CXApp (CXAI) - 2023 Q1 - Quarterly Report

Part I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations for CXApp Inc Item 1. Interim Financial Statements This section presents the unaudited condensed consolidated financial statements for CXApp Inc. and its subsidiaries, covering the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows. It also includes detailed notes explaining the company's organization, significant accounting policies, the impact of the business combination, revenue disaggregation, and specific asset and liability breakdowns Condensed Consolidated Balance Sheets This chapter provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates | Metric | March 31, 2023 (Successor) (in thousands) | December 31, 2022 (Predecessor) (in thousands) | | :--------------------------------- | :--------------------------------------- | :------------------------------------------ | | Assets | | | | Cash and cash equivalents | $6,724 | $6,308 | | Accounts receivable | $2,671 | $1,338 | | Total current assets | $10,729 | $8,569 | | Goodwill | $44,122 | $- | | Total Assets | $76,384 | $29,280 | | Liabilities | | | | Total current liabilities | $7,677 | $5,415 | | Warrant liability | $963 | $- | | Total Liabilities | $10,831 | $5,889 | | Stockholders' Equity | | | | Total Stockholders' Equity | $65,553 | $23,391 | | Total Liabilities and Stockholders' Equity | $76,384 | $29,280 | - Total assets significantly increased from $29,280 thousand (Predecessor, Dec 31, 2022) to $76,384 thousand (Successor, Mar 31, 2023), primarily due to the recognition of $44,122 thousand in goodwill from the business combination[9] - Total stockholders' equity increased from $23,391 thousand (Predecessor, Dec 31, 2022) to $65,553 thousand (Successor, Mar 31, 2023), reflecting the impact of the business combination[9] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss This chapter details the company's financial performance over specific periods, including revenues, expenses, and net income or loss | Metric (in thousands) | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :--------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Revenues | $342 | $1,620 | $2,582 | | Gross Profit | $255 | $1,137 | $1,993 | | Total Operating Expenses | $742 | $5,518 | $3,565 | | Loss from Operations | $(487) | $(4,381) | $(1,572) | | Total Other Income (Expense) | $1,685 | $1 | $1 | | Net Income (Loss) | $2,758 | $(4,380) | $(1,671) | | Comprehensive Income (Loss) | $2,758 | $(4,408) | $(1,860) | | Basic and dilutive net income per share, Class A common stock | $0.20 | N/A | N/A | | Basic and dilutive net income per share, Class C common stock | $0.20 | N/A | N/A | - The Successor period (March 15-31, 2023) reported a net income of $2,758 thousand, a significant improvement compared to losses in both Predecessor periods, primarily driven by a $1,686 thousand gain from the change in fair value of derivative liability and a $1,560 thousand income tax benefit[11] Unaudited Condensed Consolidated Statements of Stockholders' Equity This chapter outlines changes in the company's equity over time, including net income, share issuances, and other comprehensive income | Metric (in thousands) | Balance at January 1, 2023 (Predecessor) | Balance at March 14, 2023 (Predecessor) | Balance at March 31, 2023 (Successor) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | | Total Stockholders' Equity | $23,391 | $27,821 | $65,553 | | Net loss (Predecessor) / Net income (Successor) | N/A | $(4,380) | $2,758 | | Shares issued in connection with Business Combination (Class A) | N/A | N/A | 1,547,700 | | Shares issued in connection with Business Combination (Class C) | N/A | N/A | 5,487,300 | | Additional paid-in capital (Successor) | N/A | N/A | $71,536 | | Accumulated Deficit (Successor) | N/A | N/A | $(5,985) | - The Business Combination on March 14, 2023, significantly impacted stockholders' equity, with the issuance of 1,547,700 Class A and 5,487,300 Class C common shares, leading to a substantial increase in additional paid-in capital and total equity for the Successor entity[15] Unaudited Condensed Consolidated Statements of Cash Flows This chapter details the sources and uses of cash across operating, investing, and financing activities for various reporting periods | Cash Flow Activity (in thousands) | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :---------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(4,431) | $(5,144) | $(4,140) | | Net cash provided by (used in) investing activities | $9,980 | $(54) | $(51) | | Net cash (used in) provided by financing activities | $(328) | $8,892 | $4,553 | | Net increase in cash and cash equivalents | $5,221 | $3,695 | $366 | | Cash and cash equivalents, end of period | $6,724 | $10,003 | $5,394 | - The Successor period saw a significant net cash inflow from investing activities ($9,980 thousand) primarily due to cash acquired in the