UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Commission File Number: 001-39642 CXApp Inc. (Exact name of Registrant as Specified in Its Charter) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to Indicate by check mark whether the registrant is a large accelerated ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and related notes for CXApp Inc. for the specified interim periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total Assets | $29,568 | $31,803 | $(2,235) | -7.03% | | Total Liabilities | $15,258 | $16,211 | $(953) | -5.88% | | Total Stockholders' Equity | $14,310 | $15,592 | $(1,282) | -8.22% | | Cash and cash equivalents | $4,854 | $4,880 | $(26) | -0.53% | | Accounts receivable | $818 | $1,686 | $(868) | -51.48% | | Warrant liability | $1,472 | $5,048 | $(3,576) | -70.84% | | Convertible debt | $7,534 | $4,512 | $3,022 | 67.00% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This table details the company's revenues, expenses, and net loss over specific interim periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,223 | $1,766 | $2,447 | $3,584 | | Cost of Revenues | $171 | $353 | $321 | $680 | | Gross Profit | $1,052 | $1,413 | $2,126 | $2,904 | | Total Operating Expenses | $5,163 | $5,063 | $9,982 | $10,141 | | 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, Class A common stock | $(0.16) | $(0.34) | $(0.23) | $(0.68) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This table outlines changes in the company's equity components, including net loss and stock-based compensation | Metric (in thousands) | Balance at January 1, 2025 | Net Loss | Stock-based Compensation | Common Shares Issued for Debt Extinguishment/Repayment | Common Shares Issued for Commitment Shares | Cumulative Translation Adjustment | Balance at June 30, 2025 | | :-------------------- | :------------------------- | :------- | :----------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------ | :----------------------- | | Class A Common Stock (Shares) | 19,248,390 | - | - | 2,109,652 | 80,000 | - | 21,441,162 | | Additional Paid-in Capital | $92,583 | - | $1,378 | $2,331 | $89 | - | $96,358 | | Accumulated Deficit | $(77,209) | $(4,755) | - | - | - | - | $(81,964) | | Total Stockholders' Equity | $15,592 | $(4,755) | $1,378 | $2,331 | $89 | $(302) | $14,310 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six 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 | | Effect of exchange rate changes on cash and cash equivalents | $(9) | $(9) | | Net decrease in cash and cash equivalents | $(26) | $(115) | | Cash and cash equivalents, beginning of period | $4,880 | $6,275 | | Cash and cash equivalents, end of period | $4,854 | $6,160 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the interim 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) This note describes CXApp Inc.'s business, its SaaS platform, and the basis for financial statement presentation - CXApp Inc. delivers intelligent enterprise workplace experiences through its SaaS platform, focusing on customer experience (CX) and artificial intelligence (AI) for digital transformation in physical workplaces[17](index=17&type=chunk) - The CXApp SaaS platform includes an enterprise employee application, indoor mapping, on-device positioning, augmented reality, generative AI applications, and an AI-based analytics platform, targeting the hybrid workplace market[18](index=18&type=chunk) - The company was formed through a Business Combination on March 14, 2023, where KINS acquired Inpixon's enterprise apps business and subsequently changed its name to CXApp Inc., trading on Nasdaq as CXAI[19](index=19&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 the company's critical accounting policies and addresses going concern indicators and financing efforts - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and cash and cash equivalents of approximately **$4,854 thousand**[22](index=22&type=chunk) - The Company incurred net losses of approximately **$3,139 thousand** for the three months and **$4,755 thousand** for the six months ended June 30, 2025, and used approximately **$3,991 thousand** of cash for operating activities during the six months ended June 30, 2025[22](index=22&type=chunk) - To mitigate going concern indicators, the Company entered into a Securities Purchase Agreement (SPA) with Avondale Capital, LLC, on March 26, 2025, for up to **$20,000 thousand**, with an initial **$4,200 thousand** tranche closing on April 8, 2025, providing net proceeds of approximately **$3,990 thousand**. Approximately **$15,800 thousand** remained available as of June 30, 2025[23](index=23&type=chunk) - Additionally, under a May 22, 2024 SPA with Streeterville Capital, LLC, the Company had **$3,520 thousand** in remaining available funding as of June 30, 2025[24](index=24&type=chunk) - The Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards under the JOBS Act, meaning it will adopt new standards at the same time as private companies[33](index=33&type=chunk) [NOTE 3 – Disaggregation of Revenue](index=21&type=section&id=NOTE%203%20%E2%80%93%20Disaggregation%20of%20Revenue) This note breaks down the company's revenue by type, highlighting the shift towards subscription-based streams | Revenue Type (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | **Subscription revenue** | | | | | | Software | $- | $- | $1,504 | $3,092 | | License & Maintenance Contracts | $1,175 | $2,386 | $- | $- | | Total subscription revenue | $1,175 | $2,386 | $1,504 | $3,092 | | **Non-subscription revenue**| | | | | | Professional services | $20 | $33 | $262 | $492 | | Hardware | $28 | $28 | $- | $- | | Total non-subscription revenue | $48 | $61 | $262 | $492 | | **Total Revenue** | **$1,223** | **$2,447** | **$1,766** | **$3,584** | - For the three months ended June 30, 2025, total revenue decreased by approximately **31% ($543 thousand)** compared to the same period in 2024, primarily due to a decline in non-recurring Professional Services revenue[202](index=202&type=chunk) - Subscription-based revenue increased its share of total revenue to approximately **96%** for the three months ended June 30, 2025, up from **85%** in the prior year, reflecting a strategic shift towards recurring, high-margin revenue streams[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) This note details the composition and net carrying amount of the company's property and equipment | Property and Equipment (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 | $- | | Total | $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 approximately **$12 thousand** for the three months and **$24 thousand** for the six months ended June 30, 2025, a decrease from **$22 thousand** and **$44 thousand** respectively in the prior year[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) This note provides information on the company's goodwill and intangible assets, including amortization schedules - The carrying amount of goodwill remained constant at **$8,737 thousand** as of June 30, 2025, and December 31, 2024. The Company performed a qualitative goodwill impairment assessment as of June 30, 2025, and determined no impairment was necessary[100](index=100&type=chunk)[102](index=102&type=chunk) Intangible Assets (in thousands) | Intangible Assets (in thousands) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :------------------------------- | :-------------------------------- | :------------------------------------ | | Trade Name/Trademarks | $2,216 | $2,451 | | Customer Relationships | $3,034 | $3,596 | | Developed Technology | $6,704 | $7,139 | | Patents and Intellectual Property | $2,084 | $2,218 | | Totals | $14,038 | $15,404 | Future Amortization Expense (in thousands) | Future Amortization Expense (in thousands) | | :--------------------------------------- | | 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) This note details the changes in deferred revenue and its expected recognition timeline | Deferred