PALO ALTO, CALIFORNIA / ACCESS Newswire / October 6, 2025 / CXApp Inc. (Nasdaq:CXAI), the leader of AI-powered employee and workplace experience platforms, today announced that it will host an exclusive event during San Francisco Tech Week titled "The Future of Work: Employee Experience, AI, and the Hybrid Revolution." The event will take place on October 7th in San Francisco and will convene CIOs, CTOs, CHROs, and workplace experience leaders for an immersive discussion on the evolving role of AI in the mo ...

Group 1 - CXApp Inc. is actively engaging executives and clients through various conferences and exclusive events to promote thought leadership in the AI-driven employee experience market [1] - The company has announced its schedule for October, which includes industry conferences and networking events aimed at showcasing its agentic-AI based employee experience platform [1] - The focus is on demonstrating real-world applications of AI to key decision-makers and industry leaders [1]

Group 1 - CXApp Inc. (Nasdaq:CXAI) has been recognized as a Representative Vendor in Gartner's 2025 Market Guide for Workplace Experience (WEX) Applications [1] - The recognition highlights CXAI's impact on how global enterprises manage real estate, IT, HR, and workforce strategies [1] - CXAI utilizes agentic AI to deliver measurable value for the C-suite [1]

[Part I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents CXApp Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a decrease in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, primarily driven by a reduction in current assets and an increase in convertible debt, while current liabilities decreased significantly due to the settlement of a promissory note and a decrease in warrant liability | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Total Assets | $29,568 thousand | $31,803 thousand | | Total Liabilities | $15,258 thousand | $16,211 thousand | | Total Stockholders' Equity | $14,310 thousand | $15,592 thousand | | Current Assets | $6,238 thousand | $7,080 thousand | | Current Liabilities | $7,653 thousand | $11,576 thousand | | Working Capital Deficiency | $(1,415) thousand | $(4,496) thousand | - The company's working capital deficiency improved from **$(4,496) thousand** as of December 31, 2024, to **$(1,415) thousand** as of June 30, 2025[22](index=22&type=chunk)[222](index=222&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2025, CXApp reported reduced revenues and gross profit compared to the prior year, but also significantly decreased net losses, primarily due to a substantial positive change in the fair value of derivative liability and lower interest expenses | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | $2,447 | $3,584 | | Gross Profit | $1,052 | $1,413 | $2,126 | $2,904 | | Loss from Operations | $(4,111) | $(3,650) | $(7,856) | $(7,237) | | Total Other Income (Expense) | $973 | $(1,765) | $3,102 | $(3,555) | | Net Loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | | Basic and Diluted Net Loss Per Share | $(0.16) | $(0.34) | $(0.23) | $(0.68) | - Net loss significantly decreased for both the three-month and six-month periods ended June 30, 2025, compared to the same periods in 2024, driven by a positive change in fair value of derivative liability and reduced interest expense[11](index=11&type=chunk)[210](index=210&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) The statements of stockholders' equity show a decrease in total equity from January 1, 2025, to June 30, 2025, primarily due to net losses and cumulative translation adjustments, partially offset by stock-based compensation and common shares issued for debt extinguishment and commitment shares | Metric (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $15,592 | $14,310 | | Net Loss (Q1 2025) | - | $(1,616) | | Net Loss (Q2 2025) | - | $(3,139) | | Stock-based Compensation (Q1 2025) | - | $624 | | Stock-based Compensation (Q2 2025) | - | $754 | | Common Shares Issued for Debt Extinguishment | - | $1,003 | | Common Shares Issued for Repayment of Debt | - | $1,328 | | Common Shares Issued for Commitment Shares | - | $89 | | Cumulative Translation Adjustment (Q1 2025) | - | $(1) | | Cumulative Translation Adjustment (Q2 2025) | - | $(301) | - As of August 12, 2025, there were **23,435,234 shares** of Class A common stock issued and outstanding[4](index=4&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, CXApp experienced a net decrease in cash and cash equivalents, with significant cash usage in operating activities partially offset by proceeds from financing activities, primarily through the issuance of convertible debt | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(3,991) | $(2,560) | | Net Cash Used in Investing Activities | $(16) | $(26) | | Net Cash Provided by Financing Activities | $3,990 | $2,480 | | Net Decrease in Cash and Cash Equivalents | $(26) | $(115) | | Cash and Cash Equivalents, End of Period | $4,854 | $6,160 | - Non-cash financing activities for the six months ended June 30, 2025, included **$2,331 thousand** for common shares issued for debt extinguishment and **$89 thousand** for commitment shares[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial position, operations, and cash flows, including significant accounting policies, revenue disaggregation, asset valuations, debt instruments, stock-based compensation, and recent events, offering crucial context for the condensed consolidated financial statements [NOTE 1 – Organization, Nature of Business and Basis of Presentation](index=8&type=section&id=NOTE%201%20%E2%80%93%20Organization%2C%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) CXApp Inc. delivers intelligent enterprise workplace experiences through its AI-powered SaaS platform, which offers digital transformation solutions for hybrid workplaces, including employee applications, indoor mapping, and generative AI analytics. The company was formed through a business combination in March 2023, where KINS acquired Inpixon's enterprise apps business and changed its name to CXApp Inc. - CXApp's SaaS platform focuses on AI-powered solutions for enterprise workplace experiences, including indoor mapping, on-device positioning, augmented reality, and generative AI applications[17](index=17&type=chunk)[18](index=18&type=chunk) - The company was formed on March 14, 2023, through a Business Combination where KINS Technology Group Inc. acquired Inpixon's enterprise apps business and subsequently changed its name to CXApp Inc[19](index=19&type=chunk)[21](index=21&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines CXApp's critical accounting policies, including its going concern assessment, revenue recognition methods for SaaS, professional services, and hardware, and valuation methodologies for complex financial instruments like convertible debt and derivative warrant liabilities. It also details the company's status as an emerging growth company and its election regarding new accounting standards - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and incurred net losses of **$3,139 thousand** and **$4,755 thousand** for the three and six months ended June 30, 2025, respectively, indicating substantial doubt about its ability to continue as a going concern[22](index=22&type=chunk) - To mitigate going concern indicators, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand**, with **$15,800 thousand** remaining available as of June 30, 2025, and also has **$3,520 thousand** remaining from a prior agreement with Streeterville Capital, LLC[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company recognizes revenue from SaaS licenses ratably over the service term, professional services using the percentage of completion or time-based methods, and hardware sales at the point of shipment[50](index=50&type=chunk)[52](index=52&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - CXApp accounts for convertible debt using the fair value option (Level 3 inputs) and derivative warrant liabilities at fair value (Level 1 inputs), with changes recognized in the consolidated statements of operations[46](index=46&type=chunk)[74](index=74&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[32](index=32&type=chunk)[33](index=33&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [NOTE 3 – Disaggregation of Revenue](index=21&type=section&id=NOTE%203%20%E2%80%93%20Disaggregation%20of%20Revenue) CXApp's revenue primarily consists of subscription-based software licenses and maintenance contracts, with a significant shift towards these recurring streams and a reduction in non-subscription professional services and hardware sales for the periods presented | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Software Subscription | $0 | $1,504 | $0 | $3,092 | | License & Maintenance Contracts | $1,175 | $0 | $2,386 | $0 | | Total Subscription Revenue | $1,175 | $1,504 | $2,386 | $3,092 | | Professional Services | $20 | $262 | $33 | $492 | | Hardware | $28 | $0 | $28 | $0 | | Total Non-Subscription Revenue | $48 | $262 | $61 | $492 | | Total Revenue | $1,223 | $1,766 | $2,447 | $3,584 | - For the three months ended June 30, 2025, subscription revenue accounted for approximately **96%** of total revenue, an increase from **85%** in the same period of 2024, reflecting a strategic shift to a full SaaS delivery model[97](index=97&type=chunk)[204](index=204&type=chunk) [NOTE 4 – Property and Equipment, net](index=22&type=section&id=NOTE%204%20%E2%80%93%20Property%20and%20Equipment%2C%20net) CXApp's net property and equipment decreased from $64 thousand at December 31, 2024, to $57 thousand at June 30, 2025, primarily due to depreciation and amortization expenses, despite minor additions to computer and office equipment | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Computer and office equipment | $212 | $177 | | Furniture and fixtures | $13 | $11 | | Leasehold improvements | $5 | $4 | | Software | $1 | $0 | | Total Gross Property and Equipment | $231 | $192 | | Less: Accumulated depreciation and amortization | $(174) | $(128) | | Total Property and Equipment, Net | $57 | $64 | - Depreciation and amortization expense for property and equipment was **$24 thousand** for the six months ended June 30, 2025, compared to **$44 thousand** for the same period in 2024[99](index=99&type=chunk) [NOTE 5 – Goodwill and Intangible Assets](index=22&type=section&id=NOTE%205%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) CXApp's goodwill remained constant at $8,737 thousand, with no impairment recognized, while net intangible assets decreased due to ongoing amortization, primarily affecting customer relationships and developed technology - Goodwill remained at **$8,737 thousand** as of June 30, 2025, and December 31, 2024, with no impairment recognized after a qualitative assessment[100](index=100&type=chunk)[102](index=102&type=chunk) | Intangible Asset (in thousands) | Weighted Average Remaining Useful Life (Years) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | | :-------------------------------- | :--------------------------------------------- | :---------------------------------- | :------------------------------------ | | Trade Name/Trademarks | 4.67 | $2,216 | $2,451 | | Customer Relationships | 2.67 | $3,034 | $3,596 | | Developed Technology | 7.67 | $6,704 | $7,139 | | Patents and Intellectual Property | 7.67 | $2,084 | $2,218 | | Totals | - | $14,038 | $15,404 | | Future Amortization Expense (in thousands) | Amount | | :----------------------------------------- | :----- | | 2025 (remainder of year) | $1,365 | | 2026 | $2,731 | | 2027 | $2,731 | | 2028 | $1,844 | | 2029 | $1,611 | | Thereafter | $3,756 | | Total | $14,038 | [NOTE 6 – Deferred Revenue](index=23&type=section&id=NOTE%206%20%E2%80%93%20Deferred%20Revenue) Deferred revenue decreased slightly from $2,683 thousand at December 31, 2024, to $2,532 thousand at June 30, 2025, as recognized revenue from license agreements and professional services exceeded new deferred revenue and advances from customers | Deferred Revenue (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :------------ | | Deferred Revenue – January 1, 2025 | $2,683 | - | | Revenue recognized | $(2,447) | - | | Revenue deferred | $2,240 | - | | Advance from customer | $56 | - | | Deferred Revenue – June 30, 2025 | - | $2,532 | - The Company expects to satisfy its remaining performance obligations for deferred revenue, primarily related to license agreements and professional services, over the next twelve months[107](index=107&type=chunk) [NOTE 7 – Accrued Liabilities](index=24&type=section&id=NOTE%207%20%E2%80%93%20Accrued%20Liabilities) Accrued liabilities remained stable, decreasing slightly from $2,383 thousand at December 31, 2024, to $2,373 thousand at June 30, 2025, with accrued expenses and reimbursements being the largest component | Accrued Liability (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accrued expenses and reimbursements | $1,468 | $1,690 | | Accrued compensation and benefits | $412 | $382 | | Accrued insurance premium and interest | $168 | $23 | | Accrued bonus and commissions | $159 | $134 | | Accrued sales and other indirect taxes payable | $106 | $95 | | Income tax payables | $47 | $46 | | Accrued transaction costs | $13 | $13 | | Total Accrued Liabilities | $2,373 | $2,383 | - The Company owed **$168 thousand** on its Directors & Officers (D&O) insurance policy as of June 30, 2025, an increase from **$23 thousand** at December 31, 2024[109](index=109&type=chunk) [NOTE 8 – Promissory Note](index=24&type=section&id=NOTE%208%20%E2%80%93%20Promissory%20Note) The Streeterville promissory note, with an initial principal of $3,885 thousand, was fully paid down by January 17, 2025, through a combination of cash payments and exchanges for Class A Common Stock, resulting in a significant reduction in interest expense for the current period - The Streeterville promissory note, with an initial principal of **$3,885 thousand**, was fully paid down by January 17, 2025[110](index=110&type=chunk)[119](index=119&type=chunk) - During the period from July 15, 2024, to December 26, 2024, **$3,428 thousand** of the note's outstanding balance was exchanged for approximately **2,012,107 shares** of Class A Common Stock[117](index=117&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Principal amount | $0 | $3,885 | | Interest | $0 | $372 | | Accrued monitoring fee | $0 | $273 | | Total | $0 | $4,530 | | Less: Extinguishment | $0 | $3,927 | | Net Promissory Note | $0 | $603 | - Interest expense on the promissory note was **$0** for the three and six months ended June 30, 2025, a significant decrease from **$322 thousand** and **$642 thousand** for the same periods in 2024[119](index=119&type=chunk) [NOTE 9 – Warrants](index=25&type=section&id=NOTE%209%20%E2%80%93%20Warrants) CXApp had 10,751,862 Public Warrants and 10,280,000 Private Placement Warrants outstanding as of June 30, 2025, with no exercises or exchanges occurring during the periods presented. These warrants are classified as derivative liabilities and are remeasured at fair value each reporting period - As of June 30, 2025, there were **10,751,862 Public Warrants** and **10,280,000 Private Placement Warrants** outstanding[120](index=120&type=chunk)[122](index=122&type=chunk) - Each whole warrant entitles the holder to purchase one share of Class A common stock at **$11.50 per share**, expiring on March 15, 2028[120](index=120&type=chunk)[121](index=121&type=chunk) - The Private Placement Warrants are identical to Public Warrants but are exercisable on a cashless basis and non-redeemable as long as held by initial purchasers or permitted transferees[123](index=123&type=chunk) - Changes in the fair value of derivative warrant liabilities resulted in a non-cash gain of **$1,262 thousand** and **$3,576 thousand** for the three and six months ended June 30, 2025, respectively, compared to losses of **$1,051 thousand** and **$2,523 thousand** for the same periods in 2024[75](index=75&type=chunk) [NOTE 10 – Stock Option Plan and Stock-Based Compensation](index=26&type=section&id=NOTE%2010%20%E2%80%93%20Stock%20Option%20Plan%20and%20Stock-Based%20Compensation) CXApp's 2023 Equity Incentive Plan had 2,149,550 stock options outstanding and 1,597,435 restricted stock units (RSUs) outstanding as of June 30, 2025. The company recognized significant non-cash stock-based compensation expenses for both options and RSUs, with a remaining unrecognized expense of $545 thousand for options and $914 thousand for RSUs - As of June 30, 2025, **2,149,550 stock options** were outstanding with a weighted average exercise price of **$1.44**, and **979,547 options** were exercisable[132](index=132&type=chunk) - Non-cash stock-based compensation expense related to stock options was **$51 thousand** for the three months and **$310 thousand** for the six months ended June 30, 2025[132](index=132&type=chunk) - As of June 30, 2025, **1,597,435 restricted stock units (RSUs)** were outstanding[136](index=136&type=chunk) - Non-cash stock-based compensation expense related to RSUs was **$703 thousand** for the three months and **$1,068 thousand** for the six months ended June 30, 2025[137](index=137&type=chunk) - Remaining unrecognized stock compensation expense totaled approximately **$545 thousand** for options (over 2.53 years) and **$914 thousand** for RSUs (over 0.86 year) as of June 30, 2025[132](index=132&type=chunk)[137](index=137&type=chunk) [NOTE 11 – Convertible Debt](index=29&type=section&id=NOTE%2011%20%E2%80%93%20Convertible%20Debt) CXApp's convertible debt increased to $7,534 thousand as of June 30, 2025, primarily due to new Pre-Paid Purchase agreements with Avondale Capital, LLC, and Streeterville Capital, LLC. The company recognized unrealized losses on changes in fair value for these instruments and settled portions of the debt by issuing Class A Common Stock - On March 26, 2025, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand** in Pre-Paid Purchase agreements, receiving **$3,990 thousand** net proceeds from the initial **$4,200 thousand** Pre-Paid Purchase 1[138](index=138&type=chunk) - As of June 30, 2025, Avondale Pre-Paid