Business Combination, offsetting cash used in operating activities[17][149] - Operating activities consistently used cash across all periods, with the Successor period using $4,431 thousand, largely due to a reduction in accrued liabilities related to merger transaction costs[17][25] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements, covering accounting policies, business combination impacts, and specific account breakdowns NOTE 1 – Organization, Nature of Business and Basis of Presentation This note describes CXApp Inc.'s business, its SaaS platform offerings, and the foundational impact of the recent Business Combination on its organizational structure - CXApp Inc. delivers intelligent enterprise workplace experiences through its SaaS platform, offering an employee application, indoor mapping, on-device positioning, augmented reality, and an AI-based analytics platform for the hybrid workplace[19] - The company was formed through a Business Combination on March 14, 2023, where KINS Technology Group Inc. acquired Inpixon's enterprise apps business (Legacy CXApp) and subsequently changed its name to CXApp Inc. KINS is the accounting acquirer[21][23] NOTE 2 – Summary of Significant Accounting Policies This note outlines the key accounting principles and methods applied in preparing the financial statements, including going concern, revenue recognition, and warrant classification - The company's recurring losses and cash utilization raise substantial doubt about its ability to continue as a going concern, though management believes current liquidity and actions to reduce operating expenses provide a runway for at least 12 months[27] - Revenue is recognized when control of promised products or services is transferred to customers. Subscription revenue (SaaS) is recognized ratably over the license term, while professional services revenue is recognized over time using percentage of completion or time-based measures[39][40][45] - Warrants are classified as liability-classified instruments and are re-measured at fair value each reporting period, with changes recognized as non-cash gain or loss in the consolidated statements of operations[56][57] NOTE 3 – Business Combination This note details the acquisition of Inpixon's Enterprise Apps Business by KINS, including the purchase price and preliminary allocation of acquired assets and liabilities - On March 14, 2023, KINS completed the acquisition of Inpixon's Enterprise Apps Business (Legacy CXApp) for approximately $69,928 thousand, issuing Class A and Class C common stock[69] Preliminary Purchase Price Allocation (in thousands): | Description | Fair Value | | :--------------------------------- | :--------- | | Purchase Price | $69,928 | | Cash and cash equivalents acquired | $10,003 | | Developed technology | $9,268 | | Customer relationships | $5,604 | | Tradenames and trademarks | $3,294 | | Total assets acquired | $34,627 | | Total liabilities assumed | $8,821 | | Goodwill | $44,122 | - The Business Combination resulted in preliminary estimated goodwill of $44,122 thousand, representing acquired workforce and expected synergies. The allocation is provisional and subject to refinement[69][72][74] NOTE 4 – Disaggregation of Revenue This note breaks down the company's total revenue by type, distinguishing between software subscription and professional services for different reporting periods Revenue by Type (in thousands): | Revenue Type | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :----------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Software Subscription | $240 | $1,204 | $1,259 | | Professional services | $102 | $416 | $1,323 | | Total Revenue | $342 | $1,620 | $2,582 | - Total revenue for the Successor period (March 15-31, 2023) was $342 thousand, with software subscription revenue being the larger component at $240 thousand[79] NOTE 5 – Property and Equipment, net This note provides details on the company's property and equipment, net of depreciation, for both Successor and Predecessor periods Property and Equipment, Net (in thousands): | Category | March 31, 2023 (Successor) | December 31, 2022 (Predecessor) | | :-------------------------- | :------------------------- | :------------------------------ | | Computer and office equipment | $139 | $992 | | Total Property and Equipment, Net | $153 | $202 | | Depreciation and amortization expense (Successor) | $4 | N/A | - Property and equipment, net, decreased from $202 thousand at December 31, 2022, to $153 thousand at March 31, 2023[82] NOTE 6 – Software Development Costs, net This note outlines the capitalized software development costs, net of accumulated amortization, for the Successor and Predecessor periods Software Development Costs, Net (in thousands): | Category | March 31, 2023 (Successor) | December 31, 2022 (Predecessor) | | :-------------------------------- | :------------------------- | :------------------------------ | | Capitalized software development costs | $- | $2,680 | | Accumulated amortization | $- | $(2,193) | | Software development costs, net | $- | $487 | | Amortization expense (Predecessor, Jan 1-Mar 14, 2023) | N/A | $209 | | Amortization expense (Predecessor, Q1 2022) | N/A | $113 | - As of March 31, 2023 (Successor), the company reported no capitalized software development costs, net, compared to $487 thousand for the Predecessor at December 31, 2022[83] NOTE 7 – Goodwill and Intangible Assets This note details the recognition of goodwill from the Business Combination and the net carrying amounts of various intangible assets, along with future amortization expenses - Goodwill of $44,122 thousand was recognized as of March 31, 2023, entirely due to the Business Combination, with no goodwill present in the Predecessor period[84][85] Intangible Assets, Net (in thousands): | Category | March 31, 2023 (Successor) Net Carrying Amount | December 31, 2022 (Predecessor) Net Carrying Amount | | :-------------------------- | :--------------------------------------- | :------------------------------------------ | | Trade Name/Trademarks | $3,274 | $1,458 | | Customer Relationships | $5,557 | $4,636 | | Developed Technology | $9,230 | $11,781 | | Patents and Intellectual Property | $2,692 | $- | | Totals | $20,753 | $19,289 | | Aggregate Amortization Expense (Successor, Mar 15-31, 2023) | $116 | N/A | | Aggregate Amortization Expense (Predecessor, Jan 1-Mar 14, 2023) | N/A | $806 | | Aggregate Amortization Expense (Predecessor, Q1 2022) | N/A | $975 | Future Amortization Expense on Intangible Assets (in thousands): | For the Years Ending December 31, | Amount | | :-------------------------------- | :----- | | 2023 | $2,091 | | 2024 | $2,788 | | 2025 | $2,788 | | 2026 | $2,788 | | 2027 | $2,788 | | 2028 and thereafter | $7,510 | | Total | $20,753 | NOTE 8 – Deferred Revenue This note presents the breakdown of deferred revenue, primarily from license and professional service agreements, for the Successor and Predecessor periods Deferred Revenue (in thousands): | Category | March 31, 2023 (Successor) | December 31, 2022 (Predecessor) | | :-------------------------- | :------------------------- | :------------------------------ | | License agreements | $2,388 | $1,937 | | Professional Service agreements | $302 | $225 | | Total Deferred Revenue | $2,690 | $2,162 | - Total deferred revenue increased to $2,690 thousand at March 31, 2023, from $2,162 thousand at December 31, 2022, primarily driven by an increase in deferred revenue from license agreements[89] NOTE 9 – Accrued Liabilities This note details the various accrued liabilities, including insurance premiums, related party payables, and compensation, for the Successor and Predecessor periods Accrued Liabilities (in thousands): | Category | March 31, 2023 (Successor) | December 31, 2022 (Predecessor) | | :--------------------------------- | :------------------------- | :------------------------------ | | Insurance premiums and accrued interest | $538 | $- | | Related party promissory note | $20 | $- | | Income tax payables | $57 | $- | | Related party payable | $1,155 | $- | | Accrued compensation and benefits | $650 | $586 | | Accrued bonus and commissions | $192 | $422 | | Accrued rent | $35 | $59 | | Accrued other | $56 | $183 | | Accrued sales and other indirect taxes payable | $68 | $6 | | Total Accrued Liabilities | $3,182 | $1,736 | - Accrued liabilities significantly increased to $3,182 thousand at March 31, 2023, from $1,736 thousand at December 31, 2022, largely due to new insurance premiums, related party payables, and income tax payables following the Business Combination[90][91][92][93] NOTE 10 - Warrant Liabilities This note describes the outstanding public and private placement warrants, their classification as liability instruments, and the conditions for their potential redemption - As of March 31, 2023, there were 13,800 thousand Public Warrants and 10,280 thousand Private Placement Warrants outstanding, each entitling the holder to purchase one share of Class A common stock at $11.50[95][101] - Warrants are classified as liability-classified instruments and are subject to re-measurement at fair value each balance sheet date, with changes recognized in the consolidated statements of operations[56][57] - The company may redeem Public Warrants under certain conditions, including when the Class A common stock price equals or exceeds $18.00 or $10.00 per share, with specific notice periods and prices[99][100][102] NOTE 11 – Stock Option Plan and Stock-Based Compensation This note details the newly approved equity incentive plan, stock options granted, and the key assumptions used for valuing stock-based compensation - The CXApp Inc. 2023 Equity Incentive Plan was approved, making 2,110,500 shares of Class A Common Stock available for issuance[104] - During the Successor period (March 15-31, 2023), 