Revenue (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Deferred Revenue – January 1 | $2,683 | $2,878 | | Revenue recognized | $(2,447) | $(7,142) | | Revenue deferred | $2,240 | $6,947 | | Advance from customer | $56 | $- | | Deferred Revenue – June 30/December 31 | $2,532 | $2,683 | - Deferred revenue decreased from **$2,683 thousand** at December 31, 2024, to **$2,532 thousand** at June 30, 2025. The Company expects to recognize the remaining deferred revenue, primarily from license agreements and professional services, over the next twelve months[106](index=106&type=chunk)[107](index=107&type=chunk) [NOTE 7 – Accrued Liabilities](index=24&type=section&id=NOTE%207%20%E2%80%93%20Accrued%20Liabilities) This note presents a breakdown of the company's accrued liabilities at different reporting dates | Accrued Liabilities (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 | | Accrued liabilities total | $2,373 | $2,383 | - Accrued liabilities remained relatively stable, decreasing slightly from **$2,383 thousand** at December 31, 2024, to **$2,373 thousand** at June 30, 2025. A notable change was the increase in accrued insurance premium and interest from **$23 thousand** to **$168 thousand**[108](index=108&type=chunk)[109](index=109&type=chunk) [NOTE 8 – Promissory Note](index=24&type=section&id=NOTE%208%20%E2%80%93%20Promissory%20Note) This note details the status and extinguishment of the Streeterville promissory note | Promissory Note (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Principal amount | $- | $3,885 | | Add: Interest | $- | $372 | | Accrued monitoring fee | $- | $273 | | Total | $- | $4,530 | | Less: Extinguishment | $- | $3,927 | | Net Promissory Note | $- | $603 | - The Streeterville promissory note, initially **$3,885 thousand**, was fully paid down as of January 17, 2025. Interest expense on this note was **$0** for the three and six months ended June 30, 2025, compared to **$322 thousand** and **$642 thousand** for the same periods in 2024[110](index=110&type=chunk)[119](index=119&type=chunk) - During July-December 2024, **$3,428 thousand** of the note's outstanding balance was exchanged for approximately **2,012,107 shares** of Class A Common Stock, resulting in a **$1,052 thousand** loss on debt extinguishment[117](index=117&type=chunk)[118](index=118&type=chunk) [NOTE 9 – Warrants](index=25&type=section&id=NOTE%209%20%E2%80%93%20Warrants) This note describes the outstanding public and private placement warrants and their terms - As of June 30, 2025, there were **10,751,862 Public Warrants** and **10,280,000 Private Placement Warrants** outstanding, totaling **21,031,862 warrants**. Both types entitle holders to purchase Class A common stock at **$11.50 per share**[120](index=120&type=chunk)[122](index=122&type=chunk) - The Public Warrants expire on March 15, 2028, while Private Placement Warrants are identical but have transfer restrictions and are exercisable on a cashless basis by initial purchasers[121](index=121&type=chunk)[123](index=123&type=chunk) - No exercises or exchanges of warrants occurred during the periods ended June 30, 2025, and December 31, 2024[124](index=124&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) This note outlines the company's equity incentive plan and stock-based compensation expenses - The 2023 Equity Incentive Plan, effective March 14, 2023, has **5,676,000 shares** of Class A Common Stock available for issuance[125](index=125&type=chunk) Stock Options Activity | Stock Options Activity | Options outstanding at January 1, 2025 | Granted | Exercised | Forfeited | Options outstanding at June 30, 2025 | | :--------------------- | :------------------------------------- | :------ | :-------- | :-------- | :----------------------------------- | | Number of Options | 1,799,550 | 350,000 | - | - | 2,149,550 | | Weighted average exercise price | $1.52 | $1.00 | - | - | $1.44 | Non-Cash Stock Compensation (in thousands) | Non-Cash Stock Compensation (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Stock options | $51 | $310 | $102 | $322 | | Restricted stock units | $703 | $1,068 | $733 | $1,114 | | Total | $754 | $1,378 | $835 | $1,436 | - As of June 30, 2025, the remaining unrecognized stock compensation expense for options totaled approximately **$545 thousand**, to be recognized over a weighted average remaining term of **2.53 years**[132](index=132&type=chunk) - As of June 30, 2025, the Company has approximately **$914 thousand** of unrecognized restricted stock unit compensation to be expensed over a weighted average period of **0.86 year**[137](index=137&type=chunk) [NOTE 11 – Convertible Debt](index=29&type=section&id=NOTE%2011%20%E2%80%93%20Convertible%20Debt) This note details the company's convertible debt agreements, including new issuances and conversions - On March 26, 2025, the Company entered into a SPA with Avondale Capital, LLC, for up to **$20,000 thousand** in Pre-Paid Purchase agreements. The initial **$4,200 thousand** tranche closed on April 8, 2025, yielding **$3,990 thousand** net proceeds[138](index=138&type=chunk) - As of June 30, 2025, Avondale Pre-Paid Purchase 1 is recorded at a fair value of **$4,388 thousand**, and the Company recognized an unrealized loss on change in fair value of **$195 thousand** for the three months ended June 30, 2025[141](index=141&type=chunk) - The Streeterville convertible Pre-Paid Purchase 1 was fully converted into equity as of June 30, 2025. Pre-Paid Purchase 3 is recorded at a fair value of **$3,139 thousand** as of June 30, 2025, with an unrealized loss of **$145 thousand** for the three months ended June 30, 2025[144](index=144&type=chunk)[147](index=147&type=chunk) Convertible Debt (in thousands) | Convertible Debt (in thousands) | Balance as of December 31, 2024 | Additions | Settlement | Fair value measurement adjustments | Balance as of June 30, 2025 | | :------------------------------ | :------------------------------ | :-------- | :--------- | :--------------------------------- | :-------------------------- | | Convertible Debt | $4,512 | $4,200 | $(1,678) | $500 | $7,534 | [NOTE 12 – Common Stock](index=31&type=section&id=NOTE%2012%20%E2%80%93%20Common%20Stock) This note describes the issuance of Class A Common Stock to satisfy debt obligations and for commitment shares - During the six months ended June 30, 2025, the Company issued a total of **2,109,652 shares** of Class A Common Stock to satisfy obligations under promissory notes and convertible debt[156](index=156&type=chunk) - Specific issuances include **554,274 shares** on March 31, 2025, for debt obligations, **971,213 shares** in April 2025 for convertible debt, **80,000 commitment shares** on May 8, 2025, for the Avondale SPA, **112,192 shares** on May 21, 2025, for convertible debt, and **471,973 shares** in June 2025 for convertible debt[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [NOTE 13 – Income Taxes](index=32&type=section&id=NOTE%2013%20%E2%80%93%20Income%20Taxes) This note provides details on the company's income tax expense and effective tax rate - The Company recorded an income tax expense of approximately **$1 thousand** for both the three and six months ended June 30, 2025, compared to a tax benefit of **$159 thousand** and **$366 thousand** for the same periods in 2024[159](index=159&type=chunk) - 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 primarily due to a valuation allowance against deferred tax assets and significant permanent differences[160](index=160&type=chunk) [NOTE 14 – Credit Risk and Concentrations](index=32&type=section&id=NOTE%2014%20%E2%80%93%20Credit%20Risk%20and%20Concentrations) This note discusses the company's exposure to credit risk in its financial instruments - The Company's financial instruments subject to credit risk include trade accounts receivable and cash and cash equivalents. Credit risk is managed by assessing customer financial strength and establishing allowances for credit