Purchase 1 was recorded at a fair value of **$4,388 thousand**, and Streeterville Pre-Paid Purchase 3 was recorded at **$3,139 thousand**, both classified as convertible debt[141](index=141&type=chunk)[147](index=147&type=chunk) - For the six months ended June 30, 2025, the Company recognized an unrealized loss of **$500 thousand** on changes in the fair value of convertible debt[46](index=46&type=chunk)[149](index=149&type=chunk) - During the six months ended June 30, 2025, CXApp issued **1,797,869 shares** of Class A Common Stock to settle **$1,677,755 thousand** of convertible debt obligations[149](index=149&type=chunk) [NOTE 12 – Common Stock](index=31&type=section&id=NOTE%2012%20%E2%80%93%20Common%20Stock) During the six months ended June 30, 2025, CXApp issued a total of 2,109,652 shares of Class A Common Stock to satisfy obligations related to promissory notes, convertible debt, and commitment shares, reflecting ongoing financing and debt management activities - On March 31, 2025, **554,274 shares** of Class A Common Stock were issued to satisfy promissory note and convertible debt obligations[153](index=153&type=chunk) - In April 2025, **971,213 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[153](index=153&type=chunk) - On May 8, 2025, **80,000 shares** of Class A Common Stock were issued as commitment shares for the Security Purchase Agreement with Avondale[154](index=154&type=chunk) - In June 2025, **471,973 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[155](index=155&type=chunk) - Total Class A Common Stock issued during the six months ended June 30, 2025, to satisfy debt obligations was **2,109,652 shares**[156](index=156&type=chunk) [NOTE 13 – Income Taxes](index=32&type=section&id=NOTE%2013%20%E2%80%93%20Income%20Taxes) CXApp recorded a minimal income tax expense of $1 thousand for the three and six months ended June 30, 2025, compared to tax benefits in the prior year, maintaining a valuation allowance against deferred tax assets due to recurring losses and significant permanent differences | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax Expense (Benefit) | $(1) | $159 | $(1) | $366 | - The effective tax rate for the three and six months ended June 30, 2025, was **(0.03%)** and **(0.02%)**, respectively, differing from the U.S. Federal statutory rate due to a valuation allowance against deferred tax assets and permanent differences[160](index=160&type=chunk) - The Company continues to maintain a valuation allowance on its deferred tax assets as of June 30, 2025, due to uncertainty regarding their realizability[161](index=161&type=chunk) [NOTE 14 – Credit Risk and Concentrations](index=32&type=section&id=NOTE%2014%20%E2%80%93%20Credit%20Risk%20and%20Concentrations) CXApp's primary credit risks are concentrated in trade accounts receivable and cash/cash equivalents, with cash deposits held in high-credit-quality financial institutions, including foreign subsidiaries. The company assesses customer financial strength and has not experienced significant credit losses - Financial instruments subject to credit risk include trade accounts receivable and cash and cash equivalents[162](index=162&type=chunk) - Cash deposits are held with high-credit-quality financial institutions, with foreign cash balances of **$127 thousand** as of June 30, 2025[163](index=163&type=chunk) - The Company has not experienced any significant credit losses from cash or accounts receivable for the six months ended June 30, 2025[163](index=163&type=chunk)[164](index=164&type=chunk) [NOTE 15 – Segment Information](index=33&type=section&id=NOTE%2015%20%E2%80%93%20Segment%20Information) CXApp operates as a single operating segment, focusing on its vertical software-as-a-service (SaaS) platform, the CXAI Platform, for enterprise workplace management. The CEO, as CODM, evaluates performance based on consolidated net income, with a focus on cash-based operating expenses - CXApp operates as a single operating segment, offering the CXAI Platform for enterprise workplace management[165](index=165&type=chunk)[166](index=166&type=chunk) - The Chief Executive Officer (CODM) manages the business based on consolidated net income, prioritizing cash-based operating expenses over non-cash adjustments like stock-based compensation and intangible amortization[165](index=165&type=chunk)[166](index=166&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue - Licenses | $1,175 | $1,504 | $2,386 | $3,092 | | Revenue - Professional Services | $20 | $262 | $33 | $492 | | Revenue - Hardware | $28 | $0 | $28 | $0 | | Cost of revenue | $171 | $353 | $321 | $680 | | Research and development (cash) | $1,904 | $1,410 | $3,266 | $2,907 | | Sales and marketing (cash) | $449 | $714 | $955 | $1,745 | | General and administrative (cash) | $1,373 | $1,421 | $3,017 | $2,687 | | Total loss without non-cash | $(1,702) | $(3,738) | $(2,011) | $(7,624) | | Net loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | [NOTE 16 – Foreign Operations](index=34&type=section&id=NOTE%2016%20%E2%80%93%20Foreign%20Operations) CXApp operates in the United States, Canada, and the Philippines, with the United States generating the majority of revenue and assets, while Canada and the Philippines contribute smaller portions and show varying profitability | Metric (in thousands) | United States | Canada | Philippines | Eliminations | Total | | :-------------------------------- | :------------ | :----- | :---------- | :----------- | :---- | | **For the Three Months Ended June 30, 2025:** | | | | | | | Revenues by geographic area | $1,199 | $1,023 | $183 | $(1,182) | $1,223 | | Operating income (loss) by geographic area | $(4,717) | $599 | $7 | $0 | $(4,111) | | Net income (loss) by geographic area | $(4,036) | $893 | $5 | $0 | $(3,139) | | **As of June 30, 2025:** | | | | | | | Identifiable assets by geographic area | $29,021 | $249 | $298 | $0 | $29,568 | | Long lived assets by geographic area | $14,249 | $120 | $150 | $0 | $14,519 | | Goodwill by geographic area | $8,737 | $0 | $0 | $0 | $8,737 | - For the three months ended June 30, 2025, the United States generated **$1,199 thousand** in revenue, while Canada generated **$1,023 thousand** and the Philippines **$183 thousand**, before eliminations[169](index=169&type=chunk) - As of June 30, 2025, the United States held **$29,021 thousand** in identifiable assets, representing the vast majority of the company's total assets[169](index=169&type=chunk) [NOTE 17 – Leases](index=35&type=section&id=NOTE%2017%20%E2%80%93%20Leases) CXApp has operating leases for administrative offices in the United States, Canada, and the Philippines, with a weighted average remaining lease term of 1.2 years and a discount rate of 8.0% as of June 30, 2025. Total lease payments are projected to be $449 thousand - Operating lease expenses for the three and six months ended June 30, 2025, were approximately **$106 thousand** and **$213 thousand**, respectively[171](index=171&type=chunk) - As of June 30, 2025, the weighted average remaining lease term is **1.2 years**, and the weighted average discount rate used for operating lease liabilities is **8.0%**[172](index=172&type=chunk) | Operating Leases (in thousands) | Amount | | :-------------------------------- | :----- | | Year 2025 | $208 | | Year 2026 | $208 | | Year 2027 | $33 | | Total lease payments | $449 | | Less: Imputed interest | $(27) | | Present value of lease liabilities | $422 | [NOTE 18 – Commitments and Contingencies](index=35&type=section&id=NOTE%2018%20%E2%80%93%20Commitments%20and%20Contingencies) CXApp faces risks and uncertainties from global social and political circumstances, including conflicts and trade tensions, which could negatively impact its financial position. The company assesses contingent liabilities, accruing material probable losses and disclosing reasonably possible ones, with no current material litigation - Global social and political circumstances, such as wars, conflicts, and trade tensions, could adversely affect the Company's financial position and operations[174](index=174&type=chunk)[175](index=175&type=chunk) - The Company assesses contingent liabilities, accruing estimated material losses that are probable and disclosing reasonably possible material losses[176](index=176&type=chunk)[177](index=177&type=chunk) - There is no material litigation, arbitration, or governmental proceeding currently pending against CXApp or its management team[241](index=241&type=chunk) [NOTE 19 – Subsequent Events](index=36&type=section&id=NOTE%2019%20%E2%80%93%20Subsequent%20Events) Subsequent to June 30, 2025, CXApp converted a portion of its Streeterville Convertible Notes into 1,994,072 shares of Class A common stock, received $3,000 thousand in net cash proceeds from Avondale's second tranche Pre-Paid Purchase, and filed a shelf registration statement on Form S-3 for up to $150,000 thousand of various securities - On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted, reinstating full expensing for R&D expenditures, which is expected to reverse a previously recognized deferred tax asset and increase net