1,377 thousand stock options were granted to employees and directors, vesting over 2 years with an exercise price of $1.53 per share and a fair value of approximately $688 thousand[105] Key Black-Scholes Assumptions (Successor, March 15-31, 2023): | Assumption | Value | | :-------------------------- | :---------------- | | Risk-free interest rate | 3.62% – 3.67% | | Expected life of option grants | 5 – 7 years | | Expected volatility of underlying stock | 37.35% | | Dividends assumption | 0% | NOTE 12 – Fair Value of Financial Instruments This note categorizes financial instruments, specifically public and private placement warrants, based on their fair value measurement levels - Public placement warrants ($552 thousand) are classified as Level 1 investments (quoted prices in active markets), while private placement warrants liabilities ($411 thousand) are classified as Level 2 investments (observable market price for public warrants)[108] NOTE 13 – Income Taxes This note presents the income tax benefit or provision for various periods and explains the significant income tax benefit recognized in the Successor period Income Tax Benefit/(Provision) (in thousands): | Period | Amount | | :------------------------------------------------------- | :----- | | Period from March 15, 2023 to March 31, 2023 (Successor) | $1,560 | | Period from January 1, 2023 to March 14, 2023 (Predecessor) | $0 | | Three months ended March 31, 2022 (Predecessor) | $(100) | - The Successor period recorded an income tax benefit of $1,560 thousand, with an effective tax rate of approximately (164.0%), primarily due to the release of a valuation allowance attributable to acquired intangible assets from the Business Combination[109][110] NOTE 14 – Credit Risk and Concentrations This note discusses the company's exposure to credit risk from trade accounts receivable and cash, and its assessment of customer financial strength - The company's credit risk primarily stems from trade accounts receivable and cash and cash equivalents. It assesses customer financial strength and maintains an allowance for credit losses, which is not significant[111] - Cash deposits may exceed federally insured limits, but the company has not experienced significant losses and believes it is not exposed to significant credit risk from cash[112] NOTE 15 – Foreign Operations This note disaggregates revenues and net income or loss by geographic area, highlighting the performance of the United States, Canada, and Philippines operations Revenues by Geographic Area (in thousands): | Geographic Area | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :---------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | United States | $272 | $1,395 | $2,167 | | Canada | $70 | $285 | $601 | | Philippines | $196 | $160 | $- | | Eliminations | $(196) | $(220) | $(456) | | Total Revenues | $342 | $1,620 | $2,582 | Net Income (Loss) by Geographic Area (in thousands): | Geographic Area | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :---------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | United States | $2,780 | $(3,342) | $(519) | | Canada | $(158) | $(1,041) | $(1,139) | | Philippines | $157 | $3 | $- | | Eliminations | $(21) | $- | $14 | | Total Net Income (Loss) | $2,758 | $(4,380) | $(1,671) | - The United States was the primary revenue generator across all periods, and the Successor period showed a significant net income in the US operations, contrasting with losses in Canada[113] NOTE 16 – Leases This note describes the company's operating lease agreements for administrative offices, including locations, terms, and associated expenses - The company has operating leases for administrative offices in Canada (expires June 2026), the Philippines (expires May 2025), and a new 13-month lease in California starting April 1, 2023[114] - Operating lease expenses were approximately $9 thousand for the Successor period (March 15-31, 2023), $57 thousand for the Predecessor period (Jan 1-Mar 14, 2023), and $97 thousand for Q1 2022 (Predecessor)[115] - As of March 31, 2023, the weighted average remaining lease term is 2.7 years, and the weighted average discount rate used for operating lease liabilities is 8.0%[116] NOTE 17 – Commitments and Contingencies This note outlines the company's approach to assessing and disclosing contingent liabilities related to legal proceedings and unasserted claims - The company assesses contingent liabilities related to legal proceedings and unasserted claims, accruing estimated liabilities when probable and estimable, and disclosing reasonably possible material losses[117][118] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on CXApp Inc.'s financial condition and results of operations, highlighting the impact of the recent business combination. It covers an overview of the business, recent events, detailed analysis of revenues, gross margin, operating expenses, other