CXAIW CXApp Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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, 2024

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from          to          

 

Commission File Number: 001-39642

 

CXApp Inc.

(Exact name of Registrant as Specified in Its Charter)

 

Delaware		85-2104918
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

Four Palo Alto Square, Suite 200

3000 El Camino Real

Palo Alto, CA 94306

(Address of principal executive offices, zip code)

 

(650) 785-7171

(Registrant’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol		Name of each exchange on which registered
Class A common stock, $0.0001 par value per share		CXAI		The Nasdaq Stock Market LLC
Warrants to purchase common stock		CXAIW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐   No ☒

 

As of November 12, 2024, there were 16,460,126 shares of Class A common stock, $0.0001 par value, issued and outstanding.

 

 

 

CXAPP INC.

 

TABLE OF CONTENTS

 

Part I. FINANCIAL INFORMATION
	Item 1.		Interim Financial Statements		1
			Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023		1
			Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 (unaudited) (Successor) and Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the period from March 15, 2023 to September 30, 2023 (unaudited) (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor)		2
			Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 (unaudited) (Successor) and Condensed Consolidated Statements of Stockholders’ Equity for the period from March 15, 2023 to September 30, 2023 (unaudited) (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor)		3
			Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 (unaudited) (Successor) and Condensed Consolidated Statements of Cash Flows for the period from March 15, 2023 to September 30, 2023 (unaudited) (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor)		4
			Notes to Unaudited Condensed Consolidated Financial Statements		5
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk		40
	Item 4.		Controls and Procedures		41
Part II. OTHER INFORMATION
	Item 1.		Legal Proceedings		42
	Item 1A.		Risk Factors		42
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		42
	Item 3.		Defaults Upon Senior Securities		42
	Item 4.		Mine Safety Disclosures		42
	Item 5.		Other Information		42
	Item 6.		Exhibits		43
SIGNATURES					44

 

 

PART I. FINANCIAL INFORMATION

 

Item 1: Interim Financial Statements

 

CXAPP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

		September 30, 2024				December 31, 2023
		(unaudited)
Assets
Current Assets
Cash and cash equivalents		$	5,082			$	6,275
Accounts receivable, net of allowance for credit losses of $0 and $2, respectively			316				1,956
Unbilled and other receivables			145				211
Prepaid expenses and other current assets			477				587
Total current assets			6,020				9,029
Property and equipment, net			80				115
Intangible assets, net			16,087				18,136
Operating lease right-of-use asset, net			573				486
Goodwill			8,737				8,737
Other assets			78				78
Total Assets		$	31,575			$	36,581
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		$	765			$	975
Accrued liabilities			1,666				1,452
Deferred revenue			2,338				2,878
Warrant liability			5,258				1,683
Operating lease obligation, current			377				275
Note payable			3,020				3,053
Total current liabilities			13,424				10,316
Operating lease obligation, noncurrent			208				230
Deferred tax liability			122				637
Convertible debt			3,539				-
Other noncurrent liabilities			7				-
Total Liabilities		$	17,300			$	11,183
Commitments and Contingencies
Stockholders’ Equity
Class A Common Stock, $0.0001 par value; 200,000,000 shares authorized; 16,065,257 shares issued and outstanding at September 30, 2024 and 15,254,389 shares issued and outstanding at December 31, 2023		$	2			$	2
Additional paid-in capital			87,555				83,282
Accumulated deficit			(73,231	)			(57,801	)
Accumulated other comprehensive loss			(51	)			(85	)
Total Stockholders’ Equity		$	14,275			$	25,398
Total Liabilities and Stockholders’ Equity		$	31,575			$	36,581

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

CXAPP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data)

 

		Successor																Predecessor
		(unaudited)
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Revenues		$	1,897			$	1,770			$	5,481			$	4,027			$	1,620
Cost of Revenues			372				358				1,052				925				483
Gross Profit			1,525				1,412				4,429				3,102				1,137
Operating Expenses
Research and development			1,552				1,568				4,882				3,447				1,455
Sales and marketing			689				1,068				2,677				2,419				964
General and administrative			1,927				2,278				5,384				3,931				2,293
Acquisition related costs			-				30				-				194				-
Amortization of intangible assets			683				697				2,049				1,510				806
Total Operating Expenses			4,851				5,641				14,992				11,501				5,518
Loss from Operations			(3,326	)			(4,229	)			(10,563	)			(8,399	)			(4,381	)
Other Income (Expense)
Interest income (expense), net			(312	)			57				(1,258	)			61				1
Change in fair value of derivative liability			(1,052	)			5,220				(3,575	)			(5,134	)			-
Loss on debt extinguishment			(535	)			-				(535	)			-				-
Other income (expense), net			74				(24	)			(12	)			(17	)			-
Total Other Income (Expense)			(1,825	)			5,253				(5,380	)			(5,090	)			1
Net Income (Loss), before tax			(5,151	)			1,024				(15,943	)			(13,489	)			(4,380	)
Income tax benefit			147				417				513				2,958				-
Net Income (Loss)		$	(5,004	)		$	1,441			$	(15,430	)		$	(10,531	)		$	(4,380	)
Unrealized foreign exchange gain (loss) from cumulative translation adjustments			(42	)			31				34				(8	)			(28	)
Comprehensive Income (Loss)		$	(5,046	)		$	1,472			$	(15,396	)		$	(10,539	)		$	(4,408	)
Basic and diluted weighted average shares outstanding, Class A common stock			15,699,685				10,818,000				15,407,007				9,675,000
Basic and diluted net income (loss) per share, Class A common stock		$	(0.32	)		$	0.13			$	(1.00	)		$	(1.09	)

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

CXAPP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

 

Predecessor
		Net parent investment				Accumulated other comprehensive income (loss)				Total Shareholders’ Equity
Balance at January 1, 2023		$	22,236			$	1,155			$	23,391
Net loss			(4,380	)			-				(4,380	)
Stock-based compensation allocated from parent			158				-				158
Net investment from parent			8,680				-				8,680
Cumulative translation adjustment			-				(28	)			(28	)
Balance at March 14, 2023		$	26,694			$	1,127			$	27,821

 

Successor
(unaudited)
		Class A Common Stock								Class C Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Total Stockholders’ Equity
		Shares				Amount				Shares				Amount				Capital				Deficit				Loss				(Deficit)
Balance at March 15, 2023			7,034,999			$	1				-			$	-			$	1,607			$	(8,563	)		$	-			$	(6,955	)
Shares issued in connection with Business Combination			1,547,700				-				5,487,300				1				69,927				-				-				69,928
Net income			-				-				-				-				-				2,758				-				2,758
Stock-based compensation			-				-				-				-				2				-				-				2
Balance at March 31, 2023			8,582,699			$	1				5,487,300			$	1			$	71,536			$	(5,805	)		$	-			$	65,733
Net loss			-				-				-				-				-				(14,730	)			-				(14,730	)
Stock-based compensation			-				-				-				-				96				-				-				96
Cumulative translation adjustment			-				-				-				-				-				-				(39	)			(39	)
Balance at June 30, 2023			8,582,699			$	1				5,487,300			$	1			$	71,632			$	(20,535	)		$	(39	)		$	51,060
Net income			-				-				-				-				-				1,441				-				1,441
Stock-based compensation			-				-				-				-				653				-				-				653
Warrant exchange to Class A common stock			600,000				-				-				-				4,914				-				-				4,914
Warrant exercise – cash and cashless			484,608				-				-				-				5,768				-				-				5,768
Mandatory conversion from Class C to Class A common stock			5,487,300				1				(5,487,300	)			(1	)			-				-				-				-
Common stock issuance			99,782				-				-				-				195				-				-				195
Cumulative translation adjustment			-				-				-				-				-				-				31				31
Balance at September 30, 2023			15,254,389			$	2				-			$	-			$	83,162			$	(19,094	)		$	(8	)		$	64,062
Balance at December 31, 2023			15,254,389			$	2				-			$	-			$	83,282			$	(57,801	)		$	(85	)		$	25,398
Net loss			-				-				-				-				-				(5,170	)			-				(5,170	)
Stock-based compensation			-				-				-				-				599				-				-				599
Cumulative translation adjustment			-				-				-				-				-				-				54				54
Balance at March 31, 2024			15,254,389			$	2				-			$	-			$	83,881			$	(62,971	)		$	(31	)		$	20,881
Net loss			-				-				-				-				-				(5,256	)			-				(5,256	)
Stock-based compensation			-				-				-				-				833				-				-				833
Net exercise of options			12,570				-				-				-				-				-				-				-
Cumulative translation adjustment			-				-				-				-				-				-				22				22
Balance at June 30, 2024			15,266,959			$	2				-			$	-			$	84,714			$	(68,227	)		$	(9	)		$	16,480
Net loss			-				-				-				-				-				(5,004	)			-				(5,004	)
Stock-based compensation			-				-				-				-				906				-				-				906
Issuance of common stock to reduce notes payable			798,298				-				-				-				1,935				-				-				1,935
Cumulative translation adjustment			-				-				-				-				-				-				(42	)			(42	)
Balance at September 30, 2024			16,065,257			$	2				-			$	-			$	87,555			$	(73,231	)		$	(51	)		$	14,275

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

CXAPP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

		Successor								Predecessor
		(unaudited)
		Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Operating activities
Net loss		$	(15,430	)		$	(10,531	)		$	(4,380	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			64				52				228
Amortization of intangible assets			2,049				1,510				806
Amortization of right-of-use asset			297				200				40
Deferred income taxes			(513	)			(2,957	)			-
Provision for credit loss expense			-				(11	)
Amortization of debt discount and deferred financing cost			678				-				-
Accrued interest expense on promissory note and convertible debt			340				-				-
Accrued monitoring fee on promissory note			408				-				-
Stock-based compensation expense			2,345				857				158
Loss on debt extinguishment			535				-				-
(Gain) loss on foreign currency transactions			48				20				(32	)
Change in fair value of derivative liability			3,575				5,134				-
Change in operating assets and liabilities:
Accounts receivable and other receivables			1,696				1,400				(857	)
Prepaid expenses and other current assets			111				339				(20	)
Other assets			-				(37	)			-
Accounts payable			(200	)			494				(796	)
Accrued liabilities			214				(4,666	)			(787	)
Operating lease liabilities			(310	)			(202	)			(38	)
Deferred revenue			(536	)			(539	)			534
Net cash used in operating activities			(4,629	)			(8,937	)			(5,144	)
Investing activities
Purchases of property and equipment			(30	)			(47	)			(9	)
Investment in capitalized software			-				-				(45	)
Cash acquired in connection with Business Combination			-				10,003				-
Net cash provided by (used in) investing activities			(30	)			9,956				(54	)
Financing activities
Proceeds from issuance of convertible debt, net of issuance costs			3,480				-				-
Net equity investment from parent			-				-				9,089
Repayment of CXApp acquisition liability			-				-				(197	)
Warrant exercise - net			-				5,002
Repayment of related party promissory note			-				(328	)			-
Net cash provided by financing activities			3,480				4,674				8,892
Effect of exchange rate changes on cash and cash equivalents			(14	)			(17	)			1
Net increase (decrease) in cash and cash equivalents			(1,193	)			5,676				3,695
Cash and cash equivalents, beginning of period			6,275				1,503				6,308
Cash and cash equivalents, end of period		$	5,082			$	7,179			$	10,003
Supplemental disclosures of cash flow information
Cash paid for taxes		$	25			$	1			$	-
Cash paid for interest		$	6			$	12			$	-
Supplemental schedule of noncash investing and financing activities
Right-of-use asset obtained in exchange for lease liability		$	393			$	230			$	-
Noncash investment from parent		$	-			$	-			$	409
Class A Common Stock and Class C Common Stock issued in connection with Business Combination		$	-			$	69,928			$	-
Financing of Director and Officer Insurance		$	225			$	671			$	-
Warrant exercise - cashless		$	-			$	549			$	-
Warrant exchange to Class A common stock		$	-			$	4,914			$	-
Common shares issued for extinguishment of debt		$	1,935			$	-			$	-

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – Organization, Nature of Business and Basis of Presentation

 

CXApp Inc. and its subsidiaries (“CXApp” or the “Company”) is in the business of delivering intelligent enterprise workplace experiences. The CXApp SaaS platform is anchored on the intersection of customer experience (CX) and artificial intelligence (AI) providing digital transformation for the physical workplace for enhanced experiences across people, places and things.

 

The CXApp SaaS platform offers a suite of leading-edge technology workplace experience solutions including an enterprise employee application, indoor mapping, on-device positioning, augmented reality technologies, generative AI applications and an AI-based analytics platform, targeting the emerging hybrid workplace market. CXApp creates a connected workplace by reducing app overload, data fragmentation, and complex workflows and streamlines all capabilities through The Workplace SuperApp. All features, services and integrations are housed in one easy-to-access platform allowing businesses to deliver a more holistic employee experience in a hybrid workplace.

 

On September 25, 2022, an Agreement and Plan of Merger (the “Merger Agreement”), was entered into by and among Inpixon, KINS, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS acquired Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (“Legacy CXApp”) in exchange for the issuance of shares of KINS capital stock (the “Business Combination”). As a result of the Business Combination, KINS changed their name to CXApp Inc. (“CXApp”). The shares are now trading on the Nasdaq using the ticker CXAI. The transaction closed on March 14, 2023. See Note 3 for more details.

 

Unless the context otherwise requires, “we,” “us,” “our,” “CXApp” and the “Company” refer to CXApp Inc., a Delaware corporation, and its consolidated subsidiaries following the Business Combination (as defined below). Unless the context otherwise requires, references to “KINS” refer to KINS Technology Group Inc., a Delaware corporation (“KINS”), prior to the Business Combination. All references herein to the “Board” refer to the board of directors of the Company. “Legacy CXApp” refers to CXApp Holding Corp., a Delaware corporation and a wholly owned subsidiary of the Company, which the Company acquired through the Business Combination. Prior to the Separation (as defined below), Legacy CXApp was a wholly owned subsidiary of Inpixon, a Nevada corporation (“Inpixon”).

 

The Business Combination was accounted for using the acquisition method (as a forward merger), with goodwill and other identifiable intangible assets recorded in accordance with GAAP, as applicable. Under this method of accounting, the “Enterprise Apps Business” (formerly known as CXApp) is treated as the “acquired” company for financial reporting purposes. KINS (now known as CXApp Inc.) has been determined to be the accounting acquirer because KINS maintains control of the Board of Directors and management of the combined company.

 

NOTE 2 – Summary of Significant Accounting Policies

 

Liquidity

 

As of September 30, 2024 (Successor), the Company had a working capital deficiency of approximately $7,404 thousand and cash and cash equivalents of approximately $5,082 thousand. For the three and nine months ended September 30, 2024 (Successor), the Company incurred net losses of approximately $5,004 thousand and $15,430 thousand, respectively. During the nine months ended September 30, 2024 (Successor), the Company used approximately $4,629 thousand of cash for operating activities.

 

The Company acknowledges that there are challenges in generating sufficient revenue to fully support its operations and achieving long-term profitability. The Company’s recurring losses and cash usage in operations have raised concerns about its ability to continue as a going concern. Given the current liquidity position, management has taken several strategic measures to improve operational efficiency and strengthen the financial outlook. These initiatives include streamlining operations through workforce reductions, renegotiating contractual agreements, adjusting professional service fees, and optimizing expenses such as software licenses and contractor-related costs. Additionally, the Company has made progress in forming strategic partnerships such as the addition of its platform to key marketplaces and has successfully negotiated cost reductions in areas such as insurance premiums. Management believes that these actions will contribute to improved operational efficiency and long-term financial stability. However with the current liquidity position, management has implemented the following strategic measures to improve operational efficiency and strengthen the financial outlook:

 

5

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

●

In January 2024, the Company streamlined its operations to conserve cash resources by laying off approximately 20% of the global employee headcount;

 

●

In March 2024, the Company successfully negotiated for a 50% reduction in D&O insurance premium; and

 

●

In August 2024, Google added the CXAI application platform to the Google Marketplace and signed a go-to-market partnership agreement. Google Cloud’s sales and marketing teams will work with CXAI on targeting key clients and providing them the best workplace platform experience. With this, the Management believes that this partnership would help boost the Company’s product capability revenue.

 

These steps, along with anticipated revenue growth from organic sales and other partnerships, provide the Company with the necessary resources to support operations mitigating liquidity risk.

 

On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand. On June 3, 2024, the Company received net proceeds of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand. On September 30, 2024, the Company received net proceeds of $1,000 thousand, reflecting original issue discount of $50 thousand, pursuant to the convertible Pre-Paid Purchase #2 dated on the same day.

 

Management believes that the recent funding initiatives provide sufficient capital to address any potential uncertainties regarding the Company’s ability to continue as a going concern. This funding ensures that the Company is well-positioned to meet its obligations and continue operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements. If additional funding is required, the Management is confident in its ability to secure financing, as necessary. The Company has access to multiple funding sources and expects these to be sufficient for its strategic needs.

 

Looking beyond this period, the Company is focused on executing its business plan and exploring additional strategic initiatives to enhance liquidity and support long-term growth. While the ability to continue as a going concern depends on various factors, including the successful implementation of these plans and market conditions, management remains optimistic about the Company’s long-term prospects and its capacity to adapt and thrive in a dynamic market environment.

 

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, reflecting the Company’s expectation to realize its assets and meet its liabilities in the ordinary course of business. No adjustments have been made to the financial statements regarding the recoverability or classification of recorded asset amounts or liabilities, as the Company believes it will effectively manage the uncertainties described above.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, since they are interim statements, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 (Successor) are not necessarily indicative of the results that may be expected for other quarters or the year ending December 31, 2024. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements as of that date. For more complete financial information, these condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on May 23, 2024.

 

6

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of:

 

●

the valuation of stock-based compensation;

 

●

the valuation of warrant liabilities;

 

●

the allowance for credit losses;

 

●

the valuation allowance for deferred tax assets; and

 

●

impairment of long-lived assets and goodwill.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of cash, checking accounts, money market accounts, and certificates of deposit with maturities of three months or less when purchased. As of September 30, 2024 (Successor), the Company had cash equivalents of approximately $4,688 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2023 (Successor), the Company had approximately $5,584 thousand in cash equivalents.

 

Accounts Receivable, net and Allowance for Credit Losses

 

Accounts receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to uncollectability. Allowance for credit losses are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in such customer’s operating results or financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for credit losses is approximately $0 thousand and $2 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.

 

Property and Equipment, net

 

Property and equipment are recorded at cost, less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Leasehold improvements are amortized over the useful life of the asset or the initial lease term, whichever is shorter. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized.

 

7

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Intangible Assets, net

 

Intangible assets primarily consist of developed technology, customer lists/relationships, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 to 10 years, which approximates customer attrition rate and technology obsolescence. The Company assesses the carrying value of its intangible assets for impairment annually, or more frequently if an event or other circumstances indicates that the Company may not be able to recover the carrying amount of the assets. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).

 

Goodwill

 

The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

 

The Company calculates the estimated fair value of a reporting unit using weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables, including public company method, guideline transaction method, and market price method.

 

The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor). See Note 6 for impairment that occurred during the period ended December 31, 2023.

 

Leases and Right-of-Use Assets and Liabilities

 

The Company determines if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company generally uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use assets related to the Company’s operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company’s lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options. The Company amortizes its right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.

 

8

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Comprehensive Loss and Foreign Currency Translation

 

The Company reports comprehensive loss and its components in its condensed consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under GAAP, are excluded from net loss.

 

Assets and liabilities related to the Company’s foreign operations are calculated using the Philippine Peso and Canadian Dollar and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period. Gains or losses resulting from transactions denominated in foreign currencies are included in other income (expenses) in the condensed consolidated statements of operations. The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar. Aggregate foreign currency net transaction gain or loss were approximately $42 thousand loss, $34 thousand gain, $31 thousand gain, $8 thousand loss, and $28 thousand loss for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.

 

Convertible Debt

 

The Company issued convertible debt in May 2024, and evaluated to determine whether they contain features that qualify as embedded derivatives in accordance with ASC 815. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance of the convertible debt, the Company treats the instrument wholly as a liability, in accordance with ASC 470, as the conversion features do not require bifurcation as a derivative in accordance with ASC 815 and the convertible debt was not issued at a substantial premium.

 

Costs directly associated with the borrowing have been capitalized and are netted against the corresponding debt liabilities in the Company’s Condensed Consolidated Balance Sheets at issuance and amortized over the contractual term of the convertible debt instrument using the effective interest rate method.

 

Debt Issuance Costs

 

The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the related debt using the effective interest method. The amendments to FASB ASC 835-30 require that debt issuance costs be presented in the Condensed Consolidated Balance Sheets as a direct deduction from the carrying amount of long-term debt, consistent with debt discounts or premiums.

 

Debt Extinguishment

 

The note exchanges are accounted for under ASC 470-50 on Modifications and Extinguishments. This standard requires the recognition of a gain or loss on the difference between the reacquisition price and the net carrying amount of the extinguished debt.