operating loss carryforwards[179](index=179&type=chunk) - Following June 30, 2025, CXApp converted a portion of its Streeterville Pre-Paid Purchase 3 Convertible Notes into approximately **1,994,072 shares** of Class A common stock[180](index=180&type=chunk)[181](index=181&type=chunk) - On August 7, 2025, the Company received net cash proceeds of **$3,000 thousand** from the second tranche of the Pre-Paid Purchase Agreement with Avondale[182](index=182&type=chunk) - After June 30, 2025, CXApp filed a shelf registration statement on Form S-3, authorizing the future offering and sale of up to **$150,000 thousand** of various securities, including up to **$7,959 thousand** of common stock[183](index=183&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CXApp's financial condition and operational results for the three months ended June 30, 2025, highlighting strategic shifts towards an AI-first SaaS model, efforts in cost management, and liquidity position, alongside a detailed comparison of revenues, expenses, and non-GAAP financial measures [Special Note Regarding Forward-Looking Statements](index=37&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from expectations. It advises referring to the Risk Factors section of the Annual Report on Form 10-K for important factors that could impact future performance - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[186](index=186&type=chunk) - Readers are advised to refer to the Risk Factors section in the Company's Annual Report on Form 10-K for important factors affecting future performance[186](index=186&type=chunk) [Overview of Our Business](index=37&type=section&id=Overview%20of%20Our%20Business) CXApp is transforming the modern workplace with AI-powered solutions, focusing on AI-first product innovation, enterprise penetration, and margin expansion through cost discipline. The company aims for sustainable growth by scaling its enterprise customer base and optimizing operational efficiency - CXApp's strategic pillars for fiscal year 2025 include AI-First Product Innovation, Enterprise Penetration and Revenue Quality Expansion, and Margin Expansion through Cost Discipline[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Enhancements to the Generative AI analytics platform improved data ingestion, real-time behavioral insights, and predictive modeling capabilities[188](index=188&type=chunk) - Recurring SaaS revenue accounted for **99%** of total revenue in Q2 2025, demonstrating the effectiveness of the 'land-and-expand' strategy[188](index=188&type=chunk) - Gross profit for Q2 2025 was **$1,052 thousand**, with gross margin improving to **87%** due to the shift to high-margin SaaS offerings[189](index=189&type=chunk) [Executive Overview](index=37&type=section&id=Executive%20Overview) CXApp is focused on transforming the modern workplace with AI-powered solutions, prioritizing AI-first product innovation, expanding its enterprise customer base, and achieving margin expansion through disciplined cost management. The company's strategy emphasizes sustainable growth and operational efficiency in the hybrid workplace market - CXApp aims to enhance employee experience, operational efficiency, and workplace intelligence through AI-powered solutions[187](index=187&type=chunk) - Key strategic pillars include developing AI-native workplace intelligence tools, expanding high-value enterprise accounts, and streamlining SG&A to improve gross margin[188](index=188&type=chunk)[189](index=189&type=chunk) [Financial Performance Summary](index=38&type=section&id=Financial%20Performance%20Summary) CXApp's financial performance summary highlights an increased gross margin of 86% in Q2 2025, driven by a shift to a SaaS-based model, continued customer expansion in key industries, and strategic investments in R&D despite an overall increase in operating expenses - Gross margin increased to **86%** in Q2 2025, up from **80%** in Q2 2024, due to the shift to an AI-enabled SaaS model[194](index=194&type=chunk) - Operating expenses increased to **$5,163 thousand** in Q2 2025, compared to **$5,063 thousand** in Q2 2024, reflecting strategic investments in R&D[194](index=194&type=chunk) - Cash and cash equivalents stood at **$4,854 thousand** for the three months ended June 30, 2025, providing a strategic buffer for investments[192](index=192&type=chunk) [Strategic Growth Initiatives](index=38&type=section&id=Strategic%20Growth%20Initiatives) CXApp's strategic growth initiatives focus on expanding AI-native capabilities, targeting new market verticals, strengthening partnerships, and maintaining operational excellence through cost optimization and customer retention to enhance profitability and market share - Product innovation includes integrating agentic AI for desk booking and advanced analytics, and developing seamless integrations with enterprise platforms[195](index=195&type=chunk) - Market expansion targets new verticals and strengthens partnerships with cloud providers and technology platforms to increase market share[195](index=195&type=chunk) - Operational excellence focuses on cost optimization, customer retention, and sales efficiency to enhance profitability[195](index=195&type=chunk) [Competitive Positioning and Market Outlook](index=39&type=section&id=Competitive%20Positioning%20and%20Market%20Outlook) CXApp is positioned in a rapidly growing global employee experience and workplace technology market, expected to exceed 20% CAGR. Its AI-driven platform offers differentiated capabilities for hybrid workplace management, aligning with strong enterprise demand despite macroeconomic uncertainties - The global employee experience and workplace technology market is projected to grow at a CAGR exceeding **20%** in the coming years[201](index=201&type=chunk) - CXApp's AI-driven platform differentiates itself with real-time analytics, behavioral insights, and predictive modeling for agile decision-making in hybrid workplaces[201](index=201&type=chunk) - The Company observes strong interest from enterprise clients for intelligent, flexible workplace infrastructure, aligning with its strategy to scale AI-enabled solutions[201](index=201&type=chunk) [Recent Events](index=39&type=section&id=Recent%20Events) On April 8, 2025, CXApp received proceeds from the Avondale convertible Pre-Paid Purchase 1, a key financing event for the company - On April 8, 2025, the Company received proceeds from the Avondale convertible Pre-Paid Purchase 1[198](index=198&type=chunk) [RESULTS OF OPERATIONS](index=39&type=section&id=RESULTS%20OF%20OPERATIONS) CXApp's results of operations for the three months ended June 30, 2025, show a decrease in total revenue and gross profit compared to the prior year, but a significant reduction in net loss, driven by a positive change in other income/expense and lower interest expense, despite an increase in operating expenses due to R&D investments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | | Cost of revenues | $(171) | $(353) | | Gross profit | $1,052 | $1,413 | | Operating expenses | $(5,163) | $(5,063) | | Loss from operations | $(4,111) | $(3,650) | | Other expense, net | $973 | $(1,765) | | Income tax benefit, provision (expense) | $(1) | $159 | | Net loss | $(3,139) | $(5,256) | [Revenues](index=40&type=section&id=Revenues) Total revenue for the three months ended June 30, 2025, decreased by 31% to $1,223 thousand, primarily due to a strategic decline in non-recurring Professional Services revenue. Subscription-based revenue increased its share to 96% of total revenue, aligning with the company's focus on recurring, high-margin streams - Total revenue for the three months ended June 30, 2025, was **$1,223 thousand**, a **31% decrease** from **$1,766 thousand** in the prior year[202](index=202&type=chunk) - The decrease was primarily attributable to a decline in non-recurring Professional Services revenue, reflecting a strategic transition to a full SaaS delivery model[202](index=202&type=chunk)[203](index=203&type=chunk) - Subscription-based revenue comprised approximately **96%** of total revenue for the three months ended June 30, 2025, up from **85%** in the same period of 2024[204](index=204&type=chunk) [Gross Margin](index=40&type=section&id=Gross%20Margin) Gross profit margin improved to 86% for the three months ended June 30, 2025, up from 80% in the prior year, despite a decrease in gross profit. This improvement was driven by a 51.55% reduction in cost of revenues, primarily from lower professional services-related costs and reduced hosting expenses - Gross profit margin was **86%** for the three months ended June 30, 2025, compared to **80%** for the same period in 2024[205](index=205&type=chunk) - Cost of revenues decreased by approximately **$182 thousand**, or **51.55%**, due to reductions in professional services-related costs and lower hosting/infrastructure expenses[205](index=205&type=chunk) [Operating Expenses](index=40&type=section&id=Operating%20Expenses) Total operating expenses increased by $100 thousand to $5,163 thousand for the three months ended June 30, 2025, primarily due