income/expense, and income taxes across Successor and Predecessor periods. The discussion also includes non-GAAP financial measures like Adjusted EBITDA, an assessment of liquidity and capital resources, and critical accounting estimates Overview of Our Business This section describes CXApp's core business, focusing on its SaaS platform for intelligent enterprise workplace experiences and the 'Workplace SuperApp' concept - CXApp's SaaS platform offers intelligent enterprise workplace experience solutions, including an employee application, indoor mapping, augmented reality, and an AI-based analytics platform, designed for the hybrid workplace[123] - The 'Workplace SuperApp' aims to create a connected workplace by consolidating features, services, and integrations into one platform, reducing app overload and data fragmentation[124] Recent Events This section highlights the Business Combination completed on March 14, 2023, including the acquisition details and the structure of common stock issuance - The Business Combination, completed on March 14, 2023, involved KINS acquiring Inpixon's enterprise apps business (Legacy CXApp) for approximately $70,000 thousand in KINS capital stock[125] - As part of the merger, Inpixon shareholders received one share of Legacy CXApp common stock for each Inpixon common stock, which was then exchanged for New CXApp Class A and Class C common stock[128] - New CXApp Class C common stock will automatically convert to Class A common stock on the earlier of 180 days post-merger or when Class A stock price reaches $12.00 for 20 trading days within a 30-day period[128] RESULTS OF OPERATIONS This section analyzes the company's financial performance across different periods, detailing revenues, gross profit, operating expenses, other income, and net income or loss Condensed Consolidated Statements of Operations Data (in thousands): | Metric | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :--------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Revenues | $342 | $1,620 | $2,582 | | Cost of revenues | $87 | $483 | $589 | | Gross profit | $255 | $1,137 | $1,993 | | Operating expenses | $742 | $5,518 | $3,565 | | Loss from operations | $(487) | $(4,381) | $(1,572) | | Other income (expense), net | $1,685 | $1 | $1 | | Income tax benefit/(provision) | $1,560 | $- | $(100) | | Net income (loss) | $2,758 | $(4,380) | $(1,671) | - Revenues decreased by $620 thousand from the three months ended March 31, 2022 (Predecessor) to the combined Predecessor period (Jan 1-Mar 14, 2023) and Successor period (Mar 15-31, 2023), primarily due to timing of sales and bookings[132] - Gross profit margin fluctuated, being 75% for Successor, 70% for Predecessor (Jan 1-Mar 14, 2023), and 77% for Predecessor (Q1 2022), mainly due to sales mix and timing of support expenses[133] - Operating expenses increased by $2,695 thousand compared to Q1 2022, primarily because the prior period included a $2,827 thousand benefit related to an earnout[134] - Other income significantly increased to $1,685 thousand in the Successor period, driven by a $1,686 thousand gain from changes in the fair value of derivative warrant liabilities[135] - The Successor period recorded an income tax benefit of $1,560 thousand, resulting from the release of a valuation allowance due to acquired intangible assets from the Business Combination[136] Adjusted EBITDA Reconciliation (in thousands): | Metric | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Net income (loss) | $2,758 | $(4,380) | $(1,671) | | Interest and other (income) | $1 | $(1) | $(1) | | Income tax (benefit)/provision | $(1,560) | $- | $100 | | Depreciation and amortization | $120 | $1,034 | $1,120 | | EBITDA | $1,319 | $(3,347) | $(452) | | Adjusted for: | | | | | Earnout compensation expense (benefit) | $- | $- | $(2,827) | | Changes in fair value of warrant liabilities | $(1,686) | $- | $- | | Unrealized (gains) losses | $3 | $(32) | $(266) | | Stock-based compensation - compensation and related benefits | $2 | $158 | $647 | | Adjusted EBITDA | $(362) | $(3,221) | $(2,898) | - Adjusted EBITDA is a non-GAAP measure used by management to assess operating performance, excluding interest, taxes, depreciation, amortization, and other non-cash items, to enhance comparability and evaluate business trends[137][141] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations, detailing cash position, working capital, and cash flow activities across operating, investing, and financing - As of March 31, 2023, the company had $6,724 thousand in cash and cash equivalents and a working capital surplus of $3,052 thousand[144][145] - The company's recurring losses and cash utilization indicate substantial doubt about its going concern ability, but management believes current liquidity and access to capital markets can mitigate these concerns for at least one year[147] Cash Flows Summary (in thousands): | Activity | Period from