losses[162](index=162&type=chunk) - Cash deposits with financial institutions may exceed federally insured limits, and cash is also maintained at foreign financial institutions for Canadian and Philippine subsidiaries, totaling **$127 thousand** as of June 30, 2025[163](index=163&type=chunk) [NOTE 15 – Segment Information](index=33&type=section&id=NOTE%2015%20%E2%80%93%20Segment%20Information) This note clarifies that the company operates as a single operating segment for reporting purposes - The Company operates as a single operating segment, offering a vertical software-as-a-service (SaaS) platform for enterprises, with its CEO acting as the Chief Operating Decision Maker (CODM)[165](index=165&type=chunk) - Management reviews the business as a single operating segment, focusing on consolidated net income and cash-based operating expenses for evaluating performance, while de-emphasizing non-cash adjustments like stock-based compensation and intangible amortization[166](index=166&type=chunk) [NOTE 16 – Foreign Operations](index=34&type=section&id=NOTE%2016%20%E2%80%93%20Foreign%20Operations) This note provides a geographic breakdown of the company's revenues, operating results, and assets Geographic Area - Operating Results (in thousands) | Geographic Area (in thousands) | Revenues (3M Ended June 30, 2025) | Operating Income (Loss) (3M Ended June 30, 2025) | Net Income (Loss) (3M Ended June 30, 2025) | | :----------------------------- | :-------------------------------- | :----------------------------------------------- | :----------------------------------------- | | United States | $1,199 | $(4,717) | $(4,036) | | Canada | $1,023 | $599 | $893 | | Philippines | $183 | $7 | $5 | | Eliminations | $(1,182) | $- | $- | | Total | $1,223 | $(4,111) | $(3,139) | Geographic Area - Assets (in thousands) | Geographic Area (in thousands) | Identifiable Assets (June 30, 2025) | Long Lived Assets (June 30, 2025) | Goodwill (June 30, 2025) | | :----------------------------- | :---------------------------------- | :-------------------------------- | :----------------------- | | United States | $29,021 | $14,249 | $8,737 | | Canada | $249 | $120 | $- | | Philippines | $298 | $150 | $- | | Total | $29,568 | $14,519 | $8,737 | [NOTE 17 – Leases](index=35&type=section&id=NOTE%2017%20%E2%80%93%20Leases) This note details the company's operating lease arrangements and associated expenses - The Company has operating leases for administrative offices in Canada (expires May 2026), the Philippines (expired May 2025), and the United States (expires April 2026)[170](index=170&type=chunk) - Operating lease expenses for the three and six months ended June 30, 2025, were approximately **$106 thousand** and **$213 thousand**, respectively, a slight decrease from **$109 thousand** and **$222 thousand** in the prior year[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 was **8.0%**. The present value of lease liabilities is **$422 thousand**[172](index=172&type=chunk)[173](index=173&type=chunk) [NOTE 18 – Commitments and Contingencies](index=35&type=section&id=NOTE%2018%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses potential risks from global events and the company's assessment of contingent liabilities - The Company acknowledges risks and uncertainties from global social and political circumstances (e.g., wars, trade tensions, catastrophic events) that could negatively affect its financial position, operations, and search for a target company, though the specific impact is not readily determinable[174](index=174&type=chunk)[175](index=175&type=chunk) - The Company assesses contingent liabilities related to legal proceedings and unasserted claims, accruing estimated material losses if probable and estimable, and disclosing reasonably possible losses[176](index=176&type=chunk)[177](index=177&type=chunk) [NOTE 19 – Subsequent Events](index=36&type=section&id=NOTE%2019%20%E2%80%93%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including legislative changes and financing activities - On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted, reinstating full expensing for R&D expenditures, which is expected to reverse previously recognized deferred tax assets related to Section 174 and increase net operating loss carryforwards[179](index=179&type=chunk) - Following June 30, 2025, the Company converted a portion of its outstanding Streeterville Prepaid Purchase 3 Convertible Notes into approximately **1,994,072 shares** of Class A common stock to reduce debt and strengthen equity[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 Avondale Pre-Paid Purchase Agreement[182](index=182&type=chunk) - After June 30, 2025, the Company 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 a prospectus supplement for 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's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses CXApp's financial condition, operational results, liquidity, and capital resources, including key strategies and non-GAAP measures [Overview of Our Business](index=37&type=section&id=Overview%20of%20Our%20Business) This section provides an executive overview of CXApp's AI-powered workplace solutions and market strategy - CXApp is transforming the modern workplace with AI-powered solutions, focusing on enhancing employee experience, operational efficiency, and workplace intelligence[187](index=187&type=chunk) - **AI-First Product Innovation:** Strengthened competitive differentiation through AI-native workplace intelligence tools, enhancing Generative AI analytics for data ingestion, real-time behavioral insights, and predictive modeling - **Enterprise Penetration and Revenue Quality Expansion:** Focused on high-value enterprise accounts (financial services, healthcare, technology), expanding deployments with Fortune 1000 clients. Recurring SaaS revenue accounted for **99% of total revenue in Q2 2025** - **Margin Expansion through Cost Discipline:** Reduced operating costs by streamlining SG&A and rationalizing services delivery. Gross margin improved to **87% in Q2 2025**, despite a decline in total revenue due to de-emphasis on non-recurring professional services[188](index=188&type=chunk)[189](index=189&type=chunk) - The global employee experience and workplace technology market is projected to grow at a CAGR exceeding **20%**, driven by enterprise investment in hybrid workplace enablement and data-driven decision-making[201](index=201&type=chunk) [RESULTS OF OPERATIONS](index=39&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, including revenue, gross profit, and operating expenses | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Revenues | $1,223 | $1,766 | $(543) | -30.75% | | Cost of revenues | $171 | $353 | $(182) | -51.56% | | Gross profit | $1,052 | $1,413 | $(361) | -25.55% | | Operating expenses | $5,163 | $5,063 | $100 | 1.98% | | Loss from operations | $(4,111) | $(3,650) | $(461) | 12.63% | | Other expense, net | $973 | $(1,765) | $2,738 | 155.13% | | Income tax (expense)/benefit | $(1) | $159 | $(160) | -100.63% | | Net loss | $(3,139) | $(5,256) | $2,117 | -40.28% | - Total revenue decreased by **31%** to **$1,223 thousand** for the three months ended June 30, 2025, primarily due to a strategic decline in non-recurring Professional Services revenue as the Company transitions to a full SaaS delivery model[202](index=202&type=chunk)[203](index=203&type=chunk) - Gross profit margin improved to **86%** for the three months ended June 30, 2025, from **80%** in the prior year, driven by a **51.55% decrease** in cost of revenues due to reduced professional services-related costs and lower hosting expenses[205](index=205&type=chunk) - Operating expenses increased by **$100 thousand** to **$5,163 thousand**, mainly due to a **$462 thousand** rise in R&D expenses for platform enhancements and Google integration, partially offset by decreases in sales and marketing (**$279 thousand**) and G&A (**$83 thousand**)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Other