to a $462 thousand rise in R&D expenses for platform enhancements and Google integration. This increase was partially offset by decreases in sales and marketing and G&A expenses - Total operating expenses increased by **$100 thousand** to **$5,163 thousand** for the three months ended June 30, 2025[206](index=206&type=chunk) - Research and development (R&D) expenses rose by **$462 thousand**, reflecting investments in platform enhancements and strategic integration with Google[207](index=207&type=chunk) - Sales and marketing expenses decreased by **$279 thousand**, and G&A expenses decreased by **$83 thousand** due to cost control measures[208](index=208&type=chunk) [Other Income/Expense](index=40&type=section&id=Other%20Income%2FExpense) Other income/expense shifted from an expense of $1,765 thousand in Q2 2024 to an income of $973 thousand in Q2 2025, a $2,738 thousand increase. This was primarily driven by a $1,931 thousand increase in the change in fair value of derivative warrant liabilities and a $521 thousand decrease in interest expense - Other income/expense was an income of **$973 thousand** for the three months ended June 30, 2025, compared to an expense of **$1,765 thousand** for the same period in 2024[210](index=210&type=chunk) - The **$2,738 thousand** increase in other income was mainly due to a **$1,931 thousand** increase in the change in fair value of derivative warrant liabilities and a **$521 thousand** decrease in interest expense[210](index=210&type=chunk) [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) CXApp recorded a $1 thousand income tax expense for the three months ended June 30, 2025, a change from a $159 thousand tax benefit in the prior year. The prior year's benefit was mainly due to the release of a valuation allowance related to acquired intangible assets - Income tax expense was **$1 thousand** for the three months ended June 30, 2025, compared to a **$159 thousand** tax benefit for the three months ended June 30, 2024[211](index=211&type=chunk) - The prior year's tax benefit resulted primarily from the release of a valuation allowance attributable to acquired intangible assets from the Business Combination[211](index=211&type=chunk) [Non-GAAP Financial information](index=41&type=section&id=Non-GAAP%20Financial%20information) CXApp presents Adjusted EBITDA as a non-GAAP measure to supplement its GAAP results, providing insights into core operating performance by excluding interest, taxes, depreciation, amortization, and other non-cash items. While useful for internal evaluation and industry comparison, it has limitations and should not be considered a substitute for GAAP net income - Adjusted EBITDA is a non-GAAP measure used by management to assess core operating results, allocate resources, evaluate economic outcomes, and compare performance[212](index=212&type=chunk)[215](index=215&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | - Adjusted EBITDA excludes non-cash items such as changes in fair value of warrant liabilities, loss on debt extinguishment, unrealized gains/losses, loss on contract to issue common stock, and stock-based compensation[215](index=215&type=chunk) - Limitations of Adjusted EBITDA include not reflecting cash expenditures, working capital needs, interest/principal payments on debt, or cash requirements for asset replacements[217](index=217&type=chunk) [EBITDA](index=41&type=section&id=EBITDA) EBITDA for the three and six months ended June 30, 2025, was $(2,282) thousand and $(3,172) thousand, respectively. Adjusted EBITDA, which further excludes non-cash items like changes in fair value of warrant liabilities and stock-based compensation, was $(2,678) thousand and $(5,088) thousand for the same periods | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | Interest and other income | $163 | $194 | $684 | $946 | | Income tax (benefit)/provision | $1 | $1 | $(159) | $(366) | | Depreciation and amortization | $695 | $1,390 | $705 | $1,410 | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Changes in fair value of warrant liabilities | $(880) | $(3,076) | $1,051 | $2,523 | | Loss on debt extinguishment | $0 | $48 | $0 | $0 | | Unrealized (gain) loss | $(291) | $(287) | $30 | $86 | | Loss on contract to issue common stock | $21 | $21 | $0 | $0 | | Stock-based compensation | $754 | $1,378 | $835 | $1,436 | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | [Financing Obligations and Requirements](index=42&type=section&id=Financing%20Obligations%20and%20Requirements) CXApp used $3,012 thousand in cash for operating activities during the three months ended June 30, 2025. The company secured $20,000 thousand in potential funding from Avondale Capital, LLC, with $15,800 thousand remaining, and $3,520 thousand remaining from Streeterville Capital, LLC, which management believes is sufficient for liquidity needs for the next 12 months - Net cash used in operating activities was **$3,012 thousand** for the three months ended June 30, 2025[218](index=218&type=chunk) - The Company has access to up to **$20,000 thousand** in funding from Avondale Capital, LLC, with **$15,800 thousand** remaining available as of June 30, 2025[218](index=218&type=chunk) - An additional **$3,520 thousand** in funding remained available under the agreement with Streeterville Capital, LLC, as of June 30, 2025[218](index=218&type=chunk) - Management believes these funds are sufficient to satisfy working capital, capital asset purchases, debt repayments, and other liquidity requirements for at least the next 12 months[218](index=218&type=chunk) [Liquidity and Capital Resources as of June 30, 2025 Compared with June 30, 2024](index=43&type=section&id=Liquidity%20and%20Capital%20Resources%20as%20of%20June%2030%2C%202025%20Compared%20with%20June%2030%2C%202024) CXApp's liquidity position as of June 30, 2025, shows a working capital deficiency of $1,415 thousand and cash of $4,854 thousand. While net cash used in operating activities increased, financing activities provided substantial cash, leading to a net increase in cash and cash equivalents for the three months ended June 30, 2025, compared to the prior year - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and cash of approximately **$4,854 thousand**[221](index=221&type=chunk)[222](index=222&type=chunk) | Cash Flows (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,012) | $(1,910) | | Net cash provided by (used in) investing activities | $(11) | $(8) | | Net cash provided by (used in) financing activities | $3,990 | $2,480 | | Net increase (decrease) in cash and cash equivalents | $961 | $557 | [Operating Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Operating%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in operating activities increased to $3,012 thousand for the three months ended June 30, 2025, from $1,910 thousand in the prior year. This was primarily due to a net loss of $3,139 thousand, partially offset by non-cash income and expenses, and a negative change in operating assets and liabilities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | $(3,139) | $(5,256) | | Non-cash income and expenses | $596 | $3,302 | | Net change in operating assets and liabilities | $(469) | $44 | | Net cash used in operating activities | $(3,012) | $(1,910) | [Cash Flows from Investing Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Cash%20Flows%20from%20Investing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in investing activities remained minimal, at approximately $11 thousand for the three months ended June 30, 2025, and $8 thousand for the same period in 2024, primarily for the purchase of property and equipment - Net cash used in investing activities was approximately **$11 thousand** for the three months ended June 30, 2025, and **$8 thousand** for the three months ended June 30, 2024[224](index=224&type=chunk) - These amounts were primarily used for the purchase of property and equipment[224](index=224&type=chunk) [Cash Flows from Financing Activities for the three months ended June 30, 2025 and June 30, 2024](index=44&type=section&id=Cash%20Flows%20from%20Financing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash provided by financing activities significantly increased to $3,990 thousand for the three months ended June 30, 2025, compared to $2,480 thousand in the prior year, primarily driven by proceeds from the issuance of convertible debt - Net cash provided by financing activities was approximately **$3,990 thousand** for the three months ended June 30, 2025[225](index=225&type=chunk) - This was primarily due to **$3,990 thousand** in net proceeds received from the issuance of convertible debt on April 8, 2025[225](index=225&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) CXApp does not have any off-balance sheet guarantees, interest rate swap transactions, foreign currency contracts, or engage in trading activities involving non-exchange traded contracts - The Company does not have any off-balance sheet guarantees, interest rate swap transactions, or foreign currency contracts[226](index=226&type=chunk) - CXApp does not