 

Revenue Recognition

 

The Company recognizes revenue, in accordance with ASC 606, when control of the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from its software as a service for cloud-based software, as well as design, implementation and other professional services for work performed in conjunction with its cloud-based software. The Company enters into contracts with its customers whereby it grants a non-exclusive cloud-based license for the use of its proprietary software and for professional services. The contracts may also provide for on-going services for a specified price, which may include maintenance services, designated support, and enhancements, upgrades and improvements to the software, depending on the contract. Licenses for cloud software provide the customer with a right to use the software as it exists when made available to the customer. All software provides customers with the same functionality and differs mainly in the duration over which the customer benefits from the software.

 

9

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company recognizes revenue in accordance with ASC 606 – Revenue from Contracts with Customers. The standard’s core principle is that an entity will recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new standard is a principles-based standard intended to better match the accounting for the transaction with the economics of the transaction. This requires entities to use more judgment and make more estimates than under previous revenue standards.

 

The standard introduces a five-step model for revenue recognition that replaces the four criteria for revenue recognition under previous GAAP. The five steps are shown below:

 

1.

Identify the contract with a customer;

 

2.

Identify the performance obligations in the contract;

 

3.

Determine the transaction price;

 

4.

Allocate the transaction price to performance obligations; and

 

5.

Recognize revenue when (or as) the entity satisfies a performance obligation

 

License Subscription Revenue Recognition (Software As A Service)

 

With respect to sales of the Company’s license agreements, customers generally pay fixed annual fees in advance in exchange for the Company’s software service provided via electronic means, which are generally recognized ratably over the license term. Some agreements allow the customer to terminate their subscription contracts before the end of the applicable term, and in such cases the customer is generally entitled to a refund pro-rata but only for the elapsed time remaining at the point of termination, which would approximate the deferred revenue at such time. The Company’s performance obligation is satisfied over time as the electronic services are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice.

 

The timing of the Company’s revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a service. Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software.

 

Renewals or extensions of licenses are evaluated as distinct licenses and revenue attributed to the distinct service is not recognized until: (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. The Company recognizes revenue resulting from renewal of licensed software over time.

 

Professional Services Revenue Recognition

 

The Company provides integration and software customization professional services to its customers.

 

Professional services under milestone contracts are accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract.

 

10

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Professional services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts provided by in-house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known.

 

For the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company did not incur any such losses. These amounts are based on known and estimated factors.

 

Hardware Revenue Recognition

 

For sales of hardware, the Company’s performance obligation is fulfilled when the products are shipped to the customer, transferring title and ownership risks. Deliveries occur via drop-shipment by a third-party vendor and the Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse. The Company negotiates sale prices, pays suppliers directly, manages credit risk, and ensures product acceptability, acting as the principal in the transaction and recording revenue on a gross basis. Customers typically pay within 30 to 60 days of invoice receipt. The Company has elected the practical expedient to expense the costs of obtaining a contract when they are incurred because the amortization period of the asset that otherwise would have been recognized is less than a year.

 

Contract Balances

 

The timing of the Company’s revenue recognition may differ from the timing of invoicing to and payment by its customers. The Company records an unbilled receivable when revenue is recognized prior to invoicing and the Company has an unconditional right to payment. Alternatively, when invoicing a customer precedes the Company providing of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $2,338 thousand and $2,878 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively, related to customer invoices rendered in advance for software licenses, professional services, and hardware provided by the Company’s technical staff.

 

The Company expects to satisfy its remaining performance obligations for the deferred revenue associated with hardware, professional services, and recognize the deferred revenue related to licenses generally over the remaining contract term which is generally twelve months following the commencement of the license. The Company recognized revenue in the reporting period of $2,359 thousand, $893 thousand, and $865 thousand, that was included in the contract liability balance at the beginning of the period, for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.

 

Costs to Obtain a Contract

 

The Company recognizes eligible sales commissions as an asset within prepaid expenses and other current assets as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs. The capitalized costs are amortized over the expected contract term.

 

11

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Cost to Fulfill a Contract

 

The Company incurs costs to fulfill their obligations under a contract once it has obtained the contract. These costs are generally not significant and are recorded to expense as incurred.

 

Multiple Performance Obligations

 

The Company enters into contracts with customers for its technology that include multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation.

 

Sales and Use Taxes

 

The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis.

 

Shipping and Handling Costs

 

Shipping and handling costs are expensed as incurred as part of cost of revenues. These costs were deemed to be de minimis during each of the reporting periods.

 

Research and Development

 

Research and development (“R&D”) costs are expensed when incurred. R&D expenses consist primarily of personnel and related headcount costs, costs of professional services associated with the ongoing development of the Company’s technology, and allocated overhead.

 

Business Combinations

 

The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are included as of and subsequent to the acquisition date.

 

Segments

 

The Company and its Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”), acting as the Chief Operating Decision Makers (“CODM”), determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.

 

12

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Stock-based Compensation

 

The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award.

 

The grant date fair value of options is estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates.

 

Derivative Warrant Liabilities

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability.

 

For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance as a warrant liability and adjusted to the then fair value in each balance sheet date thereafter.

 

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations and amounting to $1,052 thousand loss, $3,575 thousand loss, $5,220 thousand gain, $5,134 thousand loss, and $0 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively. The Company utilized the Public Warrant quoted market price as the fair value of the Warrants as of each relevant date.

 

Earnings Per Share

 

The Company computes basic and diluted earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three and nine months ended September 30, 2024 (Successor), basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options, warrants, and vesting of restricted units in the calculation of diluted net loss per common shares would have been anti-dilutive. For the period from March 15, 2023 to September 30, 2023 (Successor), the common shares issuable were excluded from the calculation because (i) the warrants were below their exercise price and (ii) the stock options were not vested.

 

13

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), and for the period from March 15, 2023 to September 30, 2023 (Successor).

 

Schedule of antidilutive shares
(in thousands)		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023
Stock options			1,850				985				1,602				985
Restricted stock units			699				821				514				821
Warrants			21,032				21,032				21,032				21,032
Total			23,581				22,838				23,148				22,838

 

Fair Value Measurements

 

FASB ASC 820, “Fair Value Measurements” (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. The Company follows this authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

 

●

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

 

●

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

 

●

Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

 

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management. The fair value of the warrants has been measured based on the listed market price of such warrants, a Level 1 measurement. For the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company recognized, in the consolidated statements of operations and comprehensive income, unrealized loss of $1,052 thousand, unrealized loss $3,575 thousand, unrealized gain $5,220 thousand, $5,134 thousand unrealized loss, and $0 thousand, respectively. See Note 10.

 

The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the condensed consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability is de-recognized at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the de-recognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that governs the cashless conversion.

 

14

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table shows the changes in fair value of the liabilities:

 

Schedule of changes in fair value of the liabilities
Warrant liability – January 1, 2024		$	1,683
Change in FV of derivative instruments			1,472
Warrant liability – March 31, 2024			3,155
Change in FV of derivative instruments			1,051
Warrant liability – June 30, 2024			4,206
Change in FV of derivative instruments			1,052
Warrant liability – September 30, 2024		$	5,258

 

Warrant liability – March 15, 2023		$	2,649
Change in FV of derivative instruments			(1,686	)
Warrant liability – March 31, 2023			963
Change in FV of derivative instruments			12,040
Warrant liability – June 30, 2023			13,003
Change in FV of derivative instruments			(5,220	)
FV of Warrants cash exercised and exchanged for Class A common stock (see Note 10 – Warrants)			(1,237	)
Loss on warrant extinguishment			(3,894	)
FV of Warrants cashless exercised for Class A common stock (see Note 10 – Warrants)			(549	)
Warrant liability – September 30, 2023		$	2,103

 

Fair Value of Financial Instruments

 

Financial instruments consist of cash and cash equivalents, accounts receivable, unbilled and other receivables and accounts payable. The Company determines the estimated fair value of such financial instruments presented in the financial statements is equal to its carrying value due to their short-term nature.

 

Carrying Value, Recoverability and Impairment of Long-Lived Assets

 

The Company follows FASB ASC 360 “Property, Plant, and Equipment” (“ASC 360”) for its long-lived assets. Pursuant to ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.

 

Pursuant to ASC 360-10-35-21, the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

 

15

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

Based on its assessments, the Company recorded no impairment charges on long-lived assets for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).

 

Recently Issued Accounting Standards Not Yet Adopted

 

In October 2023, the FASB issued ASU 2023-06 “Disclosure Improvements”, which amends the codification in response to the SEC’s Disclosure Update and Simplification Initiative. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is currently assessing the potential impact of ASU 2023-06 and does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and disclosures. 

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) that enhances transparency into income tax disclosures. Requires annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Eliminates certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

 

In March 2024, the FASB issued ASU 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards,” which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718, or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 adds an example with multiple fact patterns and illustrates how an entity evaluates common terms and characteristics of profits interests and similar awards to reach a conclusion about whether an award meets the conditions in Topic 718. It also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to all periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

 

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements—Amendments to Remove References to the Concept Statements”, which amends the Codification to remove references to various FASB Concepts Statements and impacts a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and are not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to the beginning of the earliest comparative period presented or prospectively to all new or modified transactions recognized on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

 

16

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 3 – Business Combination

 

On March 14, 2023, the Company completed the Agreement and Plan of Merger (the “Merger Agreement”), by and among KINS, Inpixon, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS combined with Legacy CXApp, Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the “Enterprise Apps Business”). In exchange for the aggregate purchase price of approximately $69,928 thousand, the Company acquired all of the related assets and liabilities of Legacy CXApp. The consideration transferred in connection with the Business Combination consisted of 1,547,700 shares of the Company’s Class A Common Stock and 5,487,300 shares of the Company’s Class C Common Stock valued at a price of $9.94 per share. The preliminary estimated goodwill of approximately $44,200 thousand arising from the Business Combination consists of an acquired workforce, as well as synergies expected from combined operations of KINS and the CXApp.

 

The Company has authorized Class A and Class C common stock. Class A common stock and New CXApp Class C common stock are identical in all respects, except that New CXApp Class C common stock is not listed and will automatically convert into New CXApp Class A common stock on the earlier to occur of (i) the 180^th day following the closing of the Merger which has expired and (ii) the day that the last reported sale price of New CXApp Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period following the closing of the Merger.

 

The Business Combination is being accounted for as a business combination in accordance with ASC 805. The Company has determined fair values of the assets acquired and liabilities assumed in the Business Combination.

 

The Company allocated the purchase price of the Business Combination to the assets acquired and the liabilities assumed as of the closing date. The following table summarizes the purchase price allocations relating to the Business Combination (in thousands):

 

Schedule of assets acquired
Description		Fair Value				Weighted Average Useful Life (in years)
Purchase Price		$	69,928
Assets acquired:
Cash and cash equivalents		$	10,003
Accounts receivable			2,226
Notes and other receivables			209
Prepaid assets and other current assets			408
Operating lease right-of-use asset			557			3 years
Property and equipment, net			133			3 years
Other assets			42
Developed technology			8,697			10 years
Patents			2,703			10 years
Customer relationships			5,604			5 years
Trade names and trademarks			3,294			7 years
Total assets acquired		$	33,876
Liabilities assumed:
Accounts payable		$	443
Accrued liabilities			969
Deferred revenues			2,534
Operating lease obligation, current			194
Operating lease obligation, noncurrent			384
Deferred tax liability			4,217
Total liabilities assumed			8,741
Goodwill		$	44,793

 

17

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The value of the intangible assets were calculated by a third party valuation firm based on projections and financial data provided by management of the Company. Goodwill represents the excess fair value after allocation to the intangible assets. The calculated goodwill is not deductible for tax purposes.

 

Total acquisition-related costs for the Business Combination were approximately $3,543 thousand. Of the total acquisition-related costs, approximately $3,000 thousand were incurred by KINS prior to the close of the Business Combination. These costs are included in the opening retained earnings of the Company on March 15, 2023. The remaining $543 thousand of acquisition-related costs were recorded as expense in the successor period and are included in acquisition related costs on the statements of operations for the year ended December 31, 2023.

 

Measurement Period

 

The purchase price allocations for the acquisitions described above are based on initial estimates and provisional amounts. In accordance with ASC 805-10-25-13, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The Company continued to refine its inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) realization of tangible assets and (iv) the accuracy and completeness of liabilities through March 14, 2024, when the purchase price allocation was finalized.

 

CXApp Proforma Financial Information

 

The following unaudited proforma financial information presents the condensed consolidated results of operations of the Company for the nine-month period ended September 30, 2023, as if the acquisition had occurred as of the beginning of the first period presented (January 1, 2023) instead of on March 14, 2023. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

 

The proforma financial information for the Company and the acquired CXApp is as follows (in thousands):

 

Schedule of proforma financial information
		For the Nine Months Ended September 30, 2023
Revenues		$	5,647
Net income (loss)			(19,197	)

 

18

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 – Disaggregation of Revenue

 

The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from software as a service, design and implementation services for its enterprise apps solutions systems, and professional services for work performed in conjunction with its systems.

 

Revenues consisted of the following (in thousands):

 

Schedule of disaggregation of revenue
		Successor																Predecessor
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Subscription revenue
Software		$	1,660			$	1,411			$	4,752			$	3,164			$	1,204
Total subscription revenue		$	1,660			$	1,411			$	4,752			$	3,164			$	1,204
Non-subscription revenue
Professional services		$	102			$	359			$	594			$	863			$	416
Hardware			135				-				135				-				-
Total non-subscription revenue		$	237			$	359			$	729			$	863			$	416
Total Revenue		$	1,897			$	1,770			$	5,481			$	4,027			$	1,620

 

		Successor																Predecessor
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Revenue recognized over time(1)(2)		$	1,762			$	1,770			$	5,346			$	4,027			$	1,620
Revenue recognized at a point in time(3)			135				-				135				-				-
Total		$	1,897			$	1,770			$	5,481			$	4,027			$	1,620

 

 

	(1)	Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date.
	(2)	Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time.
	(3)	Hardware revenue is recognized at a point in time when the control over the goods transfers to the customer - upon delivery to the customers.

 

19

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 – Property and Equipment, net

 

Property and equipment consisted of the following (in thousands):

 

Schedule of property and equipment
		September 30, 2024				December 31, 2023
Computer and office equipment		$	199			$	179
Furniture and fixtures			13				12
Leasehold improvements			6				6
Software			1				1
Total			219				198
Less: accumulated depreciation and amortization			(139	)			(83	)
Total Property and Equipment, net		$	80			$	115

 

Depreciation and amortization expense were approximately $20 thousand, $64 thousand, $24 thousand, $52 thousand, and $19 thousand, for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.

 

NOTE 6 – Goodwill and Intangible Assets

 

The Company reviews goodwill and intangible assets for impairment on a reporting unit basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company noted that the carrying amount of Goodwill as of September 30, 2024 and December 31, 2023 (Successor) was $8,737 thousand, which was entirely due to the business combination noted in Note 3.

 

Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a decline in industry and market considerations, technological advancements, and the Company’s financial performance.

 

We completed our annual goodwill impairment evaluation as of December 31, 2023. As a result, the Company incurred an impairment loss of $36,056 thousand.

 

The Company determined that there was no impairment present at the reporting date as of September 30, 2024 (Successor).

 

Intangible assets consisted of the following (in thousands):

 

Schedule of intangible assets
		September 30, 2024															December 31, 2023
		Weighted Average Remaining Useful Life (Years)			Gross Amount				Accumulated Amortization				Net Carrying Amount				Gross Amount				Accumulated Amortization				Net Carrying Amount
Trade Name/Trademarks		5.4			$	3,294			$	(725	)		$	2,569			$	3,294			$	(373	)		$	2,921
Customer Relationships		3.4				5,604				(1,728	)			3,876				5,604				(887	)			4,717
Developed Technology		8.4				8,697				(1,341	)			7,356				8,697				(688	)			8,009
Patents and Intellectual Property		8.4				2,703				(417	)			2,286				2,703				(214	)			2,489
Totals					$	20,298			$	(4,211	)		$	16,087			$	20,298			$	(2,162	)		$	18,136

 

20

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Future amortization expense on intangible assets as of September 2024 is anticipated to be as follows (in thousands):

 

Schedule of amortization expense on intangible assets
For the Years Ending December 31,		Amount
2024 (remainder of year)		$	683
2025			2,731
2026			2,731
2027			2,731
2028			1,844
2029			1,611
Thereafter			3,756
Total		$	16,087

 

NOTE 7 – Deferred Revenue

 

Deferred revenue consisted of the following (in thousands):

 

Schedule of deferred revenue
		License Agreements				Professional Service Agreements				Hardware				Total
Deferred Revenue – January 1, 2024		$	2,404			$	474			$	-			$	2,878
Revenue recognized			(4,752	)			(594	)			(135	)			(5,481	)
Revenue deferred			4,459				323				159				4,941
Deferred Revenue – September 30, 2024		$	2,111			$	203			$	24			$	2,338

 

		License Agreements				Professional Service Agreements				Hardware				Total
Deferred Revenue – March 15, 2023		$	2,148			$	386			$	-			$	2,534
Revenue recognized			(4,560	)			(1,186	)			-				(5,746	)
Revenue deferred			4,816				1,274				-				6,090
Deferred Revenue – December 31, 2023		$	2,404			$	474			$	-			$	2,878

 

Deferred revenues were approximately $2,338 thousand and $2,878 thousand at September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.

 

The fair value of the deferred revenue approximates the services to be rendered.

 

NOTE 8 – Accrued Liabilities

 

Accrued liabilities consisted of the following (in thousands):

 

Schedule of accrued liabilities
		September 30, 2024				December 31, 2023
Accrued expenses and reimbursements		$	1,019			$	858
Accrued compensation and benefits			311				387
Accrued bonus and commissions			166				108
Accrued insurance premium and interest			90				-
Income tax payables			59				74
Accrued transaction costs			13				13
Accrued sales and other indirect taxes payable			8				12
Accrued liabilities		$	1,666			$	1,452

 

21

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Financed Director & Officers Insurance

 

The Company entered into a Directors & Officers (“D&O”) insurance agreement with Oakwood D&O Insurance, effective on March 14, 2024. The agreement states that the Company will pay a total of $310 thousand in premiums at an annual percentage rate of 9.5%. The first of ten monthly separate installment payments begin on April 14, 2024. The Company paid a down payment on the policy of $85 thousand. As of September 30, 2024 (Successor), the Company currently owes $91 thousand on the D&O insurance policy.

 

NOTE 9 – Promissory Note

 

Note payable consisted of the following (in thousands):

 

Promissory note
			September 30, 2024				December 31, 2023
Principal amount			$	3,885			$	3,885
Less:	Unamortized original issue discount			181				834
	Unamortized debt issuance cost			3				14
				3,701				3,037
Add:	Interest			311				16
	Accrued monitoring fee			408				-
				4,420				3,053
Less:	Extinguishment			1,400				-
			$	3,020			$	3,053

 

December 2023 Note Purchase Agreement and Promissory Note

 

On December 15, 2023, we entered into a note purchase agreement with Streeterville Capital, LLC (the “Lender”), pursuant to which we agreed to issue and sell to the Lender an unsecured promissory note (the “Note”) in an aggregate initial principal amount of $3,885 thousand, which is payable on or before the date that is 12 months from the issuance date. The initial principal amount includes an original issue discount of $870 thousand and $15 thousand that we agreed to pay to the Lender to cover the Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs. The net proceeds of the Note is $3,000 thousand.

 

Interest on the Note accrues at a rate of 10% per annum and is payable on the maturity date.

 

A monitoring fee of 10% of the outstanding balance will be charged on the sixth (6th) month from the issuance date of the Note to cover Lender’s accounting, legal and other costs incurred in monitoring the Note based on the then-current outstanding balance of the Note. The foregoing fee shall automatically be added to the outstanding balance on the applicable date without any further action by either party.

 

The Lender shall have the right to redeem up to an aggregate of 1/6th of the initial principal balance of the Note plus any interest accrued thereunder each month by providing written notice delivered to us; provided, however, that if the Lender does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the Lender to redeem in any further month in addition to such future month’s monthly redemption amount.

 

Upon receipt of any monthly redemption notice, we shall pay the applicable monthly redemption amount in cash to the Lender within five (5) business days of the Company’s receipt of such monthly redemption notice.

 

The Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22%. Upon the occurrence of an event of default, interest would accrue on the outstanding balance beginning on the date the applicable event of default occurred at an interest rate equal to the lesser of twenty-two percent (22%) or the maximum rate permitted under applicable law.

 

22

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note Exchanges

 

During the period from July 15, 2024 to August 19, 2024, the Company exchanged $1,400 thousand of the outstanding balance of the Note for approximately 798,298 shares of the Company’s Class A Common Stock at exchange prices between $1.47 and $2.23 per share.

 

The Company analyzed the exchange of principal under the note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded an approximately $535 thousand loss on the exchange of debt for equity as a separate item in the other income (expense) section of the consolidated statements of operations for the three months ended September 30, 2024.

 

As of November 12, 2024, there is an aggregate outstanding principal and interest balance of approximately $2,633 thousand underlying the December 2023 Note.

 

Interest expense for the December 2023 Note recognized on the condensed consolidated statement of operations and comprehensive loss were approximately $317 thousand, $958 thousand, and $0 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), and the period from March 15, 2023 to September 30, 2023 (Successor), respectively.