income/expense shifted from a **$1,765 thousand expense** in Q2 2024 to a **$973 thousand income** in Q2 2025, primarily 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) [Non-GAAP Financial information](index=41&type=section&id=Non-GAAP%20Financial%20information) This section presents Adjusted EBITDA as a non-GAAP measure, reconciling it to GAAP net loss - The Company uses Adjusted EBITDA, a non-GAAP measure, to supplement its GAAP results, defining it as earnings before interest and other income, taxes, depreciation, and amortization, adjusted for non-recurring and non-cash items like changes in fair value of warrant liabilities and stock-based compensation[212](index=212&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six 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)** | | Adjusted for: | | | | | | Changes in fair value of warrant liabilities | $(880) | $(3,076) | $1,051 | $2,523 | | Loss on debt extinguishment | $- | $48 | $- | $- | | Unrealized (gain) loss | $(291) | $(287) | $30 | $86 | | Loss on contract to issue common stock | $21 | $21 | $- | $- | | 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) This section discusses the company's financing activities and its ability to meet future liquidity needs - Net cash used in operating activities for the three months ended June 30, 2025, was **$3,012 thousand**, with a net loss of **$3,139 thousand**[218](index=218&type=chunk) - The Company secured **$3,990 thousand** in net proceeds from an initial **$4,200 thousand** Pre-Paid Purchase Agreement with Avondale Capital, LLC, on April 8, 2025, with **$15,800 thousand** remaining available under the agreement[218](index=218&type=chunk) - An additional **$3,520 thousand** in funding remained available under a Securities Purchase Agreement with Streeterville Capital, LLC, as of June 30, 2025[218](index=218&type=chunk) - Management believes these funds are sufficient to meet 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) This section compares the company's liquidity and capital resources between the current and prior year periods - 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) Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended June 30, 2025 | Three 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 | | Effect of exchange rates on cash | $(6) | $(5) | | Net increase (decrease) in cash and cash equivalents | $961 | $557 | - Net cash provided by financing activities significantly increased to **$3,990 thousand** for the three months ended June 30, 2025, primarily from proceeds of convertible debt issuance, compared to **$2,480 thousand** in the prior year[225](index=225&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements for the company - The Company does not have any off-balance sheet guarantees, interest rate swap transactions, or foreign currency contracts, nor does it 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) This section details the company's contractual obligations, primarily consisting of operating lease liabilities - The Company's contractual obligations consist solely of operating lease liabilities, totaling approximately **$422 thousand** as of June 30, 2025[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 market risk disclosures for the company - This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant accounting policies and estimates used in preparing financial statements - The Company's financial statements are prepared in accordance with U.S. GAAP, requiring management to make assumptions and estimates that affect reported amounts[229](index=229&type=chunk) - Critical accounting estimates involve complex judgments where different assumptions could materially impact financial statements, but management believes there have been no significant changes to these estimates during the three months ended June 30, 2025[231](index=231&type=chunk)[232](index=232&type=chunk) [JOBS Act Accounting Election](index=45&type=section&id=JOBS%20Act%20Accounting%20Election) This section explains the company's election to delay adoption of new accounting standards under the JOBS Act - CXApp is an "emerging growth company" under the JOBS Act and has elected to take advantage of the extended transition period for complying with new or revised accounting standards, meaning it will delay adoption until private companies are required to comply[233](index=233&type=chunk)[234](index=234&type=chunk) - This election is irrevocable and may make the Company's financial statements not comparable to those of other public companies that comply with new standards sooner[234](index=234&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms no material litigation or governmental proceedings are currently pending against the company - There is no material litigation, arbitration, or governmental proceeding currently pending against CXApp or its management team[241](index=241&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report on Form 10-K for risk factors, noting no material changes - As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K[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) This section reports no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report[243](index=243&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults occurred upon senior securities during the reporting period - There were no defaults upon senior securities[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[245](index=245&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section covers insider trading arrangements and a correction to audit and other service fees - No director or officer notified CXApp of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[246](index=246&type=chunk) - The Company corrected an inadvertent misstatement in its definitive proxy statement regarding audit and other service fees provided by Withum for fiscal year 2024[247](index=247&type=chunk) Fees (Corrected) | Fees (Corrected) | 2024 | 2023 | | :--------------- | :-------- | :------- | | Audit Fees | $319,000 | $235,000 | | Audit-Related fees | $- | $- | | Tax Fees | $38,000 | $9,000 | | All Other Fees | $25,000 | $- | | Total | $382,000 | $244,000 | [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or incorporated by reference into this Quarterly Report on Form 10-Q - The report includes various exhibits such as the Agreement and Plan of Merger, Separation and Distribution Agreement, Sponsor Support Agreement, Amended and Restated Bylaws, Warrant Agreement, Equity Incentive Plan, Securities Purchase Agreements, and certifications[251](index=251&type=chunk)

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 report, providing detailed financial results and insights[16]. Restatement and Accounting Adjustments - The company identified technical accounting deficiencies in previously issued unaudited 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 impact the company's liquidity, cash flows, or operating expenses for the affected periods[13]. - The company recorded an accrual for legal expenses that was subsequently adjusted to reflect the actual amount due, indicating a proactive approach to financial accuracy[8]. - The company revised its accounting treatment for a convertible debt instrument to comply with ASC 815, ensuring proper accounting for embedded derivatives[9]. Internal Controls - The management concluded that a material weakness exists in the company's internal control over financial reporting, which will be addressed in the upcoming Restatement Filing[12]. - The company plans to provide further specifics on the deficiencies in internal controls and its remediation plan in the Restatement Filing[14]. Compliance and Risks - The company is classified as an emerging growth company, which may affect its reporting and compliance obligations[3]. - Forward-looking statements indicate potential risks related to the completion of the restatement and its impact on future financial performance[17].