engage in trading activities involving non-exchange traded contracts[226](index=226&type=chunk) [Contractual Obligations and Commitments](index=44&type=section&id=Contractual%20Obligations%20and%20Commitments) CXApp's contractual obligations primarily consist of operating lease liabilities, totaling approximately $422 thousand as of June 30, 2025, with $208 thousand expected to be paid within the next twelve months - As of June 30, 2025, total operating lease obligations are approximately **$422 thousand**[227](index=227&type=chunk) - Approximately **$208 thousand** of these operating lease obligations are expected to be paid within the next twelve months[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for CXApp - This section is not applicable for CXApp[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) CXApp's financial statements are prepared under U.S. GAAP, requiring management to make significant assumptions and estimates. The company regularly reviews these policies and estimates, and there have been no significant changes to critical accounting estimates disclosed in the 2024 Annual Report on Form 10-K for the three months ended June 30, 2025 - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make assumptions and estimates[229](index=229&type=chunk) - No significant changes to critical accounting estimates were disclosed for the three months ended June 30, 2025, compared to the 2024 Annual Report on Form 10-K[232](index=232&type=chunk) [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies) CXApp's significant accounting policies are detailed in Note 2 of the unaudited condensed consolidated financial statements - Significant accounting policies are discussed in Note 2 of the unaudited condensed consolidated financial statements[230](index=230&type=chunk) [Critical Accounting Estimates](index=44&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve complex judgments and assumptions that could materially impact financial statements. Management believes there have been no significant changes to these estimates during the three months ended June 30, 2025, as compared to the 2024 Annual Report - Critical accounting estimates are those that are complex, require a high degree of judgment, and could materially impact financial statements if different assumptions were used[231](index=231&type=chunk) - No significant changes to critical accounting estimates were identified for the three months ended June 30, 2025, compared to the 2024 Annual Report[232](index=232&type=chunk) [JOBS Act Accounting Election](index=45&type=section&id=JOBS%20Act%20Accounting%20Election) As an 'emerging growth company' under the JOBS Act, CXApp is eligible for certain exemptions from reporting requirements and has irrevocably elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies - CXApp is an 'emerging growth company' as defined in the JOBS Act[233](index=233&type=chunk) - The Company has irrevocably elected to take advantage of the extended transition period for complying with new or revised accounting standards, potentially affecting comparability with other companies[234](index=234&type=chunk) [Part II. OTHER INFORMATION](index=46&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) There are no material legal proceedings, arbitrations, or governmental proceedings currently pending against CXApp or its management team - No material litigation, arbitration, or governmental proceeding is currently pending against CXApp or its management[241](index=241&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) As of the reporting date, there have been no material changes to the risk factors previously disclosed in CXApp's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred as of the date of this Quarterly Report[242](index=242&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) CXApp reports no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities and use of proceeds during the period[243](index=243&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) CXApp reports no defaults upon senior securities for the period - There were no defaults upon senior securities during the period[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to CXApp - This section is not applicable[245](index=245&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section includes information on insider trading arrangements and a correction to the definitive proxy statement regarding audit and other service fees for fiscal year 2024 [Insider Trading Arrangements and Policies](index=46&type=section&id=Insider%20Trading%20Arrangements%20and%20Policies) During the three months ended June 30, 2025, no director or officer of CXApp notified the company of the adoption or termination of any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer notified CXApp of the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[246](index=246&type=chunk) [Definitive Proxy Statement Correction](index=46&type=section&id=Definitive%20Proxy%20Statement%20Correction) CXApp corrected an inadvertent misstatement in its April 17, 2025, definitive proxy statement regarding audit and other service fees provided by Withum for fiscal year 2024, clarifying the total fees to $382,000 - The Company corrected an inadvertent misstatement in its definitive proxy statement regarding fees for audit and other services provided by Withum for fiscal year 2024[247](index=247&type=chunk) | Fees | 2024 | 2023 | | :---------------- | :----- | :----- | | Audit Fees | $319,000 | $235,000 | | Audit-Related fees | $0 | $0 | | Tax Fees | $38,000 | $9,000 | | All Other Fees | $25,000 | $0 | | Total | $382,000 | $244,000 | [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including merger agreements, organizational documents, warrant agreements, and certifications - The section lists various exhibits, including the Agreement and Plan of Merger, Amended and Restated Bylaws, Warrant Agreement, Securities Purchase Agreements, and certifications[251](index=251&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director (Principal Executive Officer), and Joy Mbanugo, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on August 12, 2025 - The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director, and Joy Mbanugo, Chief Financial Officer, on August 12, 2025[253](index=253&type=chunk)[254](index=254&type=chunk)

Financial Data and Key Metrics Changes - Subscription revenue constituted 96% of total revenue, up from 87% a year ago, indicating a shift towards a higher margin recurring model [56] - Gross margin improved to 86% from 80% year-over-year, despite significant investments in R&D [56][58] - EPS increased to negative 16 per share, showing improvement quarter-over-quarter and year-over-year [57] Business Line Data and Key Metrics Changes - The company experienced a meaningful ARR expansion driven by two large Fortune 1,000 renewals, reflecting customer trust and the critical role of the platform [56] - The Sky platform's usage surged by over 150% at some client sites, primarily due to return-to-office mandates [31] Market Data and Key Metrics Changes - The corporate real estate market is experiencing a contraction, with the U.S. set to lose more office space than it builds for the first time in modern history [21] - The trend towards structured hybrid work is increasing, with many companies mandating employees to return to the office for at least three days a week [22][24] Company Strategy and Development Direction - The company aims to redefine employee experiences through its AI-driven Sky platform, focusing on enhancing workplace engagement and operational efficiency [30][34] - Strategic partnerships with major cloud providers like Google, Azure, and AWS are crucial for delivering end-to-end solutions [13][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the increasing demand for solutions that facilitate employee engagement and collaboration in hybrid work environments [30][29] - The company is positioned to capture a growing share of the employee experience market, which is currently under-penetrated [61] Other Important Information - The company has been awarded a new patent related to 3D mapping and augmented reality, enhancing its multidimensional mapping strategy [44] - The Sky platform is being deployed globally, with significant interest from clients seeking solutions for space optimization and employee engagement [30][25] Q&A Session Summary Question: How is Sky differentiating itself from larger AI competitors in the enterprise engagement space? - Sky delivers enterprise-scale AI solutions validated in complex workplace environments, with a focus on behavior analytics and intelligent employee experience orchestration [71] - The continuous feedback loop from enterprise clients ensures that innovations directly address market needs [72] Question: Are there any strategic partnerships or integrations in the pipeline that could accelerate market penetration? - The company is partnering with design-build firms and business process automation providers to embed its solutions into workplace projects [77] - Existing clients, particularly at the C-level, are key references for new business opportunities, enhancing market penetration [79]