 

NOTE 10 – Warrants

 

Public Warrants

 

As of September 30, 2024 (Successor) and December 31, 2023 (Successor), there were 10,751,862 Public Warrants outstanding. Each whole warrant entitles the holder thereof to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustments described in the Company’s registration statement on Form S-1 (Registration No. 333-249177) filed in connection with its initial public offering.

 

The Public Warrants is exercisable and will expire on March 15, 2028 or earlier upon redemption or liquidation. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.

 

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

 

On July 13, 2023, warrant holders exercised 435,000 public warrants at an exercise price of $11.50, for a total of $5,002 thousand of cash proceeds to the Company.

 

On July 14, 2023, the Company entered into a Warrant Exchange Agreement (the “Agreement”) with an unaffiliated third party investor (the “Warrant Holder”) with respect to warrants to purchase an aggregate of 2,000 thousand shares of its common stock, par value $0.0001 per share (the “Common Stock”) initially issued by the Company in its initial public offering on December 15, 2020 (the “Public Warrants”). Pursuant to the Agreement, the Company issued an aggregate of 600 thousand shares of Common Stock to the Warrant Holder in exchange for the surrender and cancellation of the Public Warrants held by such holder. This resulted to an additional paid in capital of $4,914 thousand in a non-cash transaction and resulted in a $3,900 thousand loss on the warrant conversion, which is included in change in fair value of derivative liability in the statement of operations.

 

For the three months ended September 30, 2023, approximately 613,138 thousand public warrants to purchase Class A common stock were exercised on a cashless basis for approximately 50 thousand shares of common stock and are no longer outstanding.

 

23

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Private Warrants

 

As of September 30, 2024 (Successor) and December 31, 2023 (Successor), there were 10,280 thousand Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or salable until April 14, 2023, subject to certain limited exceptions.

 

Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

 

NOTE 11 – Stock Option Plan and Stock-Based Compensation

 

To calculate the stock-based compensation resulting from the issuance of options, the Company uses the Black-Scholes option pricing model, which is affected by the Company’s fair value of its stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

 

2023 Equity Incentive Plan

 

At the special meeting held on March 10, 2023, the KINS stockholders considered and approved, among other things, the Incentive Plan. The Incentive Plan was previously approved, subject to stockholder approval, by KINS’ board of directors. The Incentive Plan became effective immediately upon the closing of the Business Combination. Pursuant to the terms of the Incentive Plan, there are 2,110,500 shares of CXApp Class A Common Stock available for issuance under the Incentive Plan, which is equal to 15% of the aggregate number of shares of CXApp common stock issued and outstanding immediately after the closing of the Business Combination (giving effect to the redemptions).

 

Employee Stock Options

 

On February 6, 2024, a total of 705,000 stock options to purchase the Company’s common stock were granted to employees and consultants of the Company. These options vest over a 4-year period. The options have a life of 10 years and an exercise price of $1.20 per option. The stock options were valued using the Black-Scholes option valuation model and the weighted average fair value of the awards granted during the period was determined to be $0.74 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $1.21 per share.

 

In June 2024, the Company received a notice for a net exercise of 70,350 options to purchase shares of common stock resulting in the issuance of 12,570 shares of the Company’s Class A Common Stock with par value $0.0001 per share. In accordance with the terms of the Incentive Plan, 51,012 shares were withheld by the Company to cover the exercise price and 6,768 shares were withheld in satisfaction of the taxes required to be paid in connection with the exercise.

 

On August 26, 2024, the Board approved the award of 230,000 options to purchase common stock pursuant to the 2023 Equity Incentive Plan to Joy Mbanugo, the Chief Financial Officer of the Company. The option has an exercise price of $2.40 per share. The options expire on August 26, 2034. The stock options were valued using the Black-Scholes option valuation model and the fair value of the awards granted was determined to be $1.44 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $2.40 per share.

 

24

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

See below for a summary of the stock options granted under the Incentive Plan:

 

Schedule of stock options
		Number of Options				Weighted average exercise price				Weighted average remaining contractual term (years)				Weighted-Average Fair Value at Grant Date
Options outstanding at January 1, 2024			984,900			$	1.53				9.25			$	0.90
Granted			935,000			$	1.50				9.49			$	0.91
Exercised			(70,350	)		$	1.53
Forfeited			-			$	-
Options outstanding at September 30, 2024			1,849,550			$	1.51				9.00			$	0.91
Options exercisable at September 30, 2024			422,100			$	1.53

 

Non-cash stock-based compensation expenses related to stock option were recorded in the financial statements as summarized below:

 

Schedule of non-cash stock-based compensation expenses		Successor																Predecessor
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Research and development		$	5			$	-			$	12			$	-			$	-
Sales and marketing			16				-				64				-				-
General and administrative			89				56				356				113				158
Total non-cash stock compensation		$	110			$	56			$	432			$	113			$	158

 

As of September 30, 2024 (Successor), the remaining unrecognized stock compensation expense totaled approximately $564 thousand. This amount will be recognized as expense over the weighted average remaining term of 3.02 years.

 

25

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Key weighted-average assumptions used to apply this pricing model for the nine months ended September 30, 2024 (Successor) and the period from March 15, 2023 to December 31, 2023 (Successor) were as follows:

 

Schedule of assumptions used		2024		2023
Risk-free interest rate		3.58% – 4.33%		3.67%
Expected life of option grants		6.00 – 6.25 years		5.75 years
Expected volatility of underlying stock		61.65%		61.65%
Dividends assumption		$-		$-

 

Restricted Stock Units

 

On January 2024, a total of 47,000 restricted stock units of the Company’s common stock were granted to employees of the Company under the Incentive Plan at various dates.

 

On August 29, 2024, a total of 473,935 restricted stock units of the Company’s common stock were granted to directors of the Company under the 2023 Equity Incentive Plan.

 

The fair value of the common stock as of the various grant dates was determined to be $1.25 to $2.11 per restricted stock unit, for a weighted average fair value of $2.04 per restricted stock unit. There was no other activity related to restricted stock units for the nine months ended September 30, 2024.

 

The following summarizes our RSUs transaction activity for nine months ended September 30, 2024:

 

Schedule of RSUs transaction activity
		Shares				Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024			486,165			$	7.80
Granted			520,935			$	2.04
Vested			(308,165	)		$	7.52
Forfeited			-
Outstanding at September 30, 2024			698,935

 

		Shares				Weighted Average Grant Date Fair Value
Outstanding at March 15, 2023			-			$
Granted			526,165			$	7.80
Forfeited			(40,000	)		$	7.13
Outstanding at December 31, 2023			486,165

 

The total fair value of RSUs vested during the three months ended September 30, 2024 was $2,318 thousand.

 

26

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Non-cash stock-based compensation expenses related to restricted stock units recorded in the financial statements is summarized below:

 

Schedule of non-cash stock-based compensation expenses related to restricted stock units
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023
Research and development		$	100			$	-			$	504			$	-
Sales and marketing			51				-				257				-
General and administrative			648				597				1,152				638
Total non-cash stock compensation		$	799			$	597			$	1,913			$	638

 

As of September 30, 2024, the Company has approximately $1,376 thousand of unrecognized restricted stock unit compensation to be expensed over a weighted average period of 1.25 years.

 

NOTE 12 – Convertible Debt

 

Convertible debt as of September 30, 2024 consisted of the following (in thousands):

 

Schedule of convertible debt
Principal amount			$	3,675
Less:	Unamortized original issue discount			161
	Unamortized debt issuance cost			18
				3,496
Add:	Accrued interest payable			43
			$	3,539

 

On May 22, 2024, the Company entered into a Securities Purchase Agreement which the Lender desires to purchase up to $10,000 thousand shares of the Company’s Common Stock, pursuant to which the Company issued an unsecured convertible Pre-Paid Purchase #1 to Streeterville Capital, LLC (“Lender”). The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand and Lender gave consideration of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand.

 

The convertible Pre-Paid Purchase #1 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #1, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $3.996 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.666, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase.

 

On June 3, 2024, the Company received the net proceeds from the Lender. For the period ended September 30, 2024, amortization of debt discount and transaction cost of approximately $16 thousand was recorded on the condensed consolidated statements of operations.

 

27

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On September 30, 2024, the Company issued an unsecured convertible Pre-Paid Purchase #2 to Streeterville Capital, LLC (“Lender”), pursuant to the Securities Purchase Agreement. The convertible Pre-Paid Purchase #2 has the original principal amount of $1,050 thousand and Lender gave consideration of $1,000 thousand, reflecting original issue discount of $50 thousand.

 

The convertible Pre-Paid Purchase #2 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #2, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.992 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.332, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase.

 

On September 30, 2024, the Company received the net proceeds from the Lender.

 

During the period ended September 30, 2024, the Company has issued no shares related to the convertible Pre-Paid Purchases.

 

NOTE 13 – Income Taxes

 

The Company recorded an income tax benefit of approximately $147 thousand, $513 thousand, $417 thousand, and $2,958 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), and for the period from March 15, 2023 to September 30, 2023 (Successor), respectively. The Company did not incur income tax expense for the period from January 1, 2023 to March 14, 2023 (Predecessor).

 

The effective tax rate for three months ended September 30, 2024 (Successor) and for the nine months ended September 30, 2024 (Successor) was (2.86)% and (3.22)%, respectively. The effective tax rate differs from the U.S. Federal statutory rate primarily due to recording a valuation allowance against deferred tax assets in the foreign jurisdictions and the significant permanent differences including impairment of goodwill and change in fair value of derivative warrant liabilities.

 

NOTE 14 – Credit Risk and Concentrations

 

Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash and cash equivalents. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk of its customers, establishes an allowance for credit losses and, consequently, believes that its accounts receivable credit risk exposure beyond such allowances is limited.

 

The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. Cash is also maintained at foreign financial institutions for its Canadian and Philippine subsidiaries. Cash in foreign financial institutions as of September 30, 2024 (Successor) was $31 thousand. Cash in foreign financial institutions as of December 31, 2023 (Successor) was $300 thousand.

 

The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). However, any loss incurred or lack of access to such funds could have a significant impact on the Company’s financial condition, results of operations, and cash flows.

 

28

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – Foreign Operations

 

The Company’s operations are located primarily in the United States, Canada, and the Philippines. Revenues by geographic area are attributed by country of domicile of the Company’s subsidiaries. The financial data by geographic area are as follows (in thousands):

 

Schedule of financial data by geographic area
		United States				Canada				Philippines				Eliminations				Total
For the Three Months Ended September 30, 2024 (Successor):
Revenues by geographic area		$	1,804			$	93			$	236			$	(236	)		$	1,897
Operating loss by geographic area		$	(2,634	)		$	(467	)		$	(225	)		$	-			$	(3,326	)
Net loss by geographic area		$	(4,386	)		$	(388	)		$	(230	)		$	-			$	(5,004	)
For the Nine Months Ended September 30, 2024 (Successor):
Revenues by geographic area		$	5,140			$	341			$	709			$	(709	)		$	5,481
Operating loss by geographic area		$	(8,714	)		$	(1,650	)		$	(199	)		$	-			$	(10,563	)
Net loss by geographic area		$	(13,568	)		$	(1,658	)		$	(204	)		$	-			$	(15,430	)
For the Three Months Ended September 30, 2023 (Successor):
Revenues by geographic area		$	1,504			$	266			$	228			$	(228	)		$	1,770
Operating income (loss) by geographic area		$	(3,470	)		$	(769	)		$	10			$	-			$	(4,229	)
Net income (loss) by geographic area		$	2,224			$	(795	)		$	12			$	-			$	1,441
For the Period from January 1, 2023 to March 14, 2023 (Predecessor):
Revenues by geographic area		$	1,395			$	285			$	160			$	(220	)		$	1,620
Operating income (loss) by geographic area		$	(3,479	)		$	(905	)		$	3			$	-			$	(4,381	)
Net income (loss) by geographic area		$	(3,342	)		$	(1,041	)		$	3			$	-			$	(4,380	)

 

For the Period from March 15, 2023 to September 30, 2023 (Successor):
Revenues by geographic area		$	3,326			$	701			$	643			$	(643	)		$	4,027
Operating income (loss) by geographic area		$	(6,882	)		$	(1,693	)		$	176			$	-			$	(8,399	)
Net income (loss) by geographic area		$	(8,976	)		$	(1,714	)		$	180			$	(21	)		$	(10,531	)
As of September 30, 2024 (Successor)
Identifiable assets by geographic area		$	30,752			$	337			$	486			$	-			$	31,575
Long lived assets by geographic area		$	16,450			$	217			$	73			$	-			$	16,740
Goodwill by geographic area		$	8,737			$	-			$	-			$	-			$	8,737
As of December 31, 2023 (Successor)
Identifiable assets by geographic area		$	38,143			$	627			$	434			$	(2,623	)		$	36,581
Long lived assets by geographic area		$	18,269			$	320			$	148			$	-			$	18,737
Goodwill by geographic area		$	8,737			$	-			$	-			$	-			$	8,737

 

 

29

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – Leases

 

The Company has operating leases for administrative offices in Canada, the Philippines, and the United States. The Manila, Philippines office lease expires in May 2025, the Canada lease expires in May 2026, and the United States office lease expires in April 2026. The Company has no other operating or financing leases with terms greater than 12 months.

 

Lease expense for operating leases recorded on the balance sheet is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs. Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in the Company’s unaudited condensed consolidated statement of operations for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor) was approximately $109 thousand, $331 thousand, $56 thousand, $121 thousand, and $57 thousand, respectively.

 

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of ASC 842 “Leases” (“ASC 842”). As of September 30, 2024 (Successor), the weighted average remaining lease term is 1.3 years and the weighted average discount rate used to determine the operating lease liabilities was 8.0%. As of December 31, 2023 (Successor), the weighted average remaining lease term is 1.4 years and the weighted average discount rate used to determine the operating lease liabilities was 8.0%.

 

Schedule of operating leases
(in thousands)		Operating Leases
Year 2024		$	113
Year 2025			386
Year 2026			130
Total lease payments			629
Less: Imputed interest			(44	)
Present value of lease liabilities		$	585

 

NOTE 17 – Commitments and Contingencies

 

Risks and Uncertainties

 

Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics) may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a Business Combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a Business Combination and the value of the Company’s securities.

 

Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

30

 

 

CXAPP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Litigation

 

Certain conditions may exist as of the date the condensed consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

NOTE 18 – Subsequent Events

 

During October 2024, the Company issued a total of 394,869 shares of the Company’s Class A Common Stock in exchange for $500 thousand of convertible debt related to convertible Pre-Paid Purchase #1, and none for convertible Pre-Paid Purchase #2. Shares issued are valued at a price disclosed in Note 12 – Convertible Debt.

 

Stockholder Quorum Requirement

 

On November 8, 2024, the Board acted by unanimous consent to amend and restate our bylaws and reduce our quorum requirement, effective immediately. Following the amendment, our quorum requirement was reduced from stockholders holding at least fifty percent (50%) of the issued and outstanding shares to stockholders holding at least thirty-three and one third percent (33.3%) of the issued and outstanding shares. A 33.3% quorum is the lowest quorum requirement permitted under Delaware law and Nasdaq. The Board approved the reduction because it had found it exceedingly difficult to satisfy our former quorum requirement, which is necessary to constitute a valid and duly called meeting of our stockholders. The foregoing description of the Amended and Restated Bylaws of the Company does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Bylaws, a copy of which are attached hereto as Exhibit 3.2 and incorporated herein by reference.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q, with the audited condensed consolidated financial statements included in our Annual Report on 10-K filed with the Securities and Exchange Commission (“SEC”) on May 24, 2024 (the “Annual Report”). References in this report (the “Quarterly Report”) to “we”, “us” or the “Company” refer to CXApp Inc. References to our “management” or our “management team” refer to our officers and directors. The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition for the period ended September 30, 2024.

 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

Overview of Our Business

 

The CXApp SaaS platform offers a suite of leading-edge technology workplace experience solutions including an enterprise employee application, indoor mapping, on-device positioning, augmented reality technologies and an AI-based analytics platform, targeting the emerging hybrid workplace market to provide enhanced experiences across people, places, and things.

 

CXApp creates a connected workplace by reducing app overload, data fragmentation, and complex workflows and streamlines all capabilities through our application platform. All features, services, and integrations are housed in one easy-to-access platform allowing businesses to deliver a more holistic employee experience in a hybrid workplace.

 

Prior to the closing of the Business Combination, CXApp and subsidiaries were wholly-owned subsidiary of Inpixon (“Inpixon”) and the Company’s financial statements consist of CXApp US, CXApp Canada, and CXApp Philippines (collectively the “Company,” “we,” “us” or “our”), show the historical condensed consolidated financial position, results of operations, changes in stockholders’ equity and cash flows of the Company and should be read in conjunction with the accompanying notes thereto. The Company’s condensed consolidated financial statements do not necessarily reflect what the results of operations, financial position, or cash flows would have been had the Company been a separate entity nor are they indicative of future results of the Company.

 

The condensed consolidated operating results of the Company have been specifically identified based on the Company’s existing divisional organization. The majority of the assets and liabilities of the Company have been identified based on the existing divisional structure. The historical costs and expenses reflected in the Company’s financial statements include an allocation for certain corporate and shared service functions. Management believes the assumptions underlying our condensed consolidated financial statements are reasonable. Nevertheless, our condensed consolidated financial statements may not include all of the actual expenses that would have been incurred and may not reflect our results of operations, financial position and cash flows had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We also may incur additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical results of operations, financial position and cash flows.

 

 

RESULTS OF OPERATIONS

 

Comparison of the results of operations for the three months ended September 30, 2024 and September 30, 2023

 

The following table sets forth our results of operations. This data should be read together with our unaudited financial statements and related notes.

 

(in thousands)		Three months ended September 30, 2024				Three months ended September 30, 2023
		(unaudited)				(unaudited)
Condensed Consolidated Statements of Operations Data
Revenues		$	1,897			$	1,770
Cost of revenues			(372	)			(358	)
Gross profit			1,525				1,412
Operating expenses			(4,851	)			(5,641	)
Loss from operations			(3,326	)			(4,229	)
Other income (expense), net			(1,825	)			5,253
Income tax benefit			147				417
Net income (loss)		$	(5,004	)		$	1,441

 

Revenues

 

Revenues for the three months ended September 30, 2024, increased to $1,897 thousand, reflecting a 7% quarter-over-quarter growth, driven by the successful onboarding of new enterprise clients and deeper integration of our platform solutions with existing customers. This sustained revenue increase highlights the growing demand for our hybrid workplace solutions, particularly with our strategic partnerships, such as our collaboration with Google Cloud Marketplace, which we anticipate will significantly accelerate adoption and customer retention. Looking ahead, we expect this momentum to continue as we expand our presence in key markets and leverage our unique AI-based workplace experience technologies.

 

Our subscription-based revenue was 87% of the total revenue for the three months ended September 30, 2024 (Successor) and 80% for the three months ended September 30, 2023 (Successor), which is a 7% increase in the revenue mix because the Company has moved to a full SaaS model versus one-time professional fees.

 

Gross Margin

 

Cost of revenues includes the direct costs to deliver the services including labor and overhead. Cost of revenues were $372 thousand for the three months ended September 30, 2024 (Successor), compared to $358 thousand for the three months ended September 30, 2023 (Successor). The gross profit margin was 80% for the three months ended September 30, 2024 (Successor), compared to 80% for the three months ended September 30, 2023 (Successor).

 

 

Operating Expenses

 

Operating expenses consist primarily of research and development costs, sales and marketing costs, and general and administrative costs. These operating expenses were $4,851 thousand for the three months ended September 30, 2024 (Successor), compared to $5,641 thousand for the three months ended September 30, 2023 (Successor). The decrease in operating expenses of $790 thousand for the same comparative period was attributable to decrease in sales and marketing expenses of $446 thousand, other general and administrative expenses of $329 thousand, research and development expenses of $121 thousand, professional fees through issuance of the Company’s Class A Common Stock amounting to $106 thousand, acquisition related costs of $30 thousand, amortization of intangibles of $14 thousand, and increase in stock-based compensation expense of $256 thousand.

 

Other Income/(Expense)

 

Other income/expense was $1,825 thousand expense, and $5,253 thousand income for the three months ended September 30, 2024 (Successor) and the three months ended September 30, 2023 (Successor), respectively. This decrease of $7,078 thousand in other expense for the same comparative periods was attributable to the decrease in changes in fair value of derivative warrant liabilities of approximately $6,272 thousand, loss on debt extinguishment of approximately $535 thousand and increase in interest expense of approximately $369 thousand and increase in other income of approximately $98 thousand.

 

Provision for Income Taxes

 

There was an income tax benefit of approximately $147 thousand for the three months ended September 30, 2024 (Successor), compared to $417 thousand tax benefit for the three months ended September 30, 2023 (Successor). The income tax benefit for the three months ended September 30, 2024 (Successor) is primarily a result of the release of valuation allowance attributable to acquired intangible assets from the Business Combination recorded in the first quarter of 2023.

 

Comparison of the results of operations for the nine months ended September 30, 2024 (Successor), period ended September 30, 2023 (Successor), and period ended March 14, 2023 (Predecessor)

 

The following table sets forth our results of operations. This data should be read together with our unaudited condensed consolidated financial statements and related notes.