Revenue Performance - Revenue for the three months ended March 31, 2025, was $1,224 thousand, a decrease of $594 thousand or 33% 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]. - The transition to a recurring revenue model has improved revenue predictability and supports long-term growth objectives[181]. 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[191]. - 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]. - The company implemented cost optimization initiatives that reduced operating expenses by approximately 5% year-over-year[175]. Net Loss and Cash Flow - 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]. - 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]. - For the three months ended March 31, 2025, net cash used in operating activities was $979 thousand compared to $650 thousand for the same period in 2024[213]. - The company incurred a net loss of approximately $1,611 thousand for the three months ended March 31, 2025, compared to a net loss of $5,170 thousand for the same period in 2024[214]. Cash and Working Capital - 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]. - The company believes that the funds from the Pre-Paid Purchase agreements are sufficient to satisfy its working capital needs for the next 12 months[202]. Other Income and Investments - Other income increased to $2,129 thousand for the three months ended March 31, 2025, compared to an expense of $1,790 thousand for the same period in 2024, primarily due to changes in fair value of derivative warrant liabilities[193]. - Cash flows used in investing activities during the three months ended March 31, 2025, were approximately $5 thousand, compared to $18 thousand in the same period in 2024[215]. - The company has no cash flows provided by or used in financing activities during the three months ended March 31, 2025[216]. Lease Obligations - Total obligation for operating leases as of March 31, 2025, is approximately $365 thousand, with $274 thousand expected to be paid in the next twelve months[218]. Accounting and Compliance - The company has not made any significant changes to critical accounting estimates during the three months ended March 31, 2025[223]. - 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 Market Overview - CXApp's flagship product, the CXAI Platform, integrates AI-driven tools to enhance employee productivity and engagement[24] - The digital workplace market size 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%[39] - 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%[42] - The global virtual events market was valued at $114.12 billion in 2021 and is expected to expand at a CAGR of 21.4% from 2022 to 2030[40] - The digital workplace market is projected to grow from $22.7 billion in 2020 to $72.2 billion by 2026, with a CAGR of 21.3%[41] - The global employee experience market is projected to grow at a 20% CAGR, presenting strong tailwinds for CXApp's expansion[217] Financial Performance - The company reported net losses of approximately $19.4 million and $53.6 million for the fiscal years ended 2024 and 2023, respectively[79] - The company generated gross proceeds of $276 million from its Initial Public Offering of 27,600,000 units at $10.00 per unit on December 17, 2020[60] - Fiscal year 2024 recurring revenue increased to 87% from 78%[213] - Total operating expenses decreased to $19,598 thousand compared to $58,204 thousand during the year ended December 31, 2023[213] - Cash and cash equivalents at year-end was $4,880 thousand, with access to an additional $3,500 thousand from a Securities Purchase Agreement[212] Customer Base and Revenue Dependence - CXApp's customer base includes Fortune 1000 enterprises across various industries, enhancing its market presence and revenue potential[49] - 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[76] - The company relies on a limited number of key customers, with one customer accounting for 10% of gross revenue in 2024, highlighting the risk of revenue loss from key clients[152] - The company’s revenue depends on maintaining existing customer relationships and expanding its customer base, with potential delays in customer budget processes impacting purchases[75] Competition and Market Risks - The company faces competition from both established software vendors and emerging niche providers in the AI-driven employee experience market[37] - The company operates in a rapidly evolving sector, facing risks related to technological advances and competition, which could affect its market position[77] - The company's competitiveness is significantly affected by its ability to keep pace with rapid technological changes and customer needs, which could adversely impact growth prospects[153] - The company faces significant price competition, which may force it to reduce product prices, adversely affecting operational results[155] Research and Development - CXApp has filed 37 patents, with 17 granted, to protect its innovative technologies in employee experience solutions[35] - Research and development (R&D) expenses are anticipated to grow at a slower rate than revenue, although additional funding may be needed to support planned activities[43] - Significant investments in research and development are planned, but expected revenue from these investments may not materialize soon[94] - The company’s research and development efforts may not yield successful products or significant revenue in the near future, potentially affecting business results[93] Operational Challenges and Future Outlook - The company has incurred recurring net losses, indicating a need for additional capital to support operations and potential future acquisitions[80] - Future acquisitions may disrupt business operations and could lead to dilution for stockholders, with no assurance of achieving anticipated sales levels or profitability post-acquisition[85] - The company may require additional cash financing to support growth plans, and failure to secure such financing could limit operational capabilities[89] - Delays in collecting receivables could adversely affect cash flow and working capital, impacting overall business operations[90] - Growth depends on increasing sales to existing customers and acquiring new customers, with