Financial Data and Key Metrics Changes - Subscription revenue increased significantly from 87% in Q1 2024 to 99% in Q1 2025, indicating a strong commitment to recurring revenue [64] - Gross margin improved to 88% from 82% in Q1 2024, reflecting better cost discipline [64] - Earnings per share improved from negative $0.34 to negative $0.08 year-over-year [64] Business Line Data and Key Metrics Changes - Three large Fortune 500 customers expanded their contracts, pushing annual recurring revenue (ARR) up by 130% of their original contract value [63] - The company reported a decline in revenue due to the timing of renewals from two large customers, which were pushed to Q4 instead of Q1 [65] Market Data and Key Metrics Changes - The company is deployed in over 200 cities across 50 countries, indicating a strong global presence [15] - The focus on employee experience solutions is becoming increasingly relevant as companies navigate the return to office (RTO) challenges [5][28] Company Strategy and Development Direction - The company aims to enhance customer success by focusing on user engagement and adoption of its Sky platform [18] - The strategic priorities for 2025 include customer success, deeper AI adoption, and analytics usage [70] - The company is positioning itself as a leader in the employee experience software category, leveraging its AI capabilities [76] Management's Comments on Operating Environment and Future Outlook - Management noted that the workplace is undergoing significant transformation, with hybrid work becoming the new operating model [6] - There is a strong belief that organizations that rethink workplace experiences will thrive in the current environment [8] - The company is optimistic about its growth potential, citing a fragmented competitive landscape and a singular vision to create the best employee experience [81] Other Important Information - The company has filed for S3 eligibility, enhancing its liquidity position [70] - The partnership with Google Cloud is expected to drive cost efficiencies and innovation [80] Q&A Session Summary Question: What is the current shares outstanding? - The current shares outstanding are approximately 19,800,000 [82] Question: How much total debt is currently outstanding? - The total debt, including the recent $4,000,000 drawn, is about 10,000,000 [82] Question: Will the company share who its clients are? - The company has case studies available, but confidentiality agreements limit the disclosure of client details [83] Question: After soft Q1 revenue results, do you expect total revenue growth or subscription revenue growth year over year in '25 versus '24? - The company is not providing official guidance but aims for ARR growth as a main initiative [87] Question: Do the three large customer renewals include the six renewals mentioned in 2024? - No, these are three new renewals in addition to the six mentioned previously [91]

Financial Data and Key Metrics Changes - Subscription revenue increased significantly from 87% in Q1 2024 to 99% in Q1 2025, indicating a strong commitment to recurring revenue [63] - Gross margin improved from 82% to 88% year-over-year, reflecting better cost discipline [63] - Earnings per share improved from negative $0.34 to negative $0.08, showing progress in financial performance [64] Business Line Data and Key Metrics Changes - Three large Fortune 500 customers expanded their contracts, pushing annual recurring revenue (ARR) up by 130% of their original contract value [62] - The company successfully deployed the SkyView Analytics platform across all clients, enhancing data insights and analytics capabilities [57] Market Data and Key Metrics Changes - The company is deployed in over 200 cities across 50 countries, indicating a strong global presence [14] - The demand for hybrid work solutions has increased, with many organizations seeking to improve employee engagement and collaboration [5][27] Company Strategy and Development Direction - The company is focused on customer success, deeper AI adoption, and enhancing analytics usage as part of its strategic priorities for 2025 [70] - The introduction of the AgenTeq AI solution aims to provide collaborative AI agents that enhance user experiences and streamline workflows [48][49] - The company is positioning itself as a leader in the employee experience software category, leveraging its technological advancements and partnerships [80] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in revenue was timing-related due to the shift of two large customer renewals from Q1 to Q4, rather than a structural decline [64] - The management expressed confidence in the company's ability to navigate current economic challenges and emphasized the importance of providing cost-effective solutions to clients [77] Other Important Information - The company has filed for S3 eligibility, enhancing its liquidity position and access to capital [69] - The partnership with Google Cloud is expected to drive further improvements in cost efficiency and scalability [75] Q&A Session Summary Question: What is the current shares outstanding? - The current shares outstanding are approximately 19,800,000 [82] Question: How much total debt is currently outstanding? - The total debt, including the recent $4,000,000 drawn, is about 10,000,000 [82] Question: Will the company share who its clients are? - The company has case studies available on its website, but some clients prefer confidentiality [83][84] Question: After soft Q1 revenue results, do you expect total revenue growth or subscription revenue growth year-over-year in '25 versus '24? - The company is not providing official guidance at the moment but is focused on ARR growth [86][88] Question: Do the three large customer renewals include the six renewals mentioned in 2024? - No, these are three new renewals in addition to the six mentioned previously [92]

Revenue Performance - Revenue for the three months ended March 31, 2025, was $1,224 thousand, a decrease of $594 thousand compared to $1,818 thousand for the same period in 2024[189]. - Subscription-based revenue represented 99% of total revenue for the three months ended March 31, 2025, up from 87% in the same period in 2024, indicating a 12% increase in revenue mix[190]. Profitability and Expenses - Gross profit margin improved to 88% for the three months ended March 31, 2025, compared to 82% for the same period in 2024, driven by higher-margin AI-enabled services[181]. - Operating expenses decreased to $4,819 thousand for the three months ended March 31, 2025, down from $5,078 thousand in the same period in 2024, reflecting cost management initiatives[192]. - Net loss for the three months ended March 31, 2025, was $1,616 thousand, an improvement from a net loss of $5,170 thousand for the same period in 2024[187]. Cash Flow and Liquidity - Cash and cash equivalents were $3,893 thousand as of March 31, 2025, with an additional $3,990 thousand available from a Securities Purchase Agreement[179]. - The company has a working capital deficiency of approximately $4,017 thousand and cash of approximately $3,893 thousand as of March 31, 2025[212]. - Net cash used in operating activities for the three months ended March 31, 2025, was $979 thousand, with a net loss of $1,611 thousand[212]. - The company incurred net cash flows used in investing activities of approximately $5 thousand for the three months ended March 31, 2025, compared to $18 thousand in 2024[215]. - The company has a net cash decrease of $987 thousand for the three months ended March 31, 2025, compared to a decrease of $672 thousand in 2024[213]. - The company believes that the funds from the Pre-Paid Purchase agreements are sufficient to meet its working capital needs for the next 12 months[202]. Strategic Focus and Market Outlook - The global employee experience market is projected to grow at a 20% CAGR, presenting significant opportunities for the company to expand its market presence[188]. - The company is focused on AI-driven innovation, market expansion, and financial discipline to ensure long-term profitability and growth[176]. Financing and Agreements - The company entered into a SPA with Avondale to issue and sell up to $20,000 thousand of Pre-Paid Purchase agreements, with the initial tranche of $4,200 thousand received on April 8, 2025[202]. - The company has not provided any cash flows from financing activities during the three months ended March 31, 2025[216]. Accounting and Compliance - CXApp is classified as an emerging growth company and has elected to take advantage of the extended transition period for complying with new or revised accounting standards[225]. - The financial statements of CXApp may not be comparable to those of companies that comply with new or revised accounting standards due to the extended transition period[225]. - The decision to not opt out of the extended transition period for accounting standards compliance is irrevocable[225].