 

		Successor								Predecessor
		(unaudited)
(in thousands)		Nine months ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Condensed Consolidated Statements of Operations Data
Revenues		$	5,481			$	4,027			$	1,620
Cost of revenues			(1,052	)			(925	)			(483	)
Gross profit			4,429				3,102				1,137
Operating expenses			(14,992	)			(11,501	)			(5,518	)
Loss from operations			(10,563	)			(8,399	)			(4,381	)
Other income (expense), net			(5,380	)			(5,090	)			1
Income tax benefit			513				2,958				-
Net loss		$	(15,430	)		$	(10,531	)		$	(4,380	)

 

 

Revenues

 

The Company derives revenue from subscription software as a service (SaaS), design, deployment and implementation services for its enterprise apps business. Revenue was $5,481 thousand for the nine months ended September 30, 2024 (Successor), compared to $4,027 thousand and $1,620 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. The decrease in revenue of $166 thousand, for the comparative periods ended September 30, 2024 and September 30, 2023, was due to a decline in Professional Services revenue. Professional services are related to integration works and other services that may be requested by the customer and as such the decline in revenue is attributable to the professional services revenue because the Company has moved to a full SaaS model versus one-time professional fees.

 

Our subscription-based revenue was 87% of the total revenue for the nine months ended September 30, 2024 (Successor), 79% for the period ended September 30, 2023 (Successor), and 74% for the period ended March 14, 2023 (Predecessor), which is an 8% increase in the revenue mix.

 

Gross Margin

 

Cost of revenues includes the direct costs to deliver the services including labor and overhead. Cost of revenues was $1,052 thousand for the nine months ended September 30, 2024 (Successor), compared to $925 thousand and $483 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. The gross profit margin was 81% for the nine months ended September 30, 2024 (Successor), compared to 77% and 70% for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor). This decrease in cost of revenues of approximately $356 thousand, or approximately 25%, for the comparative periods ended September 30, 2024 and September 30, 2023, was attributable to the decrease in professional services revenue related costs.

 

Operating Expenses

 

Operating expenses consist primarily of research and development costs, sales and marketing costs, and general and administrative costs. These operating expenses were $14,992 thousand for the nine months ended September 30, 2024 (Successor), compared to $11,501 thousand and $5,518 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively.

 

The decrease in operating expenses of $2,027 thousand for the same comparative period was attributable to decrease in acquisition cost of approximately $194 thousand, general and administrative expenses of $840 thousand due to non-renewal of contract with contractors and reduction of D&O insurance premium, sales and marketing expenses of $706 thousand due to change in commission plan and employee restructuring effective in January 2024, research and development of approximately $20 thousand and amortization of intangibles of $267 thousand.

 

Other Income/(Expense)

 

Other income/expense was $5,380 thousand expense for the nine months ended September 30, 2024 (Successor), and $5,090 thousand expense and $1 thousand income for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. This increase in other expense of $291 thousand for the same comparative period was attributable to decrease in changes in fair value of derivative warrant liabilities of $1,559 thousand and the increase in interest expense of approximately $1,320 thousand was primarily attributable to the one-time monitoring fee relating to the Promissory Note issued on December 15, 2023 and convertible debt, loss on debt extinguishment of $535 thousand and decrease in foreign exchange loss of approximately $5 thousand.

 

Provision for Income Taxes

 

There was an income tax benefit of approximately $513 thousand for the nine months ended September 30, 2024 (Successor), compared to $2,958 thousand tax benefit for the period ended September 30, 2023 (Successor). The income tax benefit for the nine months ended September 30, 2024 (Successor) is primarily a result of the release of valuation allowance attributable to acquired intangible assets from the Business Combination recorded in the first quarter of 2023.

 

 

Non-GAAP Financial information

 

EBITDA

 

The Company includes a non-GAAP measure that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income, taxes, depreciation and amortization. Adjusted EBITDA is used by our management as the matrix in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items, non- recurring items and non-cash stock-based compensation. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.

 

Adjusted EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies.

 

This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as an alternative to information reported in accordance with U.S. GAAP. The table below presents our adjusted EBITDA, reconciled to net income, which is the most comparable GAAP measure, for the periods indicated (in thousands).

 

		Successor																Predecessor
		(unaudited)
		Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Nine Months Ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Net income (loss)		$	(5,004	)		$	1,441			$	(15,430	)		$	(10,531	)		$	(4,380	)
Interest expense and other income			274				(57	)			1,220				(61	)			(1	)
Income tax benefit			(147	)			(417	)			(513	)			(2,958	)			-
Depreciation and amortization			703				721				2,113				1,562				1,034
EBITDA			(4,174	)			1,688				(12,610	)			(11,988	)			(3,347	)
Adjusted for:
Changes in fair value of warrant liabilities			1,052				(5,220	)			3,575				5,134				-
Loss on debt extinguishment			535				-				535				-				-
Unrealized (gains) losses			(36	)			24				50				20				(32	)
Stock-based compensation - compensation and related benefits			909				759				2,345				857				158
Adjusted EBITDA		$	(1,714	)		$	(2,749	)		$	(6,105	)		$	(5,977	)		$	(3,221	)

 

We rely on Adjusted EBITDA, which is a non-GAAP financial measure for the following:

 

●

To compare our current operating results with corresponding periods and with the operating results of other companies in our industry;

 

●

As a basis for allocating resources to various projects;

 

●

As a measure to evaluate potential economic outcomes of acquisitions, operational alternatives and strategic decisions; and

 

●

To evaluate internally the performance of our personnel.

 

 

We have presented Adjusted EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net income (loss). By including this information, we can provide investors with a more complete understanding of our business. Specifically, we present Adjusted EBITDA as supplemental disclosure because of the following:

 

●

We believe Adjusted EBITDA is a useful tool for investors to assess the operating performance of our business without the effect of interest, income taxes, depreciation and amortization and other non- cash items including acquisition transaction and financing costs, impairment, unrealized gains, stock based compensation, interest income and expense, and income tax benefit.

 

●

We believe that it is useful to provide to investors with a standard operating metric used by management to evaluate our operating performance; and

 

●

We believe that the use of Adjusted EBITDA is helpful to compare our results to other companies.

 

Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net income (loss) and the other condensed consolidated statement of operations data prepared in accordance with GAAP. Some of these limitations include the fact that:

 

●

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

 

●

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 

●

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

 

●

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

 

●

Adjusted EBITDA does not reflect income or other taxes or the cash requirements to make any tax payments; and

 

●

Other companies in our industry may calculate Adjusted EBITDA differently than we do, thereby potentially limiting its usefulness as a comparative measure.

 

Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and providing Adjusted EBITDA only as supplemental information.

 

Financing Obligations and Requirements

 

As of November 12, 2024, the Company owed approximately $2,731 thousand in principal and accrued interest payable of $20 thousand payable within the next three months related to the December 2023 Note. The interest rate is 10%. See Note 9 of the Notes to Unaudited Condensed Consolidated Financial Statements.

 

Net cash used in operating activities during the nine months ended September 30, 2024 (Successor) of $4,629 thousand consists of net loss of $15,430 thousand offset by non-cash adjustments of approximately $9,826 thousand and net cash changes in operating assets and liabilities of approximately $975 thousand. On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchases has the original principal amount of $3,675 thousand. For the period ended September 30, 2024, the Company received net proceeds of $3,480 thousand, reflecting original issue discount of $175 and Lender’s transaction cost of $20 thousand. Given our current cash balances and budgeted cash flow requirements, the Company believes such funds are sufficient to satisfy its working capital needs, capital asset purchases, debt repayments and other liquidity requirements associated with its existing operations for the next 12 months from the issuance date of the financial statements. The Company may continue to pursue strategic transactions and may raise additional capital as needed, using our equity securities and/or cash and debt financings in combinations appropriate for each acquisition.

 

 

Liquidity and Capital Resources as of September 30, 2024

 

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities.

 

As of September 30, 2024 (Successor), the Company has a working capital deficiency of approximately $7,404 thousand and cash of approximately $5,082 thousand. For the period ended September 30, 2024 (Successor), the Company incurred net loss of approximately $15,430 thousand and used approximately $4,629 thousand of cash for operating activities.

 

The Management believes that the current liquidity position, including the cash raised under the promissory note of $3,000 thousand payable by December 2024, and the Securities Purchase Agreement (the “SPA”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001, has the ability to mitigate any going concern indicators for a period of at least one year from the date these financial statements are issued.

 

The Company’s net cash flows used in operating, investing and financing activities and certain balances are as follows (in thousands):

 

		Successor								Predecessor
		(unaudited)
		Nine months ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Cash flows (used in) provided by
Net cash used in operating activities		$	(4,629	)		$	(8,937	)		$	(5,144	)
Net cash provided by (used in) investing activities			(30	)			9,956				(54	)
Net cash provided by financing activities			3,480				4,674				8,892
Effect of exchange rates on cash			(14	)			(17	)			1
Net increase (decrease) in cash and cash equivalents		$	(1,193	)		$	5,676			$	3,695

 

		September 30, 2024				December 31, 2023
		(unaudited)
Cash and cash equivalents		$	5,082			$	6,275
Working capital deficit		$	(7,404	)		$	(1,287	)

 

Operating Activities for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor)

 

		Successor								Predecessor
		(unaudited)
		Nine months ended September 30, 2024				Period from March 15, 2023 to September 30, 2023				Period from January 1, 2023 to March 14, 2023
Net loss		$	(15,430	)		$	(10,531	)		$	(4,380	)
Non-cash income and expenses			9,826				4,805				1,200
Net change in operating assets and liabilities			975				(3,211	)			(1,964	)
Net cash used in operating activities		$	(4,629	)		$	(8,937	)		$	(5,144	)

 

 

Cash Flows from Investing Activities for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor)

 

Net cash flows used in investing activities during the nine months ended September 30, 2024 (Successor) was approximately $30 thousand compared to net cash flows provided by and used in investing activities for the period from March 15, 2023 to September 30, 2023 (Successor) and during the period from January 1, 2023 to March 14, 2023 (Predecessor) of approximately $9,956 thousand and $54 thousand, respectively. Cash flows related to investing activities during the nine months ended September 30, 2024 (Successor) include $30 thousand for the purchase of property and equipment. Cash flows related to investing activities during the period from March 15, 2023 to September 30, 2023 (Successor) include $47 thousand for the purchase of property and equipment, and $10,003 thousand for cash acquired in connection with the Business Combination. Cash flows related to investing activities during the period from January 1, 2023 to March 14, 2023 (Predecessor) include $9 thousand for the purchase of property and equipment, and $45 thousand for the investment in capitalized software.

 

Cash Flows from Financing Activities for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor)

 

Net cash flows provided by financing activities during the nine months ended September 30, 2024 (Successor) was approximately $3,480 thousand compared to net cash flows provided by financing activities for the period from March 15, 2023 to September 30, 2023 (Successor) and during the period from January 1, 2023 to March 14, 2023 (Predecessor) of approximately $4,674 thousand and $8,892 thousand, respectively. On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase has the original principal amount of $3,675 thousand. For the nine months ended, the Company received net proceeds of $3,480 thousand, reflecting original issue discount of $175 thousand and Lender’s transaction cost of $20 thousand. During the period from March 15, 2023 to September 30, 2023 (Successor), the Company paid $328 thousand in cash outflows from a repayment of a related party promissory note, Company received $5,002 thousand in cash inflows from warrant exercises. During the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company received $9,089 thousand in incoming cash flows from parent, and paid $197 thousand in cash outflows from a payment of an acquisition liability.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

 

Contractual Obligations and Commitments

 

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our balance sheet. As of September 30, 2024 (Successor), the total obligation for operating leases is approximately $585 thousand, of which approximately $377 thousand is expected to be paid in the next twelve months.

 

Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

 

Critical Accounting Policies and Estimates

 

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

 

Critical Accounting Policies

 

Our significant accounting policies are discussed in Note 2 of the unaudited condensed consolidated financial statements which are included elsewhere in this filing.

 

Critical Accounting Estimates

 

We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on our unaudited condensed consolidated financial statements.

 

The Management believes there have been no significant changes during the nine months ended September 30, 2024, to the items disclosed as critical accounting estimates in management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on May 24, 2024.

 

JOBS Act Accounting Election

 

Following the transaction, CXApp will be an “emerging growth company” as defined in the JOBS Act. As such, the Company will be eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. The Company has not made a decision whether to take advantage of any or all of these exemptions. If the Company does take advantage of some or all of these exemptions, some investors may find the Company’s common stock less attractive. The result may be a less active trading market for the Company’s common stock and its stock price may be more volatile.

 

In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for complying with new or revised accounting standards, meaning that CXApp, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of this extended transition period, and therefore our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards. Section 107 of the JOBS Act provides that our decision not to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

We conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024. The material weakness and remediation activities were discussed in Part II, Item 9A “Controls and Procedures” of the Company’s 2023 Annual Report filed on May 24, 2024.

 

Changes in Internal Control over Financial Reporting

 

The Company has made changes in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended September 30, 2024 (Successor) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

We have initiated meaningful improvements to our internal controls during the third quarter of 2024. Notably, on August 19, 2024, we appointed Joy Mbanugo as our new Chief Financial Officer. Ms. Mbanugo brings a wealth of experience in financial management, compliance, and operational oversight, and she has quickly become instrumental in spearheading enhancements to our internal control framework.

 

Her initial focus has been on addressing the material weaknesses identified in our financial reporting processes, with an emphasis on enhancing documentation, streamlining the review process, and ensuring alignment with SEC regulations and industry best practices. The implementation of these measures is expected to improve our control environment and mitigate the risks associated with our prior control deficiencies, ultimately driving more accurate and timely financial reporting in future periods.

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There is no material litigation, arbitration or governmental proceeding currently pending against CXApp or any members of its management team in their capacity as such.

 

Item 1A. Risk Factors

 

Factors that could cause our actual results to differ materially from those in this Quarterly Report include the risk factors described in the Annual Report on Form 10-K filed with the SEC. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Insider Trading Arrangements and Policies

 

During the nine months ended September 30, 2024, no director or officer of CXApp notified CXApp of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K

 

 

Item 6. Exhibits

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

 

2.1(1)		Agreement and Plan of Merger, dated as of September 25, 2022, by and among KINS Technology Group Inc., Inpixon, CXApp Holding Corp. and KINS Merger Sub Inc.
2.2(1)		Separation and Distribution Agreement, dated as of September 25, 2022, by and among KINS Technology Group Inc., Inpixon, CXApp Holding Corp. and Design Reactor, Inc.
2.3(1)		Sponsor Support Agreement, dated as of September 25, 2022, by and among KINS Capital LLC, KINS Technology Group Inc., Inpixon and CXApp Holding Corp.
3.1(2)		Amended and Restated Certificate of Incorporation of the Company.
3.2*		Amended and Restated Bylaws of the Company, effective as of November 8, 2024.
4.1		Warrant Agreement, dated as of December 14, 2020, by and between KINS and Continental Stock Transfer & Trust Company, as warrant agent (incorporated herein by reference from Exhibit 4.1 on KINS’ Form 8-K, filed December 21, 2020).
4.2(2)		Specimen CXApp Inc. Class A Common Stock Certificate.
4.3(2)		Specimen CXApp Inc. Class C Common Stock Certificate.
4.4(2)		Specimen Warrant Certificate of the Company.
10.1(2)(#)		Employee Matters Agreement, dated March 14, 2023, by and among KINS, KINS Merger Sub Inc., Inpixon, and Legacy CXApp.
10.2(2)		Tax Matters Agreement, dated March 14, 2023, by and among KINS, Inpixon, and Legacy CXApp.
10.3(2)		Transition Services Agreement, dated March 14, 2023, by and between Inpixon and Legacy CXApp.
10.4(2)(#)		Consulting Agreement, dated March 14, 2023, by and between Design Reactor, Inc. and 3AM, LLC.
10.5(#)		Employment Agreement, dated as of January 9, 2023, by and between Design Reactor, Inc. and Khurram Sheikh. (incorporated by reference to the Company’s Current Report on Form 8-K filed on March 31, 2023)
10.6(2)(#)		CXApp Inc. 2023 Equity Incentive Plan.
10.7(3)		Securities Purchase Agreement, dated as of May 22, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
10.8*		Exchange Agreement, dated as of June 15, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
10.9*		Exchange Agreement, dated as of July 19, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
10.10*		Exchange Agreement, dated as of August 8, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
10.11*		Exchange Agreement, dated as of August 13, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
10.12*		Exchange Agreement, dated as of August 16, 2024, by and between CXApp Inc. and Streeterville Capital, LLC.
14.01(2)		Code of Ethics and Business Conduct of CXApp Inc.
31.1(*)		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(*)		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(**)		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(**)		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

 

	*	Filed herewith.
	**	Furnished herewith.
	(1)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 26, 2022.
	(2)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 20, 2023.
	(3)	Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 24, 2024.
	#	Indicates a management contract or compensatory plan.

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	CXAPP INC.
Date: November 12, 2024	By:	/s/ Khurram Sheikh
	Name:	Khurram Sheikh
	Title:	Chairman, Chief Executive Officer and Director (Principal Executive Officer)
Date: November 12, 2024	By:	/s/ Joy Mbanugo
	Name:	Joy Mbanugo
	Title:	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

 

 

Exhibit 3.2

 

Effective as of November 8, 2024

 

AMENDED AND RESTATED
BY LAWS
OF
CXAPP INC.
(THE “CORPORATION”)

 

Article I
OFFICES

 

Section 1.1. Registered Office. The registered office of the Corporation within the State of Delaware shall be located at either (a) the principal place of business of the Corporation in the State of Delaware or (b) the office of the corporation or individual acting as the Corporation’s registered agent in Delaware.

 

Section 1.2. Additional Offices. The Corporation may, in addition to its registered office in the State of Delaware, have such other offices and places of business, both within and outside the State of Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or as the business and affairs of the Corporation may require.

 

Article II
STOCKHOLDERS MEETINGS

 

Section 2.1. Annual Meetings. The annual meeting of stockholders shall be held at such place, either within or without the State of Delaware, and time and on such date as shall be determined by the Board and stated in the notice of the meeting, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a). At each annual meeting, the stockholders entitled to vote on such matters shall elect those directors of the Corporation to fill any term of a directorship that expires on the date of such annual meeting and may transact any other business as may properly be brought before the meeting.

 

Section 2.2. Special Meetings. Subject to the rights of the holders of any outstanding series of the preferred stock of the Corporation (“Preferred Stock”), and to the requirements of applicable law, special meetings of stockholders, for any purpose or purposes, may be called only by the Chairman of the Board, or a Chief Executive Officer, or the Board pursuant to a resolution adopted by a majority of the Board, and may not be called by any other person. Special meetings of stockholders shall be held at such place, either within or without the State of Delaware, and at such time and on such date as shall be determined by the Board and stated in the Corporation’s notice of the meeting, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a).

 

 

Section 2.3. Notices. Written notice of each stockholders meeting stating the place, if any, date, and time of the meeting, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting and the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, shall be given in the manner permitted by Section 9.3 to each stockholder entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting, by the Corporation not less than 10 nor more than 60 days before the date of the meeting unless otherwise required by the General Corporation Law of the State of Delaware (the “DGCL”). If said notice is for a stockholders meeting other than an annual meeting, it shall in addition state the purpose or purposes for which the meeting is called, and the business transacted at such meeting shall be limited to the matters so stated in the Corporation’s notice of meeting (or any supplement thereto). Any meeting of stockholders as to which notice has been given may be postponed, and any meeting of stockholders as to which notice has been given may be cancelled, by the Board upon public announcement (as defined in Section 2.7(c)) given before the date previously scheduled for such meeting.

 

Section 2.4. Quorum. Except as otherwise provided by applicable law, the Corporation’s Certificate of Incorporation, as the same may be amended or restated from time to time (the “Certificate of Incorporation”) or these By Laws, the presence, in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock of the Corporation representing one-third of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting. If a quorum shall not be present or represented by proxy at any meeting of the stockholders of the Corporation, the chairman of the meeting may adjourn the meeting from time to time in the manner provided in Section 2.6 until a quorum shall attend. The stockholders present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. The foregoing shall not limit the right of the Corporation or any such other corporation to vote shares held by it in a fiduciary capacity.

 

Section 2.5. Voting of Shares.

 

(a) Voting Lists. The Secretary of the Corporation (the “Secretary”) shall prepare, or shall cause the officer or agent who has charge of the stock ledger of the Corporation to prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders of record entitled to vote at such meeting; provided, however, that if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order and showing the address and the number and class of shares registered in the name of each stockholder. Nothing contained in this Section 2.5(a) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If a meeting of stockholders is to be held solely by means of remote communication as permitted by Section 9.5(a), the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required by this Section 2.5(a) or to vote in person or by proxy at any meeting of stockholders.

 

 

(b) Manner of Voting. At any stockholders meeting, every stockholder entitled to vote may vote in person or by proxy. If authorized by the Board, the voting by stockholders or proxy holders at any meeting conducted by remote communication may be effected by a ballot submitted by electronic transmission (as defined in Section 9.3), provided that any such electronic transmission must either set forth or be submitted with information from which the Corporation can determine that the electronic transmission was authorized by the stockholder or proxy holder. The Board, in its discretion, or the chairman of the meeting of stockholders, in such person’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

 

(c) Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Proxies need not be filed with the Secretary until the meeting is called to order, but shall be filed with the Secretary before being voted. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, either of the following shall constitute a valid means by which a stockholder may grant such authority. No stockholder shall have cumulative voting rights.