potential limitations on financial performance if these efforts are unsuccessful[87] Regulatory and Compliance Issues - The company is required to comply with SEC and Nasdaq regulations, which increases operational costs and may affect management's focus on core business activities[128] - Compliance with evolving legal and regulatory requirements is costly and could result in significant fines or reputational damage if violated[162] - The company is subject to various data protection regulations, including the GDPR and CCPA, which could impose fines of up to $7,500 per violation[175] - The uncertain regulatory environment regarding data privacy may inhibit customer data sharing, potentially affecting sales and service adoption[177] Cybersecurity and Risk Management - The company is subject to risks from cybersecurity threats, which could disrupt operations and harm revenues and profitability[143] - The company has implemented a risk management program aligned with ISO 27001 and SOC 2 frameworks to address cybersecurity risks[185] - The Board of Directors actively oversees the company's information security program and evaluates management's cybersecurity policies[194] Corporate Governance and Stockholder Considerations - The company’s stock price can be volatile, and there are no current plans to pay dividends, which may affect market liquidity[72] - The company does not intend to pay dividends on its common stock, with future earnings expected to be retained for business development and expansion[114] - Anti-takeover provisions in the company's organizational documents could delay or prevent beneficial changes in control, limiting stockholder options[123] - The trading market for the company's common stock may rely heavily on the research and reports published by financial analysts, affecting stock price and trading volume[115]

Revenue Performance - Revenues for the three months ended September 30, 2024, increased to $1,897 thousand, reflecting a 7% quarter-over-quarter growth driven by new enterprise client onboarding and deeper platform integration [178]. - For the nine months ended September 30, 2024, revenues reached $5,481 thousand, compared to $4,027 thousand for the same period in 2023, driven by a transition to a full SaaS model [186]. Subscription Revenue - Subscription-based revenue constituted 87% of total revenue for the three months ended September 30, 2024, up from 80% in the same period of 2023, indicating a shift to a full SaaS model [179]. - Subscription-based revenue for the nine months ended September 30, 2024, was 87%, up from 79% in 2023, indicating an 8% increase in the revenue mix [187]. Profitability and Margins - Gross profit margin remained stable at 80% for both the three months ended September 30, 2024, and 2023, despite an increase in cost of revenues to $372 thousand from $358 thousand [180]. - Gross profit margin improved to 81% for the nine months ended September 30, 2024, compared to 77% in 2023, despite an increase in cost of revenues to $1,052 thousand from $925 thousand [188]. Operating Expenses - Operating expenses decreased to $4,851 thousand for the three months ended September 30, 2024, down from $5,641 thousand in 2023, primarily due to reductions in sales and marketing expenses [181]. - Operating expenses for the nine months ended September 30, 2024, were $14,992 thousand, up from $11,501 thousand in 2023, reflecting increased costs in various operational areas [189]. Net Loss - The net loss for the nine months ended September 30, 2024, was $15,430 thousand, compared to a net loss of $10,531 thousand for the same period in 2023 [186]. - The company reported a net loss of approximately $15,430 thousand for the nine months ended September 30, 2024, compared to a net loss of $10,531 thousand for the same period in 2023 [203]. Cash Flow and Liquidity - Net cash used in operating activities during the nine months ended September 30, 2024, was $(4,629) thousand, compared to $(8,937) thousand for the same period in 2023 [205]. - The company has a working capital deficiency of approximately $7,404 thousand as of September 30, 2024 [203]. - Cash flows used in investing activities during the nine months ended September 30, 2024, were approximately $(30) thousand, compared to $9,956 thousand for the same period in 2023 [206]. - Net cash provided by financing activities during the nine months ended September 30, 2024, was approximately $3,480 thousand, compared to $4,674 thousand for the same period in 2023 [207]. - The company believes its current liquidity position is sufficient to meet its working capital needs for the next 12 months [204]. Debt and Obligations - As of November 12, 2024, the company owed approximately $2,731 thousand in principal and accrued interest related to the December 2023 Note [199]. - As of September 30, 2024, the total obligation for operating leases is approximately $585 thousand, with about $377 thousand expected to be paid in the next twelve months [209]. Accounting and Compliance - The company is classified as an "emerging growth company" under the JOBS Act, allowing it to take advantage of certain reporting exemptions [215]. - The company has elected to utilize the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies [216]. - There have been no significant changes to critical accounting estimates during the nine months ended September 30, 2024, compared to the previous annual report [214]. - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring assumptions and estimates that could materially impact reported amounts [211]. - The company has not yet decided whether to take advantage of all exemptions available under the JOBS Act, which could affect stock attractiveness and trading activity [215]. - The management regularly reviews accounting policies and estimates to ensure fair presentation in accordance with GAAP [211]. - The company’s significant accounting policies are detailed in Note 2 of the unaudited condensed consolidated financial statements [212]. - Critical accounting estimates are considered complex and may have a material impact on financial statements [213]. - The company’s decision regarding the extended transition period for accounting standards compliance is irrevocable [216].