March 15, 2023 to March 31, 2023 (Successor) | Period from January 1, 2023 to March 14, 2023 (Predecessor) | Three months ended March 31, 2022 (Predecessor) | | :---------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(4,431) | $(5,144) | $(4,140) | | Net cash provided by (used in) investing activities | $9,980 | $(54) | $(51) | | Net cash (used in) provided by financing activities | $(328) | $8,892 | $4,553 | | Net increase in cash and cash equivalents | $5,221 | $3,695 | $366 | - Investing activities provided $9,980 thousand in cash for the Successor period, primarily from cash acquired in the Business Combination, while operating activities consistently used cash across all periods[149] Critical Accounting Estimates This section identifies and explains the significant judgments and assumptions used in preparing the financial statements, including revenue recognition, impairment, deferred taxes, and business combinations - Key critical accounting estimates include revenue recognition (determining distinct performance obligations, discounts), impairment assessments for goodwill and long-lived assets (future cash flows, market comparables), deferred income taxes (valuation allowance), business combinations (fair value allocation, goodwill), and derivative warrant liabilities (fair value re-measurement)[157][159][161][164][165][167][169][171] - The company evaluates the recoverability of long-lived assets and goodwill annually or when circumstances indicate impairment, using discounted cash flow models and market approaches[161][165] - A full valuation allowance was established for deferred tax assets as of March 31, 2023, and December 31, 2022, due to historical losses and uncertainty of future taxable income, though a benefit was recognized in the Successor period due to the release of valuation allowance attributable to acquired intangible assets[167][110] JOBS Act Accounting Election This section explains the company's status as an 'emerging growth company' under the JOBS Act and its election to use an extended transition period for new accounting standards - CXApp is an 'emerging growth company' under the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards, which is irrevocable[173][174] - This election means the company's financial statements may not be comparable to those of companies complying with new standards sooner, potentially affecting investor attractiveness and stock market volatility[173][174] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reported period - The company has no applicable quantitative and qualitative disclosures about market risk[175] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, and reports no material changes in internal control over financial reporting during the period - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of March 31, 2023[177] - There have been no material changes in internal control over financial reporting during the period ended March 31, 2023[178] Part II. OTHER INFORMATION This section provides additional non-financial information, including legal proceedings, risk factors, equity sales, and a list of exhibits Item 1. Legal Proceedings This section confirms that there is no material litigation, arbitration, or governmental proceeding currently pending against CXApp Inc. or its management team - No material litigation, arbitration, or governmental proceeding is currently pending against CXApp or its management[181] Item 1A. Risk Factors This section refers to the risk factors described in the company's Annual Report on Form 10-K/A and states that there have been no material changes to these risk factors as of the date of this Quarterly Report - No material changes to the risk factors disclosed in the Annual Report on Form 10-K/A have occurred as of the date of this Quarterly Report[182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and no use of proceeds to report[183] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities[184] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[185] Item 5. Other Information This section states that there is no other information to report - No other information is reported in this section[186] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including organizational documents, various agreements related to the Business Combination, employment agreements, and certifications - Key exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Employee Matters Agreement, Tax Matters Agreement, Transition Services Agreement, Consulting Agreement, and Employment Agreements for key personnel[189] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act are also filed[189] SIGNATURES This section formally concludes the report with the required signatures of the company's principal executive and financial officers - The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director, and Michael Angel, Chief Financial Officer, on May 19, 2023[195]