 

(i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

 

(ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

 

 

(d) Required Vote. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, at all meetings of stockholders at which a quorum is present, the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. All other matters presented to the stockholders at a meeting at which a quorum is present shall be determined by the vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon, unless the matter is one upon which, by applicable law, the Certificate of Incorporation, these By Laws or applicable stock exchange rules, a different vote is required, in which case such provision shall govern and control the decision of such matter.

 

(e) Inspectors of Election. The Board may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, who may be employees of the Corporation or otherwise serve the Corporation in other capacities, to act at such meeting of stockholders or any adjournment thereof and to make a written report thereof. The Board may appoint one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspectors of election or alternates are appointed by the Board, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain and report the number of outstanding shares and the voting power of each; determine the number of shares present in person or represented by proxy at the meeting and the validity of proxies and ballots; count all votes and ballots and report the results; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. No person who is a candidate for an office at an election may serve as an inspector at such election. Each report of an inspector shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors.

 

Section 2.6. Adjournments. Any meeting of stockholders, annual or special, may be adjourned by the chairman of the meeting, from time to time, whether or not there is a quorum, to reconvene at the same or some other place. Notice need not be given of any such adjourned meeting if the date, time, and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting the stockholders, or the holders of any class or series of stock entitled to vote separately as a class, as the case may be, may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with Section 9.2, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

 

 

Section 2.7. Advance Notice for Business.

 

(a) Annual Meetings of Stockholders. No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the annual meeting by or at the direction of the Board or (iii) otherwise properly brought before the annual meeting by any stockholder of the Corporation (x) who is a stockholder of record entitled to vote at such annual meeting on the date of the giving of the notice provided for in this Section 2.7(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting and (y) who complies with the notice procedures set forth in this Section 2.7(a). Notwithstanding anything in this Section 2.7(a) to the contrary, only persons nominated for election as a director to fill any term of a directorship that expires on the date of the annual meeting pursuant to Section 3.2 will be considered for election at such meeting.

 

(i) In addition to any other applicable requirements, for business (other than nominations) to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary and such business must otherwise be a proper matter for stockholder action. Subject to Section 2.7(a)(iii), a stockholder’s notice to the Secretary with respect to such business, to be timely, must be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date (or if there has been no prior annual meeting), notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Corporation. The public announcement of an adjournment or postponement of an annual meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this Section 2.7(a).

 

(ii) To be in proper written form, a stockholder’s notice to the Secretary with respect to any business (other than nominations) must set forth as to each such matter such stockholder proposes to bring before the annual meeting (A) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event such business includes a proposal to amend these By Laws, the language of the proposed amendment) and the reasons for conducting such business at the annual meeting, (B) the name and record address of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and by the beneficial owner, if any, on whose behalf the proposal is made, (D) a description of all arrangements or understandings between such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and any other person or persons (including their names) in connection with the proposal of such business by such stockholder, (E) any material interest of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made in such business and (F) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

 

 

(iii) The foregoing notice requirements of this Section 2.7(a) shall be deemed satisfied by a stockholder as to any proposal (other than nominations) if the stockholder has notified the Corporation of such stockholder’s intention to present such proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such stockholder has complied with the requirements of such Rule for inclusion of such proposal in a proxy statement prepared by the Corporation to solicit proxies for such annual meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.7(a), provided, however, that once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.7(a) shall be deemed to preclude discussion by any stockholder of any such business. If the Board or the chairman of the annual meeting determines that any stockholder proposal was not made in accordance with the provisions of this Section 2.7(a) or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 2.7(a), such proposal shall not be presented for action at the annual meeting. Notwithstanding the foregoing provisions of this Section 2.7(a), if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such matter may have been received by the Corporation.

 

(iv) In addition to the provisions of this Section 2.7(a), a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 2.7(a) shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting only pursuant to Section 3.2.

 

(c) Public Announcement. For purposes of these By Laws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed or furnished by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act (or any successor thereto).

 

 

Section 2.8. Conduct of Meetings. The chairman of each annual and special meeting of stockholders shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, any Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act of a Chief Executive Officer or if a Chief Executive Officer is not a director, the President (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the President or if the President is not a director, such other person as shall be appointed by the Board. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting. The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with these By Laws or such rules and regulations as adopted by the Board, the chairman of any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary of each annual and special meeting of stockholders shall be the Secretary or, in the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary so appointed to act by the chairman of the meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

Section 2.9. Consents in Lieu of Meeting. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock entitled to vote thereon having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

 

Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required by this section and the DGCL to the Corporation, written consents signed by a sufficient number of holders entitled to vote to take action are delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

 

 

Article III
DIRECTORS

 

Section 3.1. Powers; Number. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By Laws required to be exercised or done by the stockholders. Directors need not be stockholders or residents of the State of Delaware. Subject to the Certificate of Incorporation, the number of directors shall be fixed exclusively by resolution of the Board.

 

Section 3.2. Advance Notice for Nomination of Directors.

 

(a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of one or more series of Preferred Stock to elect directors. Nominations of persons for election to the Board at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as set forth in the Corporation’s notice of such special meeting, may be made (I) by or at the direction of the Board or (ii) by any stockholder of the Corporation (x) who is a stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in this Section 3.2 and on the record date for the determination of stockholders entitled to vote at such meeting and (y) who complies with the notice procedures set forth in this Section 3.2.

 

(b) In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice to the Secretary must be received by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date (or if there has been no prior annual meeting), notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting was first made by the Corporation; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this Section 3.2.

 

 

(c) Notwithstanding anything in paragraph (b) to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public announcement by the Corporation naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board before the close of business on the 90th day prior to the anniversary date of the immediately preceding annual meeting of stockholders, a stockholder’s notice required by this Section 3.2 shall also be considered timely, but only with respect to nominees for the additional directorships created by such increase that are to be filled by election at such annual meeting, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the date on which such public announcement was first made by the Corporation.

 

(d) To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice (A) the name and record address of such stockholder as they appear on the Corporation’s books and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, (B) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made, (C) a description of all arrangements or understandings relating to the nomination to be made by such stockholder among such stockholder, the beneficial owner, if any, on whose behalf the nomination is made, each proposed nominee and any other person or persons (including their names), (D) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder and the beneficial owner, if any, on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

 

(e) If the Board or the chairman of the meeting of stockholders determines that any nomination was not made in accordance with the provisions of this Section 3.2, or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 3.2, then such nomination shall not be considered at the meeting in question. Notwithstanding the foregoing provisions of this Section 3.2, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders of the Corporation to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.

 

(f) In addition to the provisions of this Section 3.2, a stockholder shall also comply with all of the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 3.2 shall be deemed to affect any rights of the holders of Preferred Stock to elect directors pursuant to the Certificate of Incorporation.

 

 

Section 3.3. Compensation. Unless otherwise restricted by the Certificate of Incorporation or these By Laws, the Board shall have the authority to fix the compensation of directors, including for service on a committee of the Board, and may be paid either a fixed sum for attendance at each meeting of the Board or other compensation as director. The directors may be reimbursed their expenses, if any, of attendance at each meeting of the Board. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.

 

Article IV
BOARD MEETINGS

 

Section 4.1. Annual Meetings. The Board shall meet as soon as practicable after the adjournment of each annual stockholders meeting at the place of the annual stockholders meeting unless the Board shall fix another time and place and give notice thereof in the manner required herein for special meetings of the Board. No notice to the directors shall be necessary to legally convene this meeting, except as provided in this Section 4.1.

 

Section 4.2. Regular Meetings. Regularly scheduled, periodic meetings of the Board may be held without notice at such times, dates and places (within or without the State of Delaware) as shall from time to time be determined by the Board.

 

Section 4.3. Special Meetings. Special meetings of the Board (a) may be called by the Chairman of the Board or President and (b) shall be called by the Chairman of the Board, President or Secretary on the written request of at least a majority of directors then in office, or the sole director, as the case may be, and shall be held at such time, date and place (within or without the State of Delaware) as may be determined by the person calling the meeting or, if called upon the request of directors or the sole director, as specified in such written request. Notice of each special meeting of the Board shall be given, as provided in Section 9.3, to each director (i) at least 24 hours before the meeting if such notice is oral notice given personally or by telephone or written notice given by hand delivery or by means of a form of electronic transmission and delivery; (ii) at least two days before the meeting if such notice is sent by a nationally recognized overnight delivery service; and (iii) at least five days before the meeting if such notice is sent through the United States mail. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Certificate of Incorporation, or these By Laws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting. A special meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 9.4.

 

 

Section 4.4. Quorum; Required Vote. A majority of the Board shall constitute a quorum for the transaction of business at any meeting of the Board, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these By Laws. If a quorum shall not be present at any meeting, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

Section 4.5. Consent In Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By Laws, any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions (or paper reproductions thereof) are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 4.6. Organization. The chairman of each meeting of the Board shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, any Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act) of a Chief Executive Officer or if a Chief Executive Officer is not a director, the President (if he or she shall be a director) or in the absence (or inability or refusal to act) of the President or if the President is not a director, a chairman elected from the directors present. The Secretary shall act as secretary of all meetings of the Board. In the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary shall perform the duties of the Secretary at such meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

Article V
COMMITTEES OF DIRECTORS

 

Section 5.1. Establishment. The Board may by resolution of the Board designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Each committee shall keep regular minutes of its meetings and report the same to the Board when required by the resolution designating such committee. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.

 

Section 5.2. Available Powers. Any committee established pursuant to Section 5.1 hereof, to the extent permitted by applicable law and by resolution of the Board, shall have and may exercise all of the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it.

 

 

Section 5.3. Alternate Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member.

 

Section 5.4. Procedures. Unless the Board otherwise provides, the time, date, place, if any, and notice of meetings of a committee shall be determined by such committee. At meetings of a committee, a majority of the number of members of the committee (but not including any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with, such meeting) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by applicable law, the Certificate of Incorporation, these By Laws or the Board. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board otherwise provides and except as provided in these By Laws, each committee designated by the Board may make, alter, amend and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board is authorized to conduct its business pursuant to Article III and Article IV of these By Laws.

 

Article VI
OFFICERS

 

Section 6.1. Officers. The officers of the Corporation elected by the Board shall be one or more Chief Executive Officers, a Chief Financial Officer, a Secretary and such other officers (including without limitation, a Chairman of the Board, Presidents, Vice Presidents, Assistant Secretaries and a Treasurer) as the Board from time to time may determine. Officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article VI. Such officers shall also have such powers and duties as from time to time may be conferred by the Board. Any Chief Executive Officer or President may also appoint such other officers (including without limitation one or more Vice Presidents and Controllers) as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers shall have such powers and duties and shall hold their offices for such terms as may be provided in these By Laws or as may be prescribed by the Board or, if such officer has been appointed by any Chief Executive Officer or President, as may be prescribed by the appointing officer.

 

(a) Chairman of the Board. The Chairman of the Board shall preside when present at all meetings of the stockholders and the Board. The Chairman of the Board shall have general supervision and control of the acquisition activities of the Corporation subject to the ultimate authority of the Board, and shall be responsible for the execution of the policies of the Board with respect to such matters. In the absence (or inability or refusal to act) of the Chairman of the Board, any Chief Executive Officer (if he or she shall be a director) shall preside when present at all meetings of the stockholders and the Board. The powers and duties of the Chairman of the Board shall not include supervision or control of the preparation of the financial statements of the Corporation (other than through participation as a member of the Board). The position of Chairman of the Board and Chief Executive Officer may be held by the same person and may be held by more than one person.

 

 

(b) Chief Executive Officer. One or more Chief Executive Officers shall be the chief executive officer(s) of the Corporation, shall have general supervision of the affairs of the Corporation and general control of all of its business subject to the ultimate authority of the Board, and shall be responsible for the execution of the policies of the Board with respect to such matters, except to the extent any such powers and duties have been prescribed to the Chairman of the Board pursuant to Section 6.1(a) above. In the absence (or inability or refusal to act) of the Chairman of the Board, any Chief Executive Officer (if he or she shall be a director) shall preside when present at all meetings of the stockholders and the Board. The position of Chief Executive Officer and President may be held by the same person and may be held by more than one person.

 

(c) President. The President shall make recommendations to any Chief Executive Officer on all operational matters that would normally be reserved for the final executive responsibility of any Chief Executive Officer. In the absence (or inability or refusal to act) of the Chairman of the Board and a Chief Executive Officer, the President (if he or she shall be a director) shall preside when present at all meetings of the stockholders and the Board. The President shall also perform such duties and have such powers as shall be designated by the Board. The position of President and Chief Executive Officer may be held by the same person.

 

(d) Vice Presidents. In the absence (or inability or refusal to act) of the President, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board) shall perform the duties and have the powers of the President. Any one or more of the Vice Presidents may be given an additional designation of rank or function.

 

(e) Secretary.

 

(i) The Secretary shall attend all meetings of the stockholders, the Board and (as required) committees of the Board and shall record the proceedings of such meetings in books to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board and shall perform such other duties as may be prescribed by the Board, the Chairman of the Board, any Chief Executive Officer or President. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary, or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing thereof by his or her signature.

 

(ii) The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, if one has been appointed, a stock ledger, or duplicate stock ledger, showing the names of the stockholders and their addresses, the number and classes of shares held by each and, with respect to certificated shares, the number and date of certificates issued for the same and the number and date of certificates cancelled.

 

 

(f) Assistant Secretaries. The Assistant Secretary or, if there be more than one, the Assistant Secretaries in the order determined by the Board shall, in the absence (or inability or refusal to act) of the Secretary, perform the duties and have the powers of the Secretary.

 

(g) Chief Financial Officer. The Chief Financial Officer shall perform all duties commonly incident to that office (including, without limitation, the care and custody of the funds and securities of the Corporation, which from time to time may come into the Chief Financial Officer’s hands and the deposit of the funds of the Corporation in such banks or trust companies as the Board, any Chief Executive Officer or the President may authorize).

 

(h) Treasurer. The Treasurer shall, in the absence (or inability or refusal to act) of the Chief Financial Officer, perform the duties and exercise the powers of the Chief Financial Officer.

 

Section 6.2. Term of Office; Removal; Vacancies. The elected officers of the Corporation shall be appointed by the Board and shall hold office until their successors are duly elected and qualified by the Board or until their earlier death, resignation, retirement, disqualification, or removal from office. Any officer may be removed, with or without cause, at any time by the Board. Any officer appointed by any Chief Executive Officer or President may also be removed, with or without cause, by any Chief Executive Officer or President, as the case may be, unless the Board otherwise provides. Any vacancy occurring in any elected office of the Corporation may be filled by the Board. Any vacancy occurring in any office appointed by any Chief Executive Officer or President may be filled by any Chief Executive Officer, or President, as the case may be, unless the Board then determines that such office shall thereupon be elected by the Board, in which case the Board shall elect such officer.

 

Section 6.3. Other Officers. The Board may delegate the power to appoint such other officers and agents, and may also remove such officers and agents or delegate the power to remove same, as it shall from time to time deem necessary or desirable.

 

Section 6.4. Multiple Officeholders; Stockholder and Director Officers. Any number of offices may be held by the same person unless the Certificate of Incorporation or these By Laws otherwise provide. Officers need not be stockholders or residents of the State of Delaware.

 

Article VII
SHARES

 

Section 7.1. Certificated and Uncertificated Shares. The shares of the Corporation may be certificated or uncertificated, subject to the sole discretion of the Board and the requirements of the DGCL.

 

 

Section 7.2. Multiple Classes of Stock. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the Corporation shall (a) cause the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights to be set forth in full or summarized on the face or back of any certificate that the Corporation issues to represent shares of such class or series of stock or (b) in the case of uncertificated shares, within a reasonable time after the issuance or transfer of such shares, send to the registered owner thereof a written notice containing the information required to be set forth on certificates as specified in clause (a) above; provided, however, that, except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of such certificate or, in the case of uncertificated shares, on such written notice a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

 

Section 7.3. Signatures. Each certificate representing capital stock of the Corporation shall be signed by or in the name of the Corporation by (a) the Chairman of the Board, any Chief Executive Officer, the President or a Vice President and (b) the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation. Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar on the date of issue.

 

Section 7.4. Consideration and Payment for Shares.

 

(a) Subject to applicable law and the Certificate of Incorporation, shares of stock may be issued for such consideration, having in the case of shares with par value a value not less than the par value thereof, and to such persons, as determined from time to time by the Board. The consideration may consist of any tangible or intangible property or any benefit to the Corporation including cash, promissory notes, services performed, contracts for services to be performed or other securities, or any combination thereof.

 

(b) Subject to applicable law and the Certificate of Incorporation, shares may not be issued until the full amount of the consideration has been paid, unless upon the face or back of each certificate issued to represent any partly paid shares of capital stock or upon the books and records of the Corporation in the case of partly paid uncertificated shares, there shall have been set forth the total amount of the consideration to be paid therefor and the amount paid thereon up to and including the time said certificate representing certificated shares or said uncertificated shares are issued.

 

 

Section 7.5. Lost, Destroyed or Wrongfully Taken Certificates.

 

(a) If an owner of a certificate representing shares claims that such certificate has been lost, destroyed or wrongfully taken, the Corporation shall issue a new certificate representing such shares or such shares in uncertificated form if the owner: (i) requests such a new certificate before the Corporation has notice that the certificate representing such shares has been acquired by a protected purchaser; (ii) if requested by the Corporation, delivers to the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, wrongful taking or destruction of such certificate or the issuance of such new certificate or uncertificated shares; and (iii) satisfies other reasonable requirements imposed by the Corporation.

 

(b) If a certificate representing shares has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the Corporation of that fact within a reasonable time after the owner has notice of such loss, apparent destruction or wrongful taking and the Corporation registers a transfer of such shares before receiving notification, the owner shall be precluded from asserting against the Corporation any claim for registering such transfer or a claim to a new certificate representing such shares or such shares in uncertificated form.

 

Section 7.6. Transfer of Stock.

 

(a) If a certificate representing shares of the Corporation is presented to the Corporation with an endorsement requesting the registration of transfer of such shares or an instruction is presented to the Corporation requesting the registration of transfer of uncertificated shares, the Corporation shall register the transfer as requested if:

 

(i) in the case of certificated shares, the certificate representing such shares has been surrendered;

 

(ii) (A) with respect to certificated shares, the endorsement is made by the person specified by the certificate as entitled to such shares; (B) with respect to uncertificated shares, an instruction is made by the registered owner of such uncertificated shares; or (C) with respect to certificated shares or uncertificated shares, the endorsement or instruction is made by any other appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

 

(iii) the Corporation has received a guarantee of signature of the person signing such endorsement or instruction or such other reasonable assurance that the endorsement or instruction is genuine and authorized as the Corporation may request;

 

(iv) the transfer does not violate any restriction on transfer imposed by the Corporation that is enforceable in accordance with Section 7.8(a); and

 

(v) such other conditions for such transfer as shall be provided for under applicable law have been satisfied.

 

 

(b) Whenever any transfer of shares shall be made for collateral security and not absolutely, the Corporation shall so record such fact in the entry of transfer if, when the certificate for such shares is presented to the Corporation for transfer or, if such shares are uncertificated, when the instruction for registration of transfer thereof is presented to the Corporation, both the transferor and transferee request the Corporation to do so.

 

Section 7.7. Registered Stockholders. Before due presentment for registration of transfer of a certificate representing shares of the Corporation or of an instruction requesting registration of transfer of uncertificated shares, the Corporation may treat the registered owner as the person exclusively entitled to inspect for any proper purpose the stock ledger and the other books and records of the Corporation, vote such shares, receive dividends or notifications with respect to such shares and otherwise exercise all the rights and powers of the owner of such shares, except that a person who is the beneficial owner of such shares (if held in a voting trust or by a nominee on behalf of such person) may, upon providing documentary evidence of beneficial ownership of such shares and satisfying such other conditions as are provided under applicable law, may also so inspect the books and records of the Corporation.

 

Section 7.8. Effect of the Corporation’s Restriction on Transfer.

 

(a) A written restriction on the transfer or registration of transfer of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons, if permitted by the DGCL and noted conspicuously on the certificate representing such shares or, in the case of uncertificated shares, contained in a notice, offering circular or prospectus sent by the Corporation to the registered owner of such shares within a reasonable time prior to or after the issuance or transfer of such shares, may be enforced against the holder of such shares or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder.

 

(b) A restriction imposed by the Corporation on the transfer or the registration of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons, even if otherwise lawful, is ineffective against a person without actual knowledge of such restriction unless: (i) the shares are certificated and such restriction is noted conspicuously on the certificate; or (ii) the shares are uncertificated and such restriction was contained in a notice, offering circular or prospectus sent by the Corporation to the registered owner of such shares within a reasonable time prior to or after the issuance or transfer of such shares.

 

Section 7.9. Regulations. The Board shall have power and authority to make such additional rules and regulations, subject to any applicable requirement of law, as the Board may deem necessary and appropriate with respect to the issue, transfer or registration of transfer of shares of stock or certificates representing shares. The Board may appoint one or more transfer agents or registrars and may require for the validity thereof that certificates representing shares bear the signature of any transfer agent or registrar so appointed.