Revenue Performance - Revenue for the three months ended June 30, 2024, was $1,766 thousand, a decrease of $149 thousand (approximately 7.8%) compared to $1,915 thousand for the same period in 2023[166]. - For the six months ended June 30, 2024, revenue was $3,584 thousand, an increase from $2,257 thousand for the same period in 2023, reflecting growth in the subscription model[174]. Subscription Revenue - Subscription-based revenue accounted for 85% of total revenue for the three months ended June 30, 2024, up from 79% in the same period of 2023, indicating a 6% increase in the revenue mix[167]. - Subscription-based revenue represented 86% of total revenue for the six months ended June 30, 2024, compared to 78% for the same period in 2023, marking an 8% increase in the revenue mix[175]. Profitability and Margins - Gross profit margin improved to 80% for the three months ended June 30, 2024, compared to 75% for the same period in 2023, reflecting a decrease in cost of revenues by approximately 26%[168]. - Gross profit margin increased to 81% for the six months ended June 30, 2024, compared to 75% for the same period in 2023, reflecting a decrease in cost of revenues by approximately 35%[176]. Operating Expenses - Operating expenses for the three months ended June 30, 2024, were $5,063 thousand, a slight decrease of $55 thousand (approximately 1.1%) from $5,118 thousand in the same period of 2023[169]. - Operating expenses rose to $10,141 thousand for the six months ended June 30, 2024, up from $5,860 thousand in the same period of 2023[177]. Other Expenses - Other expenses decreased significantly to $1,765 thousand for the three months ended June 30, 2024, from $12,028 thousand in the same period of 2023, a reduction of $10,263 thousand (approximately 85.3%)[170]. - Other expenses decreased by $6,787 thousand for the six months ended June 30, 2024, primarily due to a reduction in changes in fair value of derivative warrant liabilities[179]. Net Loss - The net loss for the three months ended June 30, 2024, was $5,256 thousand, significantly reduced from a net loss of $14,730 thousand in the same period of 2023[165]. - The company reported a net loss of $10,426 thousand for the six months ended June 30, 2024, compared to a net loss of $11,972 thousand for the same period in 2023[191]. Income Tax Benefit - The income tax benefit for the three months ended June 30, 2024, was approximately $159 thousand, down from $981 thousand in the same period of 2023, primarily due to the release of valuation allowance[171]. - The company incurred an income tax benefit of approximately $366 thousand for the six months ended June 30, 2024, down from a benefit of $2,541 thousand in the same period of 2023[180]. Cash Flow and Liquidity - As of June 30, 2024, the company had a working capital deficiency of approximately $6,807 thousand and cash of approximately $6,160 thousand[191]. - The company used $2,560 thousand in net cash for operating activities during the six months ended June 30, 2024[188]. - The company entered into a Securities Purchase Agreement to raise up to $10,000 thousand in shares of common stock, which is expected to support liquidity needs[188]. - Net cash flows provided by financing activities during the six months ended June 30, 2024, was approximately $2,480 thousand, compared to $328 thousand and $8,892 thousand in the previous periods[195]. Business Combination - The company completed a Business Combination on March 14, 2023, valued at approximately $69,928 thousand, which included the transfer of the Enterprise Apps Business[158]. Accounting and Compliance - The Company has elected to take advantage of the extended transition period for complying with new accounting standards as an emerging growth company[204]. - There have been no significant changes to critical accounting estimates during the six months ended June 30, 2024[202].

Revenue Performance - Revenue for the three months ended March 31, 2024, was $1,818 thousand, a decrease of $144 thousand compared to $1,620 thousand for the period from January 1, 2023, to March 14, 2023[161]. - Subscription-based revenue constituted 87% of total revenue for the three months ended March 31, 2024, up from 74% for the same period in 2023, indicating a 13% increase in revenue mix[162]. Profitability and Loss - Gross profit margin improved to 82% for the three months ended March 31, 2024, compared to 70% for the period from January 1, 2023, to March 14, 2023[163]. - The net loss for the three months ended March 31, 2024, was $5,170 thousand, compared to a net income of $2,758 thousand for the period from March 15, 2023, to March 31, 2023[159]. - Adjusted EBITDA for the same period was $(2,281) thousand, a decline from $(362) thousand in the prior year[171]. Operating Expenses - Operating expenses were $5,078 thousand for the three months ended March 31, 2024, a decrease of $1,182 thousand compared to $5,518 thousand for the period from January 1, 2023, to March 14, 2023[164]. Other Income and Tax - Other income/expense was a $1,790 thousand expense for the three months ended March 31, 2024, primarily due to changes in fair value of derivative warrant liabilities[165]. - The income tax benefit for the three months ended March 31, 2024, was approximately $207 thousand, down from $1,560 thousand for the same period in 2023[166]. Cash Flow and Liquidity - The company had a working capital deficiency of approximately $5,280 thousand and cash of approximately $5,603 thousand as of March 31, 2024[179]. - Net cash used in operating activities during the three months ended March 31, 2024 was $650 thousand, an improvement from $4,431 thousand in the same period of 2023[181]. - Cash flows used in investing activities were approximately $18 thousand for the three months ended March 31, 2024, compared to $9,980 thousand in the same period of 2023[182]. - There were no cash flows provided by or used in financing activities during the three months ended March 31, 2024, contrasting with $328 thousand used in the same period of 2023[183]. - The company believes its current liquidity position is sufficient to meet its working capital needs for the next 12 months[180]. Business Operations - CXApp's SaaS platform targets the emerging hybrid workplace market, offering solutions such as indoor mapping and AI-based analytics[149]. - The company aims to enhance employee experiences by reducing app overload and streamlining workflows through The Workplace SuperApp[150]. Financing and Obligations - The company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand expected in Q2 2024[176]. - The company has total obligations for operating leases of approximately $391 thousand, with $231 thousand expected to be paid in the next twelve months[185]. Accounting and Compliance - CXApp is classified as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of certain accounting standards until they apply to private companies[191]. - The company has elected to take advantage of the extended transition period for complying with new or revised accounting standards, which may affect the comparability of its financial statements[192]. - There have been no significant changes to critical accounting estimates during the three-month period ended March 31, 2024, compared to the previous annual report[190].