Product and Technology - CXApp's flagship product, the CXAI Platform, integrates AI-driven tools to enhance employee productivity and engagement [25] - CXApp has filed 37 patents, with 17 granted, to protect its innovative technologies in employee experience solutions [36] - CXApp's platform aims to create a seamless and engaging workplace experience, leveraging AI-driven personalization and real-time insights [39] - The company plans to integrate AI capabilities into its product offerings, which may incur substantial costs and present competitive risks [150] - The company is expanding its AI-driven capabilities with a generative AI analytics platform to enhance workplace decision-making [214] Market Trends - The digital workplace market was valued at $27.4 billion in 2022 and is projected to grow to $90.5 billion by 2030, reflecting a compound annual growth rate (CAGR) of 21.4% [40] - The global virtual events market is projected to expand at a CAGR of 21.4% from 2022 to 2030, indicating a growing demand for collaboration tools [41] - The occupancy analytics market in commercial office space is expected to rise from $2.17 billion in 2019 to $5.73 billion by 2024, growing at a CAGR of 21.5% [43] - The global employee experience market is projected to grow at a 20% CAGR, providing strong growth opportunities for the company [218] Financial Performance - The company incurred recurring net losses of approximately $19.4 million and $53.6 million for the fiscal years ended 2024 and 2023, respectively [80] - Revenue growth is dependent on increasing sales to existing customers and acquiring new customers, which may be limited by competition and market conditions [88] - Recurring revenue increased to 87% from 78%, reflecting a successful transition to a recurring revenue model [214] - Total operating expenses decreased to $19,598 thousand from $58,204 thousand, indicating effective cost optimization initiatives [214] - Cash and cash equivalents at year-end were $4,880 thousand, with an additional $3,500 thousand available from a Securities Purchase Agreement [213] Customer Base and Competition - CXApp's customer base includes Fortune 1000 enterprises across various industries, enhancing its market presence and revenue potential [50] - The company faces competition from specialized SaaS providers and large technology-driven entrants like Microsoft and Cisco, which are integrating employee experience offerings [45] - The top three customers accounted for approximately 25% and 22% of gross revenue during the years ended December 31, 2024 and the period from March 15, 2023 to December 31, 2023, respectively [77] - The company relies on a limited number of key customers, with one customer accounting for 10% of gross revenue in 2024 and another for 12% in 2023 [77] Risks and Challenges - The company is subject to risks associated with early-stage and emerging growth companies, including potential difficulties in obtaining financing and integrating acquisitions [60] - The company may require additional cash financing to support growth, and failure to secure such financing could limit operational capabilities [90] - Delays in collecting receivables could adversely affect cash flow and working capital, impacting overall business operations [91] - The company faces significant price competition, which may force it to reduce prices and impact profitability [156] - The company faces risks related to cybersecurity threats that could disrupt operations and adversely affect revenues and profitability [144] Regulatory and Compliance - The company is required to comply with SEC and Nasdaq regulations, which increases operational costs and may affect its ability to attract qualified board members [129] - The evolving regulatory landscape regarding data practices may impose burdens on the company's operations and profitability [174] - The company is subject to data protection regulations such as GDPR and CCPA, which could impose fines up to $7,500 per violation, potentially affecting service demand [176] - The uncertain regulatory environment may inhibit customer data sharing, affecting the company's service utilization [178] Corporate Strategy and Governance - The company’s corporate strategy includes potential future acquisitions, which may require effective planning and management processes to integrate new operations [82] - The company has never declared or paid cash dividends and does not intend to do so in the foreseeable future, focusing on retaining funds for operations [204] - The Board of Directors actively oversees the company's information security program and evaluates current cybersecurity policies [195] - The company has implemented a risk management program aligned with ISO 27001 and SOC 2 frameworks to address cybersecurity risks [186] Stock and Market Performance - The market price of the company's common stock may be volatile, influenced by various factors including operational results and strategic actions by competitors [108] - The company has experienced a sustained depression in its stock price from October to December 2023, which could impact its market capitalization and financial condition [123] - Future sales of common stock may cause substantial dilution to existing shareholders, potentially harming the market price [117] - The trading market for the company's common stock relies on research and reports from analysts, and any negative evaluations could lead to a decline in stock price [116]

Financial Results - The company announced its financial results for Q4 2024 and the fiscal year ended December 31, 2024 during a conference call on April 3, 2025[6]. - The earnings press release and presentation are attached as exhibits to the current report, providing detailed financial results[16]. Restatement and Accounting Deficiencies - The company identified technical accounting deficiencies in previously issued financial statements for the quarters ended June 30, 2024, and September 30, 2024, leading to a restatement of those financials[7]. - The restatement does not reflect changes in business performance, revenue recognition, or operational execution, indicating core financial results remain unchanged[7]. - A deficiency was identified in the accounting for a convertible debt instrument, which was not in accordance with ASC 815, necessitating a revision of its accounting treatment[9]. - The restated financial statements did not impact the company's liquidity, cash flows, or operating expenses for the affected periods[13]. - The company plans to provide further specifics on deficiencies in internal control over financial reporting and its remediation plan in the upcoming Restatement Filing[14]. Internal Control and Compliance - The company has acknowledged a material weakness in its internal control over financial reporting[12]. - The company is classified as an emerging growth company under the Securities Act[3]. Legal and Financial Adjustments - The company recorded an accrual for legal expenses that was subsequently adjusted to reflect the actual amount due, indicating a prior understatement[8].