 

 

Article VIII
INDEMNIFICATION

 

Section 8.1. Right to Indemnification. To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (hereinafter an “Indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such Indemnitee in connection with such proceeding; provided, however, that, except as provided in Section 8.3 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify an Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board.

 

Section 8.2. Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 8.1, an Indemnitee shall also have the right to be paid by the Corporation to the fullest extent not prohibited by applicable law the expenses (including, without limitation, attorneys’ fees) incurred in defending or otherwise participating in any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the DGCL requires, an advancement of expenses incurred by an Indemnitee in his or her capacity as a director or officer of the Corporation (and not in any other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon the Corporation’s receipt of an undertaking (hereinafter an “undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Article VIII or otherwise.

 

Section 8.3. Right of Indemnitee to Bring Suit. If a claim under Section 8.1 or Section 8.2 is not paid in full by the Corporation within 60 days after a written claim therefor has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall also be entitled to be paid the expense of prosecuting or defending such suit. In (a) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by an Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that, the Indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including a determination by its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, shall be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.

 

 

Section 8.4. Non-Exclusivity of Rights. The rights provided to any Indemnitee pursuant to this Article VIII shall not be exclusive of any other right, which such Indemnitee may have or hereafter acquire under applicable law, the Certificate of Incorporation, these By Laws, an agreement, a vote of stockholders or disinterested directors, or otherwise.

 

Section 8.5. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and/or any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

 

Section 8.6. Indemnification of Other Persons. This Article VIII shall not limit the right of the Corporation to the extent and in the manner authorized or permitted by law to indemnify and to advance expenses to persons other than Indemnitees. Without limiting the foregoing, the Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation and to any other person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, to the fullest extent of the provisions of this Article VIII with respect to the indemnification and advancement of expenses of Indemnitees under this Article VIII.

 

Section 8.7. Amendments. Any repeal or amendment of this Article VIII by the Board or the stockholders of the Corporation or by changes in applicable law, or the adoption of any other provision of these By Laws inconsistent with this Article VIII, will, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide broader indemnification rights to Indemnitees on a retroactive basis than permitted prior thereto), and will not in any way diminish or adversely affect any right or protection existing hereunder in respect of any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision; provided however, that amendments or repeals of this Article VIII shall require the affirmative vote of the stockholders holding at least 66.7% of the voting power of all outstanding shares of capital stock of the Corporation.

 

Section 8.8. Certain Definitions. For purposes of this Article VIII, (a) references to “other enterprise” shall include any employee benefit plan; (b) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (c) references to “serving at the request of the Corporation” shall include any service that imposes duties on, or involves services by, a person with respect to any employee benefit plan, its participants, or beneficiaries; and (d) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” for purposes of Section 145 of the DGCL.

 

 

Section 8.9. Contract Rights. The rights provided to Indemnitees pursuant to this Article VIII shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer, agent or employee and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.

 

Section 8.10. Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VIII shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of this Article VIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

Article IX
MISCELLANEOUS

 

Section 9.1. Place of Meetings. If the place of any meeting of stockholders, the Board or committee of the Board for which notice is required under these By Laws is not designated in the notice of such meeting, such meeting shall be held at the principal business office of the Corporation; provided, however, if the Board has, in its sole discretion, determined that a meeting shall not be held at any place, but instead shall be held by means of remote communication pursuant to Section 9.5 hereof, then such meeting shall not be held at any place.

 

Section 9.2. Fixing Record Dates.

 

(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 9.2(a) at the adjourned meeting.

 

 

(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

Section 9.3. Means of Giving Notice.

 

(a) Notice to Directors. Whenever under applicable law, the Certificate of Incorporation or these By Laws notice is required to be given to any director, such notice shall be given either (i) in writing and sent by mail, or by a nationally recognized delivery service, (ii) by means of facsimile telecommunication or other form of electronic transmission, or (iii) by oral notice given personally or by telephone. A notice to a director will be deemed given as follows: (i) if given by hand delivery, orally, or by telephone, when actually received by the director, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iv) if sent by facsimile telecommunication, when sent to the facsimile transmission number for such director appearing on the records of the Corporation, (v) if sent by electronic mail, when sent to the electronic mail address for such director appearing on the records of the Corporation, or (vi) if sent by any other form of electronic transmission, when sent to the address, location or number (as applicable) for such director appearing on the records of the Corporation.

 

(b) Notice to Stockholders. Whenever under applicable law, the Certificate of Incorporation or these By Laws notice is required to be given to any stockholder, such notice may be given (i) in writing and sent either by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, or (ii) by means of a form of electronic transmission consented to by the stockholder, to the extent permitted by, and subject to the conditions set forth in Section 232 of the DGCL. A notice to a stockholder shall be deemed given as follows: (i) if given by hand delivery, when actually received by the stockholder, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, and (iv) if given by a form of electronic transmission consented to by the stockholder to whom the notice is given and otherwise meeting the requirements set forth above, (A) if by facsimile transmission, when directed to a number at which the stockholder has consented to receive notice, (B) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice, (C) if by a posting on an electronic network together with separate notice to the stockholder of such specified posting, upon the later of (1) such posting and (2) the giving of such separate notice, and (D) if by any other form of electronic transmission, when directed to the stockholder. A stockholder may revoke such stockholder’s consent to receiving notice by means of electronic communication by giving written notice of such revocation to the Corporation. Any such consent shall be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Secretary or an Assistant Secretary or to the Corporation’s transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

 

(c) Electronic Transmission. “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process, including but not limited to transmission by telex, facsimile telecommunication, electronic mail, telegram and cablegram.

 

(d) Notice to Stockholders Sharing Same Address. Without limiting the manner by which notice otherwise may be given effectively by the Corporation to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these By Laws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. A stockholder may revoke such stockholder’s consent by delivering written notice of such revocation to the Corporation. Any stockholder who fails to object in writing to the Corporation within 60 days of having been given written notice by the Corporation of its intention to send such a single written notice shall be deemed to have consented to receiving such single written notice.

 

(e) Exceptions to Notice Requirements. Whenever notice is required to be given, under the DGCL, the Certificate of Incorporation or these By Laws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting that shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

 

Whenever notice is required to be given by the Corporation, under any provision of the DGCL, the Certificate of Incorporation or these By Laws, to any stockholder to whom (1) notice of two consecutive annual meetings of stockholders and all notices of stockholder meetings or of the taking of action by written consent of stockholders without a meeting to such stockholder during the period between such two consecutive annual meetings, or (2) all, and at least two payments (if sent by first-class mail) of dividends or interest on securities during a 12-month period, have been mailed addressed to such stockholder at such stockholder’s address as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such stockholder shall not be required. Any action or meeting that shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given. If any such stockholder shall deliver to the Corporation a written notice setting forth such stockholder’s then current address, the requirement that notice be given to such stockholder shall be reinstated. In the event that the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to Section 230(b) of the DGCL. The exception in subsection (1) of the first sentence of this paragraph to the requirement that notice be given shall not be applicable to any notice returned as undeliverable if the notice was given by electronic transmission.

 

 

Section 9.4. Waiver of Notice. Whenever any notice is required to be given under applicable law, the Certificate of Incorporation, or these By Laws, a written waiver of such notice, signed by the person or persons entitled to said notice, or a waiver by electronic transmission by the person entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such required notice. All such waivers shall be kept with the books of the Corporation. Attendance at a meeting shall constitute a waiver of notice of such meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

 

Section 9.5. Meeting Attendance via Remote Communication Equipment.

 

(a) Stockholder Meetings. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders entitled to vote at such meeting and proxy holders not physically present at a meeting of stockholders may, by means of remote communication:

 

(i) participate in a meeting of stockholders; and

 

(ii) be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (A) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (B) the Corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and, if entitled to vote, to vote on matters submitted to the applicable stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (C) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such votes or other action shall be maintained by the Corporation.

 

(b) Board Meetings. Unless otherwise restricted by applicable law, the Certificate of Incorporation or these By Laws, members of the Board or any committee thereof may participate in a meeting of the Board or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

 

 

Section 9.6. Dividends. The Board may from time to time declare, and the Corporation may pay, dividends (payable in cash, property or shares of the Corporation’s capital stock) on the Corporation’s outstanding shares of capital stock, subject to applicable law and the Certificate of Incorporation.

 

Section 9.7. Reserves. The Board may set apart out of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.

 

Section 9.8. Contracts and Negotiable Instruments. Except as otherwise provided by applicable law, the Certificate of Incorporation or these By Laws, any contract, bond, deed, lease, mortgage or other instrument may be executed and delivered in the name and on behalf of the Corporation by such officer or officers or other employee or employees of the Corporation as the Board may from time to time authorize. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, any Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer or any Vice President may execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation. Subject to any restrictions imposed by the Board, the Chairman of the Board , any Chief Executive Officer, President, the Chief Financial Officer, the Treasurer or any Vice President may delegate powers to execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation to other officers or employees of the Corporation under such person’s supervision and authority, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

 

Section 9.9. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board.

 

Section 9.10. Seal. The Board may adopt a corporate seal, which shall be in such form as the Board determines. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.

 

Section 9.11. Books and Records. The books and records of the Corporation may be kept within or outside the State of Delaware at such place or places as may from time to time be designated by the Board.

 

Section 9.12. Resignation. Any director, committee member or officer may resign by giving notice thereof in writing or by electronic transmission to the Chairman of the Board, any Chief Executive Officer, the President or the Secretary. The resignation shall take effect at the time it is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

 

Section 9.13. Surety Bonds. Such officers, employees and agents of the Corporation (if any) as the Chairman of the Board, any Chief Executive Officer, President or the Board may direct, from time to time, shall be bonded for the faithful performance of their duties and for the restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation, in such amounts and by such surety companies as the Chairman of the Board, any Chief Executive Officer, President or the Board may determine. The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Secretary.

 

Section 9.14. Securities of Other Corporations. Powers of attorney, proxies, waivers of notice of meeting, consents in writing and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board, any Chief Executive Officer, President, any Vice President or any officers authorized by the Board. Any such officer, may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities, or to consent in writing, in the name of the Corporation as such holder, to any action by such corporation, and at any such meeting or with respect to any such consent shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed. The Board may from time to time confer like powers upon any other person or persons.

 

Section 9.15. Amendments. The Board shall have the power to adopt, amend, alter or repeal the By Laws. The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or repeal the By Laws. The By Laws also may be adopted, amended, altered or repealed by the stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by applicable law or the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power (except as otherwise provided in Section 8.7) of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the By Laws.

 

 

Exhibit 10.8

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of June 15, 2024 by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and CXApp Inc., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Original Note (as defined below).

 

A. Borrower previously sold and issued to Lender that certain Promissory Note dated December 15, 2023 in the original principal amount of $3,885,000.00 (the “Original Note”) pursuant to that certain Note Purchase Agreement dated December 15, 2023 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Original Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B. Subject to the terms sof this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of the Original Note (the “Partitioned Note”) in the original principal amount of $50,000.00 (the “Exchange Amount”) from the Original Note and then cause the outstanding balance of the Original Note to be reduced by an amount equal to the Exchange Amount, which represents the total outstanding balance of the Partitioned Note.

 

C. Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) the Partitioned Note for 23,696 shares of Borrower’s Common Stock, par value $0.0001 (the “Common Stock,” and such 23,696 shares of Commons Stock, the “Exchange Shares”), according to the terms and conditions of this Agreement.

 

D. The Exchange will consist of Lender surrendering the Partitioned Note in exchange for the Exchange Shares, which will be issued free of any restrictive securities legend.

 

E. Other than the surrender of the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

 

F. Lender and Borrower now desire to exchange the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

 

2. Partition. Effective as of the date hereof, Borrower and Lender agree that the Partitioned Note is hereby partitioned from the Original Note. Following such partition of the Original Note, Borrower and Lender agree that the Original Note shall remain in full force and effect, provided that the outstanding balance of the Original Note shall be reduced by an amount equal to the Exchange Amount.

 

3. Issuance of Shares. Pursuant to the terms and conditions of this Agreement, the Exchange Shares shall be delivered to Lender on or before June 27, 2024 and the Exchange shall occur with Lender surrendering the Partitioned Note to Borrower on the Free Trading Date (as defined below). On the Free Trading Date, the Partitioned Note shall be cancelled and all obligations of Borrower under the Partitioned Note shall be deemed fulfilled. All Exchange Shares delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage account. Borrower agrees to provide all necessary cooperation or assistance that may be required to cause all Exchange Shares delivered hereunder to become Free Trading (the first date on which all Exchange Shares become Free Trading, the “Free Trading Date”). For purposes hereof, the term “Free Trading” means that (a) the Exchange Shares have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Lender.

 

4. Closing. The closing of the transaction contemplated hereby (the “Closing”) along with the delivery of the Exchange Shares to Lender shall occur on the date that is mutually agreed to by Borrower and Lender by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

5. Holding Period, Tacking and Legal Opinion. Borrower represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Partitioned Note and the Exchange Shares will include Lender’s holding period of the Original Note from December 15, 2023. Borrower agrees not to take a position contrary to this Section 5 in any document, statement, setting, or situation. Borrower agrees to take all action necessary to issue the Exchange Shares without restriction, and not containing any restrictive legend without the need for any action by Lender; provided that the applicable holding period has been met. In furtherance thereof, prior to the Closing, counsel to Lender may, in its sole discretion, provide an opinion that: (a) the Exchange Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the transactions contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. Borrower represents that it is not subject to Rule 144(i). The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned Note. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned Note. Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 5 are a material inducement to Lender’s decision to consummate the transactions contemplated herein.

 

 

6. Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no Event of Default has occurred under the Original Note and any Events of Default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Original Note, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares are validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

7. Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, and (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

8. Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not deliver Exchange Shares in an amount that would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.

 

9. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

10. Arbitration of Claims. This Agreement shall be subject to the arbitration of claims provisions set forth in Section 8.2 of the Purchase Agreement.

 

11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

12. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

13. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

 

14. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

15. Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

16. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

 

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

18. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Original Note and each of the other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Original Note or any other Transaction Document, on the other hand, the terms of this Agreement shall prevail.

 

19. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

 

20. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

21. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

	BORROWER:
	CXAPP INC.
	By:	/s/ Khurram P.Sheikh
		Khurram P.Sheikh, Chairman and CEO
	LENDER:
	STREETERVILLE CAPITAL, LLC
	By:	/s/ John M. Fife
		John M. Fife, President

 

 

Exhibit 10.9

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of July 19, 2024 by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and CXApp Inc., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Original Note (as defined below).

 

A. Borrower previously sold and issued to Lender that certain Promissory Note dated December 15, 2023 in the original principal amount of $3,885,000.00 (the “Original Note”) pursuant to that certain Note Purchase Agreement dated December 15, 2023 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Original Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B. Subject to the terms sof this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of the Original Note (the “Partitioned Note”) in the original principal amount of $200,000.00 (the “Exchange Amount”) from the Original Note and then cause the outstanding balance of the Original Note to be reduced by an amount equal to the Exchange Amount, which represents the total outstanding balance of the Partitioned Note.

 

C. Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) the Partitioned Note for 89,686 shares of Borrower’s Common Stock, par value $0.0001 (the “Common Stock,” and such 89,686 shares of Commons Stock, the “Exchange Shares”), according to the terms and conditions of this Agreement.

 

D. The Exchange will consist of Lender surrendering the Partitioned Note in exchange for the Exchange Shares, which will be issued free of any restrictive securities legend.

 

E. Other than the surrender of the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

 

F. Lender and Borrower now desire to exchange the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

 

2. Partition. Effective as of the date hereof, Borrower and Lender agree that the Partitioned Note is hereby partitioned from the Original Note. Following such partition of the Original Note, Borrower and Lender agree that the Original Note shall remain in full force and effect, provided that the outstanding balance of the Original Note shall be reduced by an amount equal to the Exchange Amount.

 

3. Issuance of Shares. Pursuant to the terms and conditions of this Agreement, the Exchange Shares shall be delivered to Lender on or before July 23, 2024 and the Exchange shall occur with Lender surrendering the Partitioned Note to Borrower on the Free Trading Date (as defined below). On the Free Trading Date, the Partitioned Note shall be cancelled and all obligations of Borrower under the Partitioned Note shall be deemed fulfilled. All Exchange Shares delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage account. Borrower agrees to provide all necessary cooperation or assistance that may be required to cause all Exchange Shares delivered hereunder to become Free Trading (the first date on which all Exchange Shares become Free Trading, the “Free Trading Date”). For purposes hereof, the term “Free Trading” means that (a) the Exchange Shares have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Lender.

 

4. Closing. The closing of the transaction contemplated hereby (the “Closing”) along with the delivery of the Exchange Shares to Lender shall occur on the date that is mutually agreed to by Borrower and Lender by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

5. Holding Period, Tacking and Legal Opinion. Borrower represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Partitioned Note and the Exchange Shares will include Lender’s holding period of the Original Note from December 15, 2023. Borrower agrees not to take a position contrary to this Section 5 in any document, statement, setting, or situation. Borrower agrees to take all action necessary to issue the Exchange Shares without restriction, and not containing any restrictive legend without the need for any action by Lender; provided that the applicable holding period has been met. In furtherance thereof, prior to the Closing, counsel to Lender may, in its sole discretion, provide an opinion that: (a) the Exchange Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the transactions contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. Borrower represents that it is not subject to Rule 144(i). The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned Note. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned Note. Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 5 are a material inducement to Lender’s decision to consummate the transactions contemplated herein.

 

 

6. Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no Event of Default has occurred under the Original Note and any Events of Default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Original Note, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares are validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

7. Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, and (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

8. Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not deliver Exchange Shares in an amount that would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.

 

9. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

10. Arbitration of Claims. This Agreement shall be subject to the arbitration of claims provisions set forth in Section 8.2 of the Purchase Agreement.

 

11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

12. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

13. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

 

14. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

15. Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

16. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

 

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

18. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Original Note and each of the other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Original Note or any other Transaction Document, on the other hand, the terms of this Agreement shall prevail.

 

19. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

 

20. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

21. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

	BORROWER:
	CXAPP INC.
	By:	/s/ Khurram P.Sheikh
		Khurram P.Sheikh, Chairman and CEO
	LENDER:
	STREETERVILLE CAPITAL, LLC
	By:	/s/ John M. Fife
		John M. Fife, President

 

 

Exhibit 10.10

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of August 8, 2024 by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and CXApp Inc., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Original Note (as defined below).

 

A. Borrower previously sold and issued to Lender that certain Promissory Note dated December 15, 2023 in the original principal amount of $3,885,000.00 (the “Original Note”) pursuant to that certain Note Purchase Agreement dated December 15, 2023 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Original Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B. Subject to the terms sof this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of the Original Note (the “Partitioned Note”) in the original principal amount of $250,000.00 (the “Exchange Amount”) from the Original Note and then cause the outstanding balance of the Original Note to be reduced by an amount equal to the Exchange Amount, which represents the total outstanding balance of the Partitioned Note.

 

C. Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) the Partitioned Note for 138,121 shares of Borrower’s Common Stock, par value $0.0001 (the “Common Stock,” and such 138,121 shares of Commons Stock, the “Exchange Shares”), according to the terms and conditions of this Agreement.

 

D. The Exchange will consist of Lender surrendering the Partitioned Note in exchange for the Exchange Shares, which will be issued free of any restrictive securities legend.

 

E. Other than the surrender of the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

 

F. Lender and Borrower now desire to exchange the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

 

2. Partition. Effective as of the date hereof, Borrower and Lender agree that the Partitioned Note is hereby partitioned from the Original Note. Following such partition of the Original Note, Borrower and Lender agree that the Original Note shall remain in full force and effect, provided that the outstanding balance of the Original Note shall be reduced by an amount equal to the Exchange Amount.

 

3. Issuance of Shares. Pursuant to the terms and conditions of this Agreement, the Exchange Shares shall be delivered to Lender on or before August 12, 2024 and the Exchange shall occur with Lender surrendering the Partitioned Note to Borrower on the Free Trading Date (as defined below). On the Free Trading Date, the Partitioned Note shall be cancelled and all obligations of Borrower under the Partitioned Note shall be deemed fulfilled. All Exchange Shares delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage account. Borrower agrees to provide all necessary cooperation or assistance that may be required to cause all Exchange Shares delivered hereunder to become Free Trading (the first date on which all Exchange Shares become Free Trading, the “Free Trading Date”). For purposes hereof, the term “Free Trading” means that (a) the Exchange Shares have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Lender.

 

4. Closing. The closing of the transaction contemplated hereby (the “Closing”) along with the delivery of the Exchange Shares to Lender shall occur on the date that is mutually agreed to by Borrower and Lender by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

5. Holding Period, Tacking and Legal Opinion. Borrower represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Partitioned Note and the Exchange Shares will include Lender’s holding period of the Original Note from December 15, 2023. Borrower agrees not to take a position contrary to this Section 5 in any document, statement, setting, or situation. Borrower agrees to take all action necessary to issue the Exchange Shares without restriction, and not containing any restrictive legend without the need for any action by Lender; provided that the applicable holding period has been met. In furtherance thereof, prior to the Closing, counsel to Lender may, in its sole discretion, provide an opinion that: (a) the Exchange Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the transactions contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. Borrower represents that it is not subject to Rule 144(i). The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned Note. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned Note. Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 5 are a material inducement to Lender’s decision to consummate the transactions contemplated herein.