Market Growth and Trends - The digital workplace market size was valued at $27.4 billion in 2022 and is projected to grow to $90.5 billion by 2030, reflecting a significant increase in demand for workplace technology solutions [47]. - The global virtual events market was valued at $114.12 billion in 2021 and is expected to expand at a CAGR of 21.4% from 2022 to 2030, driven by the increasing use of collaboration tools [48]. - The occupancy analytics market in commercial office space was estimated at $2.17 billion in 2019 and is expected to rise to $5.73 billion by 2024, growing at a CAGR of 21.5% [50]. - The workplace experience apps market is estimated to be around 15% of the overall occupancy analytics market, indicating a growing niche within the sector [50]. Company Strategy and Product Development - CXApp's platform integrates various technologies to enhance employee engagement and workplace experience, targeting the emerging hybrid workplace market [28]. - The company has a multi-year product roadmap focusing on augmented reality, 3D mapping, and enhanced analytics capabilities to improve workplace decision-making [33]. - CXApp's analytics dashboard provides insights into real estate, technology, and employee interactions, enabling data-driven decisions for optimizing workplace services [34]. - The company aims to expand its direct sales team into new verticals and grow its foundational channel partner program to enhance market presence [57]. - The CXApp platform is designed to streamline operations in a single mobile app, providing real-time communications and collaboration for employees across various locations [58]. - The company plans to further integrate AI capabilities into its product offerings, which may incur substantial costs and potential delays in software releases [146]. Financial Performance and Projections - CXApp incurred recurring net losses of approximately $53.6 million and $29.2 million for the fiscal years ended 2023 and 2022, respectively [79]. - The company may need additional capital to support operations, which could be satisfied by additional debt or equity financings, potentially diluting existing stockholders [80]. - Revenue forecasting remains uncertain, with potential adverse effects on profitability if forecasts are not met [132]. - The company faces significant price competition, which may force it to reduce prices and adversely affect results of operations [153]. Compliance and Regulatory Challenges - The company faces increased costs and management distraction due to compliance with SEC and Nasdaq regulations as a public entity [125]. - The company received a notice from Nasdaq on April 18, 2024, for failing to file its 2023 Form 10-K, affecting its compliance with listing rules [128]. - The company plans to implement enhancements to its internal control over financial reporting starting in Q2 2024 [137]. - Compliance with diverse and changing legal requirements is costly and time-consuming, and violations could result in significant fines and reputational damage [161]. Intellectual Property and Legal Risks - The company has filed 37 patents, with 17 already granted, establishing its position as a technological frontrunner in the workplace experience sector [45]. - The company has not registered copyrights on any of the software developed, which may lead to difficulties in enforcing intellectual property rights and potential revenue loss [101]. - The company may face claims of infringing on third-party intellectual property rights, which could result in significant litigation costs and impact its financial condition [105]. - Legal claims related to trade secrets or intellectual property could result in substantial costs and distract management [99]. Operational and Market Risks - The company’s growth is dependent on increasing sales to existing customers and obtaining new customers, which may be limited by competition and market conditions [86]. - The ongoing military conflict between Russia and Ukraine has negatively impacted the global economy, potentially affecting the company's business indirectly [163]. - The company relies on a limited number of key customers, and the loss of significant business from any of these customers could materially affect results of operations [149]. - The company may face challenges in attracting and retaining skilled personnel, which is critical for managing growth and completing contracts [96]. Capital Structure and Stockholder Considerations - The company does not intend to pay dividends on its common stock, limiting returns to stockholders to potential stock price appreciation [112]. - The company may issue additional securities in connection with investments or acquisitions, potentially resulting in dilution for existing stockholders [118]. - Anti-takeover provisions in the company's organizational documents may delay or prevent beneficial changes of control, limiting stockholder options [120]. - A sustained depression in the market price of the company's common stock could lead to impairment losses, negatively affecting financial condition and results of operations [119]. Risk Management and Security - The company's information security program is aligned with ISO 27001 and SOC 2 frameworks, focusing on risk management and compliance [186]. - Annual risk assessments are conducted to identify and mitigate security risks related to corporate operations and services [187]. - The risk management framework includes guidelines for identifying and estimating the costs of protective measures against security risks [189]. - The IT Department is responsible for prioritizing and implementing risk-reduction measures as defined in the risk assessment process [192].

Financial Performance - Revenue for the three months ended September 30, 2023, was $1,770 thousand, a slight increase of $28 thousand compared to $1,742 thousand for the same period in 2022[161] - Gross profit margin improved to 80% for the three months ended September 30, 2023, up from 71% in the same period of 2022, due to a more efficient cost structure[162] - Operating expenses decreased significantly to $5,641 thousand for the three months ended September 30, 2023, down from $10,759 thousand in the same period of 2022, reflecting reduced administrative costs[163] - Other income for the three months ended September 30, 2023, was $5,253 thousand, a substantial increase from an expense of $1,413 thousand in the same period of 2022, primarily due to changes in fair value of derivative warrant liabilities[164] - For the three months ended September 30, 2023, the Company reported a net income of approximately $1,441 thousand, while for the period from March 15, 2023 to September 30, 2023, it incurred a net loss of approximately $10,531 thousand[179] - The Company incurred a net loss of approximately $10,531 thousand for the three months ended September 30, 2023, compared to a net loss of $4,380 thousand for the same period in the previous year[184] Revenue Recognition - The company recognizes revenue when control is transferred to customers, primarily from software as a service and professional services for enterprise apps[192] - Revenue from subscription software as a service contracts is recognized over time using the output method, reflecting continuous access to the service[194] - Professional services revenue is accounted for using the percentage of completion method, recognizing revenue in proportion to the stage of completion of the contract[199] - The company utilizes a five-step process for revenue recognition, requiring significant judgment and estimates regarding distinct performance obligations[194] Operating Expenses and Cash Flow - Operating expenses for the period from March 15, 2023, to September 30, 2023, were $11,501 thousand, a decrease from $26,779 thousand for the nine months ended September 30, 2022[169] - The Company used approximately $8,937 thousand in cash for operating activities during the period from March 15, 2023 to September 30, 2023[179] - Net cash provided by investing activities was approximately $9,956 thousand for the period from March 15, 2023 to September 30, 2023, primarily due to cash acquired in connection with the Business Combination[185] - Net cash provided by financing activities was approximately $4,674 thousand for the period from March 15, 2023 to September 30, 2023[186] Tax and Valuation - The company has established a full valuation allowance for deferred tax assets as of September 30, 2023, due to historical losses and insufficient future profit projections[202] - No interest or penalties on uncertain tax positions were recorded during the three months ended September 30, 2023[203] - The company has not recorded any impairment charges for long-lived assets for the three months ended September 30, 2023[197] - Goodwill and other indefinite-lived assets are evaluated for impairment at least annually, with no indicators of impairment noted as of September 30, 2023[200] Business Operations - The business combination completed on March 14, 2023, involved the spin-off of Legacy CXApp to Inpixon's shareholders, enhancing the company's operational focus[156] - The Company implemented a headcount reduction in North America, resulting in cost savings of approximately $300 thousand per quarter[180] - The total obligation for operating leases as of September 30, 2023, was approximately $594 thousand, with $321 thousand expected to be paid in the next twelve months[188] - The company believes it has mitigated going concern issues for at least one year from the date the financial statements were issued, despite recurring losses and cash utilization[182] Accounting Policies - The company accounts for business combinations using the acquisition method, recording assets and liabilities at fair value at the date of acquisition[205] - The company has elected to take advantage of the extended transition period for complying with new accounting standards as an emerging growth company[209] - The company evaluates the remaining useful lives of long-lived assets and has determined no revisions are necessary as of the latest reporting periods[198] - The company monitors and evaluates estimates related to discounts and rebates, although historically these have not been significant[195]