what you can do, that you could ask them to be a participant, to be a long-term shareholder of the company, to try to help you during this year and going forward and participate on some of the deals that you have?

Yes, Richard, you raised a couple of good points. I mean, obviously there is a disconnect with -- we are the company is and the market cap and some of those things are just beyond our control, but I understand what you are saying, look as I -- as a business the management team and the board obviously looks at all of its options and we will consider things that make strategic sense and are good for our shareholders. So whether it would be acquisitions or divestiture of assets or financing et cetera, we review all those possibilities on a regular basis and determine what we think, makes sense today there is opportunities to really cross-sell across our customer base and we touched on this in the past, on some of these calls that at some point maybe it makes sense to separate these businesses. But today, we are leveraging the sales force that we have; we are leveraging the customer base and the infrastructure across both segments. So, we will keep reviewing that and make those decisions as it comes to our attention and the board will review and see what make sense for shareholders.

And last question, if I could is there a company that have a full sales force say 100, 200 people that could upsell using your technology versus just I don't know use just your sales people that go out there. How many sales people do you have hitting all these different vertical markets?

Well, so our plans are to leverage our direct sales force, but absolutely as we scale and grow the business, we need to have a channel strategy and we have been working on deploying that. So we have channel partners engaged today and we are focused on signing-up a lot more, in terms of strategic partners as well as channel partners that can carry our Inpixon product line, so you will be hearing more about that, because that is certainly our plans to scale the business.

Terrific, I look forward to it. Thank you so much Nadir, appreciate it.

Thanks very much.

Our next question comes from Mike Crawford from B. Riley. Please go ahead.

Thanks just further to channel and related partners, what about strategic partners like Tableau, software house, your relationship progressing with that company?

Yes, so we definitely at the end of 2016 started working on getting more focused around the indoor positioning and analytics and combination. So we will continue partner with Tableau and others in the visualization space. But the small microcap company with limited resources, we can't necessarily go after too many things and be everything, to everybody. So we decided as a management team and with the board's approval to really get focused on indoor positioning and analytics around that. So last year, you may heard me talk about we may take the product known as LightMiner with Tableau into some other direction. We decided to strategically put that on hold and really focus on our core peace which I think really is the future of the company and the billion dollar opportunity for us. So we have relationships with Tableau, we will continue to have that, we are going to be looking for more strategic partnership that can help us focus on the IPA story.

Okay thank you and then given that one of the key attributes of your analytics ability is the speed with which you can process information but is that something that might be viewed as complementary to someone else in the data analytics business that might have more of a Hadoop-related type architecture that you would be a complementary add to it, if they were to get your capabilities into their sweet for to be more in full service solutions provider?

Yes, again the way I would answer is that, we are going to say focused on our mission at hand, which is really to grow the indoor positioning analytics space, so if they are a partner or a customer that can leverage our technology and further that goal then yes, absolutely but we are not going to do is try to get de-focused or have too many different types of arrangements or partnerships that could leverage our database or our analytics engine for other used cases, right it will just be distracting to the team. So we are going to stay focused if it's within our focus area then absolutely.

Okay, thanks.

Okay, we have now reached our allotted time for questions. This concludes our question-and-answer session. I would like to turn the conference back over to Nadir Ali for any closing remarks

All right. Thanks, Phil. Thank you everyone again for your time today. We are continuing to innovate our internal processes and strategies within our business units such as our sales and marketing efforts around our growing state of the art high value products and solution offering. What can you expect in the future? You will continue to see announcements of our new webcast series, our mounting PR efforts to leverage and champion our brands compelling value propositions as we expand our marketing and messaging to [indiscernible] press and relevant industry channels. We are also continuing to invest in our R&D to ensure that we remain at the forefront of our space and earn the accolades and client wins that we believe we warrant, such as recently being named to the 2017 CRM MSP Elite 150 list. As I mentioned on our last call, we are driving the realization out in the market that our solutions are incomparable and drive real long-term value. We are highly encouraged by the market responses, we are experiencing from our clients and prospective customers alike, who seek to drive ever more ROI from their actionable data, we will of course continue to update you on our upcoming developments and our participation at both industry and investor conferences. Thank you again for your time and continued support.

The conference has now concluded, thank you for attending today's presentation you may now disconnect.