 

 

6. Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no Event of Default has occurred under the Original Note and any Events of Default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Original Note, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares are validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

7. Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, and (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

8. Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not deliver Exchange Shares in an amount that would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.

 

9. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

10. Arbitration of Claims. This Agreement shall be subject to the arbitration of claims provisions set forth in Section 8.2 of the Purchase Agreement.

 

11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

12. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

13. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

 

14. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

15. Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

16. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

 

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

18. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Original Note and each of the other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Original Note or any other Transaction Document, on the other hand, the terms of this Agreement shall prevail.

 

19. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

 

20. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

21. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

	BORROWER:
	CXAPP INC.
	By:	/s/ Khurram P.Sheikh
		Khurram P.Sheikh, Chairman and CEO
	LENDER:
	STREETERVILLE CAPITAL, LLC
	By:	/s/ John M. Fife
		John M. Fife, President

 

 

Exhibit 10.11

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of August 13, 2024 by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and CXApp Inc., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Original Note (as defined below).

 

A. Borrower previously sold and issued to Lender that certain Promissory Note dated December 15, 2023 in the original principal amount of $3,885,000.00 (the “Original Note”) pursuant to that certain Note Purchase Agreement dated December 15, 2023 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Original Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B. Subject to the terms sof this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of the Original Note (the “Partitioned Note”) in the original principal amount of $600,000.00 (the “Exchange Amount”) from the Original Note and then cause the outstanding balance of the Original Note to be reduced by an amount equal to the Exchange Amount, which represents the total outstanding balance of the Partitioned Note.

 

C. Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) the Partitioned Note for 408,163 shares of Borrower’s Common Stock, par value $0.0001 (the “Common Stock,” and such 408,163 shares of Commons Stock, the “Exchange Shares”), according to the terms and conditions of this Agreement.

 

D. The Exchange will consist of Lender surrendering the Partitioned Note in exchange for the Exchange Shares, which will be issued free of any restrictive securities legend.

 

E. Other than the surrender of the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

 

F. Lender and Borrower now desire to exchange the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

 

2. Partition. Effective as of the date hereof, Borrower and Lender agree that the Partitioned Note is hereby partitioned from the Original Note. Following such partition of the Original Note, Borrower and Lender agree that the Original Note shall remain in full force and effect, provided that the outstanding balance of the Original Note shall be reduced by an amount equal to the Exchange Amount.

 

3. Issuance of Shares. Pursuant to the terms and conditions of this Agreement, the Exchange Shares shall be delivered to Lender on or before August 14, 2024 and the Exchange shall occur with Lender surrendering the Partitioned Note to Borrower on the Free Trading Date (as defined below). On the Free Trading Date, the Partitioned Note shall be cancelled and all obligations of Borrower under the Partitioned Note shall be deemed fulfilled. All Exchange Shares delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage account. Borrower agrees to provide all necessary cooperation or assistance that may be required to cause all Exchange Shares delivered hereunder to become Free Trading (the first date on which all Exchange Shares become Free Trading, the “Free Trading Date”). For purposes hereof, the term “Free Trading” means that (a) the Exchange Shares have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Lender.

 

4. Closing. The closing of the transaction contemplated hereby (the “Closing”) along with the delivery of the Exchange Shares to Lender shall occur on the date that is mutually agreed to by Borrower and Lender by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

5. Holding Period, Tacking and Legal Opinion. Borrower represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Partitioned Note and the Exchange Shares will include Lender’s holding period of the Original Note from December 15, 2023. Borrower agrees not to take a position contrary to this Section 5 in any document, statement, setting, or situation. Borrower agrees to take all action necessary to issue the Exchange Shares without restriction, and not containing any restrictive legend without the need for any action by Lender; provided that the applicable holding period has been met. In furtherance thereof, prior to the Closing, counsel to Lender may, in its sole discretion, provide an opinion that: (a) the Exchange Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the transactions contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. Borrower represents that it is not subject to Rule 144(i). The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned Note. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned Note. Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 5 are a material inducement to Lender’s decision to consummate the transactions contemplated herein.

 

 

6. Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no Event of Default has occurred under the Original Note and any Events of Default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Original Note, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares are validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

7. Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, and (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

8. Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not deliver Exchange Shares in an amount that would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.

 

9. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

10. Arbitration of Claims. This Agreement shall be subject to the arbitration of claims provisions set forth in Section 8.2 of the Purchase Agreement.

 

11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

12. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

13. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

 

14. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

15. Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

16. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

 

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

18. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Original Note and each of the other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Original Note or any other Transaction Document, on the other hand, the terms of this Agreement shall prevail.

 

19. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

 

20. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

21. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

	BORROWER:
	CXAPP INC.
	By:	/s/ Khurram P.Sheikh
		Khurram P.Sheikh, Chairman and CEO
	LENDER:
	STREETERVILLE CAPITAL, LLC
	By:	/s/ John M. Fife
		John M. Fife, President

 

 

Exhibit 10.12

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of August 16, 2024 by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and CXApp Inc., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Original Note (as defined below).

 

A. Borrower previously sold and issued to Lender that certain Promissory Note dated December 15, 2023 in the original principal amount of $3,885,000.00 (the “Original Note”) pursuant to that certain Note Purchase Agreement dated December 15, 2023 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Original Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B. Subject to the terms sof this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of the Original Note (the “Partitioned Note”) in the original principal amount of $300,000.00 (the “Exchange Amount”) from the Original Note and then cause the outstanding balance of the Original Note to be reduced by an amount equal to the Exchange Amount, which represents the total outstanding balance of the Partitioned Note.

 

C. Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) the Partitioned Note for 138,632 shares of Borrower’s Common Stock, par value $0.0001 (the “Common Stock,” and such 138,632 shares of Commons Stock, the “Exchange Shares”), according to the terms and conditions of this Agreement.

 

D. The Exchange will consist of Lender surrendering the Partitioned Note in exchange for the Exchange Shares, which will be issued free of any restrictive securities legend.

 

E. Other than the surrender of the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

 

F. Lender and Borrower now desire to exchange the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Recitals and Definitions. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

 

2. Partition. Effective as of the date hereof, Borrower and Lender agree that the Partitioned Note is hereby partitioned from the Original Note. Following such partition of the Original Note, Borrower and Lender agree that the Original Note shall remain in full force and effect, provided that the outstanding balance of the Original Note shall be reduced by an amount equal to the Exchange Amount.

 

3. Issuance of Shares. Pursuant to the terms and conditions of this Agreement, the Exchange Shares shall be delivered to Lender on or before August 19, 2024 and the Exchange shall occur with Lender surrendering the Partitioned Note to Borrower on the Free Trading Date (as defined below). On the Free Trading Date, the Partitioned Note shall be cancelled and all obligations of Borrower under the Partitioned Note shall be deemed fulfilled. All Exchange Shares delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage account. Borrower agrees to provide all necessary cooperation or assistance that may be required to cause all Exchange Shares delivered hereunder to become Free Trading (the first date on which all Exchange Shares become Free Trading, the “Free Trading Date”). For purposes hereof, the term “Free Trading” means that (a) the Exchange Shares have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Lender.

 

4. Closing. The closing of the transaction contemplated hereby (the “Closing”) along with the delivery of the Exchange Shares to Lender shall occur on the date that is mutually agreed to by Borrower and Lender by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

5. Holding Period, Tacking and Legal Opinion. Borrower represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Partitioned Note and the Exchange Shares will include Lender’s holding period of the Original Note from December 15, 2023. Borrower agrees not to take a position contrary to this Section 5 in any document, statement, setting, or situation. Borrower agrees to take all action necessary to issue the Exchange Shares without restriction, and not containing any restrictive legend without the need for any action by Lender; provided that the applicable holding period has been met. In furtherance thereof, prior to the Closing, counsel to Lender may, in its sole discretion, provide an opinion that: (a) the Exchange Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the transactions contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. Borrower represents that it is not subject to Rule 144(i). The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned Note. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned Note. Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 5 are a material inducement to Lender’s decision to consummate the transactions contemplated herein.

 

 

6. Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no Event of Default has occurred under the Original Note and any Events of Default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Original Note, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares are validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

7. Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, and (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

 

8. Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not deliver Exchange Shares in an amount that would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.

 

9. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

10. Arbitration of Claims. This Agreement shall be subject to the arbitration of claims provisions set forth in Section 8.2 of the Purchase Agreement.

 

11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

12. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

13. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

 

14. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

15. Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

16. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

 

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

18. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Original Note and each of the other Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Original Note or any other Transaction Document, on the other hand, the terms of this Agreement shall prevail.

 

19. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

 

20. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

21. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

	BORROWER:
	CXAPP INC.
	By:	/s/ Khurram P.Sheikh
		Khurram P.Sheikh, Chairman and CEO
	LENDER:
	STREETERVILLE CAPITAL, LLC
	By:	/s/ John M. Fife
		John M. Fife, President

 

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Khurram Sheikh, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of CXApp Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 12, 2024

 

	/s/ Khurram Sheikh
	Khurram Sheikh
	Chairman, Chief Executive Officer and Director
	(Principal Executive Officer)

 

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Joy Mbanugo, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of CXApp Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 12, 2024

 

	/s/ Joy Mbanugo
	Joy Mbanugo
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of CXApp Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Khurram Sheikh, Chairman, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 12, 2024

 

	/s/ Khurram Sheikh
	Khurram Sheikh
	Chairman, Chief Executive Officer and Director
	(Principal Executive Officer)

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
(AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

 

In connection with the Quarterly Report of CXApp Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Joy Mbanugo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 12, 2024

 

	/s/ Joy Mbanugo
	Joy Mbanugo
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

 

v3.24.3

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 12, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-39642
Entity Registrant Name	CXApp Inc.
Entity Central Index Key	0001820875
Entity Tax Identification Number	85-2104918
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	Four Palo Alto Square
Entity Address, Address Line Two	Suite 200
Entity Address, Address Line Three	3000 El Camino Real
Entity Address, City or Town	Palo Alto
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94306
City Area Code	650
Local Phone Number	785-7171
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,460,126
Class A common stock, $0.0001 par value per share
Title of 12(b) Security	Class A common stock, $0.0001 par value per share
Trading Symbol	CXAI
Security Exchange Name	NASDAQ
Warrants to purchase common stock
Title of 12(b) Security	Warrants to purchase common stock
Trading Symbol	CXAIW
Security Exchange Name	NASDAQ

v3.24.3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current Assets
Cash and cash equivalents	$ 5,082	$ 6,275
Accounts receivable, net of allowance for credit losses of $0 and $2, respectively	316	1,956
Unbilled and other receivables	145	211
Prepaid expenses and other current assets	477	587
Total current assets	6,020	9,029
Property and equipment, net	80	115
Intangible assets, net	16,087	18,136
Operating lease right-of-use asset, net	573	486
Goodwill	8,737	8,737
Other assets	78	78
Total Assets	31,575	36,581
Current Liabilities
Accounts payable	765	975
Accrued liabilities	1,666	1,452
Deferred revenue	2,338	2,878
Warrant liability	5,258	1,683
Operating lease obligation, current	377	275
Note payable	3,020	3,053
Total current liabilities	13,424	10,316
Operating lease obligation, noncurrent	208	230
Deferred tax liability	122	637
Convertible debt	3,539
Other noncurrent liabilities	7
Total Liabilities	17,300	11,183
Stockholders’ Equity
Common Stock value	2	2
Additional paid-in capital	87,555	83,282
Accumulated deficit	(73,231)	(57,801)
Accumulated other comprehensive loss	(51)	(85)
Total Stockholders’ Equity	14,275	25,398
Total Liabilities and Stockholders’ Equity	$ 31,575	$ 36,581

v3.24.3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Allowance for credit losses	$ 0	$ 2
Common Class A [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	16,065,257	15,254,389
Common stock, shares outstanding	16,065,257	15,254,389

v3.24.3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME LOSS (Unaudited) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024
Successor [Member]
Revenues		$ 1,897	$ 1,770	$ 4,027	$ 5,481
Cost of Revenues		372	358	925	1,052
Gross Profit		1,525	1,412	3,102	4,429
Operating Expenses
Research and development		1,552	1,568	3,447	4,882
Sales and marketing		689	1,068	2,419	2,677
General and administrative		1,927	2,278	3,931	5,384
Acquisition related costs			30	194
Amortization of intangible assets		683	697	1,510	2,049
Total Operating Expenses		4,851	5,641	11,501	14,992
Loss from Operations		(3,326)	(4,229)	(8,399)	(10,563)
Other Income (Expense)
Interest income (expense), net		(312)	57	61	(1,258)
Change in fair value of derivative liability		(1,052)	5,220	(5,134)	(3,575)
Loss on debt extinguishment		(535)			(535)
Other income (expense), net		74	(24)	(17)	(12)
Total Other Income (Expense)		(1,825)	5,253	(5,090)	(5,380)
Net Income (Loss), before tax		(5,151)	1,024	(13,489)	(15,943)
Income tax benefit		147	417	2,958	513
Net Income (Loss)		(5,004)	1,441	(10,531)	(15,430)
Unrealized foreign exchange gain (loss) from cumulative translation adjustments		(42)	31	(8)	34
Comprehensive Income (Loss)		$ (5,046)	$ 1,472	$ (10,539)	$ (15,396)
Successor [Member] | Common Class A [Member]
Other Income (Expense)
Basic weighted average shares outstanding		15,699,685	15,407,007	9,675,000	10,818,000
Diluted weighted average shares outstanding		15,699,685	15,407,007	9,675,000	10,818,000
Basic net income (loss) per share		$ (0.32)		$ 1.09
Diluted net income (loss) per share		$ (0.32)	$ 1.00	$ 1.09	$ 0.13
Predecessor [Member]
Revenues	$ 1,620
Cost of Revenues	483
Gross Profit	1,137
Operating Expenses
Research and development	1,455
Sales and marketing	964
General and administrative	2,293
Acquisition related costs
Amortization of intangible assets	806
Total Operating Expenses	5,518
Loss from Operations	(4,381)
Other Income (Expense)
Interest income (expense), net	1
Change in fair value of derivative liability
Loss on debt extinguishment
Other income (expense), net
Total Other Income (Expense)	1
Net Income (Loss), before tax	(4,380)
Income tax benefit
Net Income (Loss)	(4,380)
Unrealized foreign exchange gain (loss) from cumulative translation adjustments	(28)
Comprehensive Income (Loss)	$ (4,408)

v3.24.3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Net Parent Investment [Member] Predecessor [Member]	AOCI Attributable to Parent [Member] Predecessor [Member]	AOCI Attributable to Parent [Member] Successor [Member]	Total [Member] Predecessor [Member]	Total [Member] Successor [Member]	Class A Common Stock [Member] Successor [Member]	Class C Common Stock [Member] Successor [Member]	Additional Paid-in Capital [Member] Successor [Member]	Retained Earnings [Member] Successor [Member]
Beginning balance, value at Dec. 31, 2022	$ 22,236	$ 1,155		$ 23,391
Net loss	(4,380)			(4,380)
Stock-based compensation allocated from parent	158			158
Net investment from parent	8,680			8,680
Cumulative translation adjustment		(28)		(28)
Ending balance, value at Mar. 14, 2023	26,694	1,127		27,821	$ (6,955)	$ 1		$ 1,607	$ (8,563)
Ending balance, shares at Mar. 14, 2023						7,034,999
Shares issued in connection with Business Combination					69,928		$ 1	69,927
Shares issued in connection with Business Combination, shares						1,547,700	5,487,300
Net loss					2,758				2,758
Stock-based compensation					2			2
Ending balance, value at Mar. 31, 2023					65,733	$ 1	$ 1	71,536	(5,805)
Ending balance, shares at Mar. 31, 2023						8,582,699	5,487,300
Beginning balance, value at Mar. 14, 2023	$ 26,694	$ 1,127		$ 27,821	(6,955)	$ 1		1,607	(8,563)
Beginning balance, shares at Mar. 14, 2023						7,034,999
Ending balance, value at Sep. 30, 2023			(8)		64,062	$ 2		83,162	(19,094)
Ending balance, shares at Sep. 30, 2023						15,254,389
Beginning balance, value at Mar. 31, 2023					65,733	$ 1	$ 1	71,536	(5,805)
Beginning balance, shares at Mar. 31, 2023						8,582,699	5,487,300
Net loss					(14,730)				(14,730)
Stock-based compensation					96			96
Cumulative translation adjustment			(39)		(39)
Ending balance, value at Jun. 30, 2023			(39)		51,060	$ 1	$ 1	71,632	(20,535)
Ending balance, shares at Jun. 30, 2023						8,582,699	5,487,300
Net loss					1,441				1,441
Stock-based compensation					653			653
Warrant exchange to Class A common stock					4,914			4,914
Warrant exchange to Class A common stock, shares						600,000
Warrant exercise – cash and cashless					5,768			5,768
Warrant exercise - cash and cashless, shares						484,608
Mandatory conversion from Class C to Class A common stock						$ 1	$ (1)
Mandatory conversion from Class C to Class A common stock, shares						5,487,300	(5,487,300)
Common stock issuance					195			195
Common stock issuance, shares						99,782
Cumulative translation adjustment			31		31
Ending balance, value at Sep. 30, 2023			(8)		64,062	$ 2		83,162	(19,094)
Ending balance, shares at Sep. 30, 2023						15,254,389
Beginning balance, value at Dec. 31, 2023			(85)		25,398	$ 2		83,282	(57,801)
Beginning balance, shares at Dec. 31, 2023						15,254,389
Net loss					(5,170)				(5,170)
Stock-based compensation					599			599
Cumulative translation adjustment			54		54
Ending balance, value at Mar. 31, 2024			(31)		20,881	$ 2		83,881	(62,971)
Ending balance, shares at Mar. 31, 2024						15,254,389
Beginning balance, value at Dec. 31, 2023			(85)		25,398	$ 2		83,282	(57,801)
Beginning balance, shares at Dec. 31, 2023						15,254,389
Ending balance, value at Sep. 30, 2024			(51)		14,275	$ 2		87,555	(73,231)
Ending balance, shares at Sep. 30, 2024						16,065,257
Beginning balance, value at Mar. 31, 2024			(31)		20,881	$ 2		83,881	(62,971)
Beginning balance, shares at Mar. 31, 2024						15,254,389
Net loss					(5,256)				(5,256)
Stock-based compensation					833			833
Net exercise of options
Net exercise of options, shares						12,570
Cumulative translation adjustment			22		22
Ending balance, value at Jun. 30, 2024			(9)		16,480	$ 2		84,714	(68,227)
Ending balance, shares at Jun. 30, 2024						15,266,959
Net loss					(5,004)				(5,004)
Stock-based compensation					$ 906			$ 906
Issuance of common stock to reduce notes payable					1,935,000			1,935,000
Issuance of common stock to reduce notes payable, shares						798,298
Cumulative translation adjustment			$ (42)		$ (42)
Ending balance, value at Sep. 30, 2024			$ (51)		$ 14,275	$ 2		$ 87,555	$ (73,231)
Ending balance, shares at Sep. 30, 2024						16,065,257

