KINS TECHNOLOGY(KINZ) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Interim Financial Statements This section presents the unaudited condensed consolidated financial statements and related notes for CXApp Inc. for the specified interim periods Condensed Consolidated Balance Sheets 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 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 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 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 This section provides detailed explanations and disclosures supporting the interim financial statements NOTE 1 – Organization, Nature of Business and Basis of Presentation 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] - 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] - 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] NOTE 2 – Summary of Significant Accounting Policies 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] - 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] - 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] - 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] - 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] NOTE 3 – Disaggregation of Revenue 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] - 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] NOTE 4 – Property and Equipment, net 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] NOTE 5 – Goodwill and Intangible Assets 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][102] 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 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][107] NOTE 7 – Accrued Liabilities 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][109] NOTE 8 – Promissory Note 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][119] - 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][118] NOTE 9 – Warrants 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][122] - 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][123] - No exercises or exchanges of warrants occurred during the periods ended June 30, 2025, and December 31, 2024[124] NOTE 10 – Stock Option Plan and Stock-Based Compensation 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] 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] - 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] NOTE 11 – Convertible Debt 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] - 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] - 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][147] 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 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] - 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][154][155] NOTE 13 – Income Taxes 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] - 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] NOTE 14 – Credit Risk and Concentrations 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] - 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] NOTE 15 – Segment Information 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] - 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] NOTE 16 – Foreign Operations 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 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] - 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] - 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][173] NOTE 18 – Commitments and Contingencies 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][175] - 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][177] NOTE 19 – Subsequent Events 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] - 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][181] - 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] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses CXApp's financial condition, operational results, liquidity, and capital resources, including key strategies and non-GAAP measures Overview of Our Business 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] - 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][189] - 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] RESULTS OF OPERATIONS 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][203] - 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] - 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][207][208] - 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] Non-GAAP Financial information 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] 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 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] - 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] - An additional $3,520 thousand in funding remained available under a Securities Purchase Agreement with Streeterville Capital, LLC, as of June 30, 2025[218] - 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] Liquidity and Capital Resources as of June 30, 2025 Compared with June 30, 2024 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] 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] Off-Balance Sheet Arrangements 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] Contractual Obligations and Commitments 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] - Approximately $208 thousand of these operating lease obligations are expected to be paid within the next twelve months[227] Quantitative and Qualitative Disclosures about Market Risk 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] Critical Accounting Policies and Estimates 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] - 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][232] JOBS Act Accounting Election 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][234] - 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] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities This section confirms no defaults occurred upon senior securities during the reporting period - There were no defaults upon senior securities[244] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[245] Item 5. Other Information 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] - 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] 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 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]