v3.24.3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	1 Months Ended	2 Months Ended	9 Months Ended
	Sep. 30, 2023	Mar. 14, 2023	Sep. 30, 2024
Successor [Member]
Operating activities
Net loss	$ (10,531)		$ (15,430)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	52		64
Amortization of intangible assets	1,510		2,049
Amortization of right-of-use asset	200		297
Deferred income taxes	(2,957)		(513)
Provision for credit loss expense	(11)
Amortization of debt discount and deferred financing cost			678
Accrued interest expense on promissory note and convertible debt			340
Accrued monitoring fee on promissory note			408
Stock-based compensation expense	857		2,345
Loss on debt extinguishment			535
(Gain) loss on foreign currency transactions	20		48
Change in fair value of derivative liability	5,134		3,575
Change in operating assets and liabilities:
Accounts receivable and other receivables	1,400		1,696
Prepaid expenses and other current assets	339		111
Other assets	(37)
Accounts payable	494		(200)
Accrued liabilities	(4,666)		214
Operating lease liabilities	(202)		(310)
Deferred revenue	(539)		(536)
Net cash used in operating activities	(8,937)		(4,629)
Investing activities
Purchases of property and equipment	(47)		(30)
Investment in capitalized software
Cash acquired in connection with Business Combination	10,003
Net cash provided by (used in) investing activities	9,956		(30)
Financing activities
Proceeds from issuance of convertible debt, net of issuance costs			3,480
Net equity investment from parent
Repayment of CXApp acquisition liability
Warrant exercise - net	5,002
Repayment of related party promissory note	(328)
Net cash provided by financing activities	4,674		3,480
Effect of exchange rate changes on cash and cash equivalents	(17)		(14)
Net increase (decrease) in cash and cash equivalents	5,676		(1,193)
Cash and cash equivalents, beginning of period	1,503		6,275
Cash and cash equivalents, end of period	7,179		5,082
Supplemental disclosures of cash flow information
Cash paid for taxes	1		25
Cash paid for interest	12		6
Supplemental schedule of noncash investing and financing activities
Right-of-use asset obtained in exchange for lease liability	230		393
Noncash investment from parent
Class A Common Stock and Class C Common Stock issued in connection with Business Combination	69,928
Financing of Director and Officer Insurance	671		225
Warrant exercise - cashless	549
Warrant exchange to Class A common stock	4,914
Common shares issued for extinguishment of debt			$ 1,935
Predecessor [Member]
Operating activities
Net loss		$ (4,380)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		228
Amortization of intangible assets		806
Amortization of right-of-use asset		40
Deferred income taxes
Amortization of debt discount and deferred financing cost
Accrued interest expense on promissory note and convertible debt
Accrued monitoring fee on promissory note
Stock-based compensation expense		158
Loss on debt extinguishment
(Gain) loss on foreign currency transactions		(32)
Change in fair value of derivative liability
Change in operating assets and liabilities:
Accounts receivable and other receivables		(857)
Prepaid expenses and other current assets		(20)
Other assets
Accounts payable		(796)
Accrued liabilities		(787)
Operating lease liabilities		(38)
Deferred revenue		534
Net cash used in operating activities		(5,144)
Investing activities
Purchases of property and equipment		(9)
Investment in capitalized software		(45)
Cash acquired in connection with Business Combination
Net cash provided by (used in) investing activities		(54)
Financing activities
Proceeds from issuance of convertible debt, net of issuance costs
Net equity investment from parent		9,089
Repayment of CXApp acquisition liability		(197)
Repayment of related party promissory note
Net cash provided by financing activities		8,892
Effect of exchange rate changes on cash and cash equivalents		1
Net increase (decrease) in cash and cash equivalents		3,695
Cash and cash equivalents, beginning of period		6,308
Cash and cash equivalents, end of period		10,003
Supplemental disclosures of cash flow information
Cash paid for taxes
Cash paid for interest
Supplemental schedule of noncash investing and financing activities
Right-of-use asset obtained in exchange for lease liability
Noncash investment from parent		409
Class A Common Stock and Class C Common Stock issued in connection with Business Combination
Financing of Director and Officer Insurance
Warrant exercise - cashless
Warrant exchange to Class A common stock
Common shares issued for extinguishment of debt

v3.24.3

Insider Trading Arrangements	9 Months Ended
	Sep. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

v3.24.3

Organization, Nature of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Organization, Nature of Business and Basis of Presentation	NOTE 1 – Organization, Nature of Business and Basis of Presentation   CXApp Inc. and its subsidiaries (“CXApp” or the “Company”) is in the business of delivering intelligent enterprise workplace experiences. The CXApp SaaS platform is anchored on the intersection of customer experience (CX) and artificial intelligence (AI) providing digital transformation for the physical workplace for enhanced experiences across people, places and things.   The CXApp SaaS platform offers a suite of leading-edge technology workplace experience solutions including an enterprise employee application, indoor mapping, on-device positioning, augmented reality technologies, generative AI applications and an AI-based analytics platform, targeting the emerging hybrid workplace market. CXApp creates a connected workplace by reducing app overload, data fragmentation, and complex workflows and streamlines all capabilities through The Workplace SuperApp. All features, services and integrations are housed in one easy-to-access platform allowing businesses to deliver a more holistic employee experience in a hybrid workplace.   On September 25, 2022, an Agreement and Plan of Merger (the “Merger Agreement”), was entered into by and among Inpixon, KINS, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS acquired Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (“Legacy CXApp”) in exchange for the issuance of shares of KINS capital stock (the “Business Combination”). As a result of the Business Combination, KINS changed their name to CXApp Inc. (“CXApp”). The shares are now trading on the Nasdaq using the ticker CXAI. The transaction closed on March 14, 2023. See Note 3 for more details.   Unless the context otherwise requires, “we,” “us,” “our,” “CXApp” and the “Company” refer to CXApp Inc., a Delaware corporation, and its consolidated subsidiaries following the Business Combination (as defined below). Unless the context otherwise requires, references to “KINS” refer to KINS Technology Group Inc., a Delaware corporation (“KINS”), prior to the Business Combination. All references herein to the “Board” refer to the board of directors of the Company. “Legacy CXApp” refers to CXApp Holding Corp., a Delaware corporation and a wholly owned subsidiary of the Company, which the Company acquired through the Business Combination. Prior to the Separation (as defined below), Legacy CXApp was a wholly owned subsidiary of Inpixon, a Nevada corporation (“Inpixon”).   The Business Combination was accounted for using the acquisition method (as a forward merger), with goodwill and other identifiable intangible assets recorded in accordance with GAAP, as applicable. Under this method of accounting, the “Enterprise Apps Business” (formerly known as CXApp) is treated as the “acquired” company for financial reporting purposes. KINS (now known as CXApp Inc.) has been determined to be the accounting acquirer because KINS maintains control of the Board of Directors and management of the combined company.

v3.24.3

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 2 – Summary of Significant Accounting Policies   Liquidity   As of September 30, 2024 (Successor), the Company had a working capital deficiency of approximately $7,404 thousand and cash and cash equivalents of approximately $5,082 thousand. For the three and nine months ended September 30, 2024 (Successor), the Company incurred net losses of approximately $5,004 thousand and $15,430 thousand, respectively. During the nine months ended September 30, 2024 (Successor), the Company used approximately $4,629 thousand of cash for operating activities.   The Company acknowledges that there are challenges in generating sufficient revenue to fully support its operations and achieving long-term profitability. The Company’s recurring losses and cash usage in operations have raised concerns about its ability to continue as a going concern. Given the current liquidity position, management has taken several strategic measures to improve operational efficiency and strengthen the financial outlook. These initiatives include streamlining operations through workforce reductions, renegotiating contractual agreements, adjusting professional service fees, and optimizing expenses such as software licenses and contractor-related costs. Additionally, the Company has made progress in forming strategic partnerships such as the addition of its platform to key marketplaces and has successfully negotiated cost reductions in areas such as insurance premiums. Management believes that these actions will contribute to improved operational efficiency and long-term financial stability. However with the current liquidity position, management has implemented the following strategic measures to improve operational efficiency and strengthen the financial outlook:   ● In January 2024, the Company streamlined its operations to conserve cash resources by laying off approximately 20% of the global employee headcount;   ● In March 2024, the Company successfully negotiated for a 50% reduction in D&O insurance premium; and   ● In August 2024, Google added the CXAI application platform to the Google Marketplace and signed a go-to-market partnership agreement. Google Cloud’s sales and marketing teams will work with CXAI on targeting key clients and providing them the best workplace platform experience. With this, the Management believes that this partnership would help boost the Company’s product capability revenue.   These steps, along with anticipated revenue growth from organic sales and other partnerships, provide the Company with the necessary resources to support operations mitigating liquidity risk.   On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand. On June 3, 2024, the Company received net proceeds of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand. On September 30, 2024, the Company received net proceeds of $1,000 thousand, reflecting original issue discount of $50 thousand, pursuant to the convertible Pre-Paid Purchase #2 dated on the same day.   Management believes that the recent funding initiatives provide sufficient capital to address any potential uncertainties regarding the Company’s ability to continue as a going concern. This funding ensures that the Company is well-positioned to meet its obligations and continue operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements. If additional funding is required, the Management is confident in its ability to secure financing, as necessary. The Company has access to multiple funding sources and expects these to be sufficient for its strategic needs.   Looking beyond this period, the Company is focused on executing its business plan and exploring additional strategic initiatives to enhance liquidity and support long-term growth. While the ability to continue as a going concern depends on various factors, including the successful implementation of these plans and market conditions, management remains optimistic about the Company’s long-term prospects and its capacity to adapt and thrive in a dynamic market environment.   The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, reflecting the Company’s expectation to realize its assets and meet its liabilities in the ordinary course of business. No adjustments have been made to the financial statements regarding the recoverability or classification of recorded asset amounts or liabilities, as the Company believes it will effectively manage the uncertainties described above.   Basis of Presentation   The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, since they are interim statements, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 (Successor) are not necessarily indicative of the results that may be expected for other quarters or the year ending December 31, 2024. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements as of that date. For more complete financial information, these condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on May 23, 2024.   Principles of Consolidation   The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.   Use of Estimates   The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of:     ● the valuation of stock-based compensation;     ● the valuation of warrant liabilities;     ● the allowance for credit losses;     ● the valuation allowance for deferred tax assets; and     ● impairment of long-lived assets and goodwill.   Cash and Cash Equivalents   Cash and cash equivalents consist of cash, checking accounts, money market accounts, and certificates of deposit with maturities of three months or less when purchased. As of September 30, 2024 (Successor), the Company had cash equivalents of approximately $4,688 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2023 (Successor), the Company had approximately $5,584 thousand in cash equivalents.   Accounts Receivable, net and Allowance for Credit Losses   Accounts receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to uncollectability. Allowance for credit losses are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in such customer’s operating results or financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for credit losses is approximately $0 thousand and $2 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.   Property and Equipment, net   Property and equipment are recorded at cost, less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Leasehold improvements are amortized over the useful life of the asset or the initial lease term, whichever is shorter. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized.   Intangible Assets, net   Intangible assets primarily consist of developed technology, customer lists/relationships, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 to 10 years, which approximates customer attrition rate and technology obsolescence. The Company assesses the carrying value of its intangible assets for impairment annually, or more frequently if an event or other circumstances indicates that the Company may not be able to recover the carrying amount of the assets. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).   Goodwill   The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.   The Company calculates the estimated fair value of a reporting unit using weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables, including public company method, guideline transaction method, and market price method.   The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor). See Note 6 for impairment that occurred during the period ended December 31, 2023.   Leases and Right-of-Use Assets and Liabilities   The Company determines if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company generally uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use assets related to the Company’s operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company’s lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options. The Company amortizes its right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year.   Income Taxes   The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.   Comprehensive Loss and Foreign Currency Translation   The Company reports comprehensive loss and its components in its condensed consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under GAAP, are excluded from net loss.   Assets and liabilities related to the Company’s foreign operations are calculated using the Philippine Peso and Canadian Dollar and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period. Gains or losses resulting from transactions denominated in foreign currencies are included in other income (expenses) in the condensed consolidated statements of operations. The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar. Aggregate foreign currency net transaction gain or loss were approximately $42 thousand loss, $34 thousand gain, $31 thousand gain, $8 thousand loss, and $28 thousand loss for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.   Convertible Debt   The Company issued convertible debt in May 2024, and evaluated to determine whether they contain features that qualify as embedded derivatives in accordance with ASC 815. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance of the convertible debt, the Company treats the instrument wholly as a liability, in accordance with ASC 470, as the conversion features do not require bifurcation as a derivative in accordance with ASC 815 and the convertible debt was not issued at a substantial premium.   Costs directly associated with the borrowing have been capitalized and are netted against the corresponding debt liabilities in the Company’s Condensed Consolidated Balance Sheets at issuance and amortized over the contractual term of the convertible debt instrument using the effective interest rate method.   Debt Issuance Costs   The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the related debt using the effective interest method. The amendments to FASB ASC 835-30 require that debt issuance costs be presented in the Condensed Consolidated Balance Sheets as a direct deduction from the carrying amount of long-term debt, consistent with debt discounts or premiums.   Debt Extinguishment   The note exchanges are accounted for under ASC 470-50 on Modifications and Extinguishments. This standard requires the recognition of a gain or loss on the difference between the reacquisition price and the net carrying amount of the extinguished debt.   Revenue Recognition   The Company recognizes revenue, in accordance with ASC 606, when control of the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from its software as a service for cloud-based software, as well as design, implementation and other professional services for work performed in conjunction with its cloud-based software. The Company enters into contracts with its customers whereby it grants a non-exclusive cloud-based license for the use of its proprietary software and for professional services. The contracts may also provide for on-going services for a specified price, which may include maintenance services, designated support, and enhancements, upgrades and improvements to the software, depending on the contract. Licenses for cloud software provide the customer with a right to use the software as it exists when made available to the customer. All software provides customers with the same functionality and differs mainly in the duration over which the customer benefits from the software.   The Company recognizes revenue in accordance with ASC 606 – Revenue from Contracts with Customers. The standard’s core principle is that an entity will recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new standard is a principles-based standard intended to better match the accounting for the transaction with the economics of the transaction. This requires entities to use more judgment and make more estimates than under previous revenue standards.   The standard introduces a five-step model for revenue recognition that replaces the four criteria for revenue recognition under previous GAAP. The five steps are shown below:   1. Identify the contract with a customer;   2. Identify the performance obligations in the contract;   3. Determine the transaction price;   4. Allocate the transaction price to performance obligations; and   5. Recognize revenue when (or as) the entity satisfies a performance obligation   License Subscription Revenue Recognition (Software As A Service)   With respect to sales of the Company’s license agreements, customers generally pay fixed annual fees in advance in exchange for the Company’s software service provided via electronic means, which are generally recognized ratably over the license term. Some agreements allow the customer to terminate their subscription contracts before the end of the applicable term, and in such cases the customer is generally entitled to a refund pro-rata but only for the elapsed time remaining at the point of termination, which would approximate the deferred revenue at such time. The Company’s performance obligation is satisfied over time as the electronic services are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice.   The timing of the Company’s revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a service. Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software.   Renewals or extensions of licenses are evaluated as distinct licenses and revenue attributed to the distinct service is not recognized until: (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. The Company recognizes revenue resulting from renewal of licensed software over time.   Professional Services Revenue Recognition   The Company provides integration and software customization professional services to its customers.   Professional services under milestone contracts are accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract.   Professional services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts provided by in-house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known.   For the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company did not incur any such losses. These amounts are based on known and estimated factors.   Hardware Revenue Recognition   For sales of hardware, the Company’s performance obligation is fulfilled when the products are shipped to the customer, transferring title and ownership risks. Deliveries occur via drop-shipment by a third-party vendor and the Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse. The Company negotiates sale prices, pays suppliers directly, manages credit risk, and ensures product acceptability, acting as the principal in the transaction and recording revenue on a gross basis. Customers typically pay within 30 to 60 days of invoice receipt. The Company has elected the practical expedient to expense the costs of obtaining a contract when they are incurred because the amortization period of the asset that otherwise would have been recognized is less than a year.   Contract Balances   The timing of the Company’s revenue recognition may differ from the timing of invoicing to and payment by its customers. The Company records an unbilled receivable when revenue is recognized prior to invoicing and the Company has an unconditional right to payment. Alternatively, when invoicing a customer precedes the Company providing of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $2,338 thousand and $2,878 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively, related to customer invoices rendered in advance for software licenses, professional services, and hardware provided by the Company’s technical staff.   The Company expects to satisfy its remaining performance obligations for the deferred revenue associated with hardware, professional services, and recognize the deferred revenue related to licenses generally over the remaining contract term which is generally twelve months following the commencement of the license. The Company recognized revenue in the reporting period of $2,359 thousand, $893 thousand, and $865 thousand, that was included in the contract liability balance at the beginning of the period, for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.   Costs to Obtain a Contract   The Company recognizes eligible sales commissions as an asset within prepaid expenses and other current assets as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs. The capitalized costs are amortized over the expected contract term.   Cost to Fulfill a Contract   The Company incurs costs to fulfill their obligations under a contract once it has obtained the contract. These costs are generally not significant and are recorded to expense as incurred.   Multiple Performance Obligations   The Company enters into contracts with customers for its technology that include multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation.   Sales and Use Taxes   The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis.   Shipping and Handling Costs   Shipping and handling costs are expensed as incurred as part of cost of revenues. These costs were deemed to be de minimis during each of the reporting periods.   Research and Development   Research and development (“R&D”) costs are expensed when incurred. R&D expenses consist primarily of personnel and related headcount costs, costs of professional services associated with the ongoing development of the Company’s technology, and allocated overhead.   Business Combinations   The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are included as of and subsequent to the acquisition date.   Segments   The Company and its Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”), acting as the Chief Operating Decision Makers (“CODM”), determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.   Stock-based Compensation   The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award.   The grant date fair value of options is estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates.   Derivative Warrant Liabilities   The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability.   For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance as a warrant liability and adjusted to the then fair value in each balance sheet date thereafter.   Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations and amounting to $1,052 thousand loss, $3,575 thousand loss, $5,220 thousand gain, $5,134 thousand loss, and $0 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively. The Company utilized the Public Warrant quoted market price as the fair value of the Warrants as of each relevant date.   Earnings Per Share   The Company computes basic and diluted earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three and nine months ended September 30, 2024 (Successor), basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options, warrants, and vesting of restricted units in the calculation of diluted net loss per common shares would have been anti-dilutive. For the period from March 15, 2023 to September 30, 2023 (Successor), the common shares issuable were excluded from the calculation because (i) the warrants were below their exercise price and (ii) the stock options were not vested.   The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), and for the period from March 15, 2023 to September 30, 2023 (Successor).   Schedule of antidilutive shares                                 (in thousands)   Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023   Stock options     1,850       985       1,602       985   Restricted stock units     699       821       514       821   Warrants     21,032       21,032       21,032       21,032   Total     23,581       22,838       23,148       22,838     Fair Value Measurements   FASB ASC 820, “Fair Value Measurements” (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. The Company follows this authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:     ● Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.     ● Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.     ● Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.   Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management. The fair value of the warrants has been measured based on the listed market price of such warrants, a Level 1 measurement. For the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company recognized, in the consolidated statements of operations and comprehensive income, unrealized loss of $1,052 thousand, unrealized loss $3,575 thousand, unrealized gain $5,220 thousand, $5,134 thousand unrealized loss, and $0 thousand, respectively. See Note 10.   The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the condensed consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability is de-recognized at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the de-recognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that governs the cashless conversion.   The following table shows the changes in fair value of the liabilities:   Schedule of changes in fair value of the liabilities         Warrant liability – January 1, 2024   $ 1,683   Change in FV of derivative instruments     1,472   Warrant liability – March 31, 2024     3,155   Change in FV of derivative instruments     1,051   Warrant liability – June 30, 2024     4,206   Change in FV of derivative instruments     1,052   Warrant liability – September 30, 2024   $ 5,258     Warrant liability – March 15, 2023   $ 2,649   Change in FV of derivative instruments     (1,686 )  Warrant liability – March 31, 2023     963   Change in FV of derivative instruments     12,040   Warrant liability – June 30, 2023     13,003   Change in FV of derivative instruments     (5,220 ) FV of Warrants cash exercised and exchanged for Class A common stock (see Note 10 – Warrants)     (1,237 ) Loss on warrant extinguishment     (3,894 ) FV of Warrants cashless exercised for Class A common stock (see Note 10 – Warrants)     (549 ) Warrant liability – September 30, 2023   $ 2,103     Fair Value of Financial Instruments   Financial instruments consist of cash and cash equivalents, accounts receivable, unbilled and other receivables and accounts payable. The Company determines the estimated fair value of such financial instruments presented in the financial statements is equal to its carrying value due to their short-term nature.   Carrying Value, Recoverability and Impairment of Long-Lived Assets   The Company follows FASB ASC 360 “Property, Plant, and Equipment” (“ASC 360”) for its long-lived assets. Pursuant to ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.   Pursuant to ASC 360-10-35-21, the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.   The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.   Based on its assessments, the Company recorded no impairment charges on long-lived assets for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).   Recently Issued Accounting Standards Not Yet Adopted   In October 2023, the FASB issued ASU 2023-06 “Disclosure Improvements”, which amends the codification in response to the SEC’s Disclosure Update and Simplification Initiative. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is currently assessing the potential impact of ASU 2023-06 and does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and disclosures.    In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) that enhances transparency into income tax disclosures. Requires annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Eliminates certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.   In March 2024, the FASB issued ASU 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards,” which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718, or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 adds an example with multiple fact patterns and illustrates how an entity evaluates common terms and characteristics of profits interests and similar awards to reach a conclusion about whether an award meets the conditions in Topic 718. It also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to all periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.   In March 2024, the FASB issued ASU 2024-02 “Codification Improvements—Amendments to Remove References to the Concept Statements”, which amends the Codification to remove references to various FASB Concepts Statements and impacts a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and are not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to the beginning of the earliest comparative period presented or prospectively to all new or modified transactions recognized on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

v3.24.3

Business Combination	9 Months Ended
	Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Business Combination	NOTE 3 – Business Combination   On March 14, 2023, the Company completed the Agreement and Plan of Merger (the “Merger Agreement”), by and among KINS, Inpixon, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS combined with Legacy CXApp, Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the “Enterprise Apps Business”). In exchange for the aggregate purchase price of approximately $69,928 thousand, the Company acquired all of the related assets and liabilities of Legacy CXApp. The consideration transferred in connection with the Business Combination consisted of 1,547,700 shares of the Company’s Class A Common Stock and 5,487,300 shares of the Company’s Class C Common Stock valued at a price of $9.94 per share. The preliminary estimated goodwill of approximately $44,200 thousand arising from the Business Combination consists of an acquired workforce, as well as synergies expected from combined operations of KINS and the CXApp.   The Company has authorized Class A and Class C common stock. Class A common stock and New CXApp Class C common stock are identical in all respects, except that New CXApp Class C common stock is not listed and will automatically convert into New CXApp Class A common stock on the earlier to occur of (i) the 180th day following the closing of the Merger which has expired and (ii) the day that the last reported sale price of New CXApp Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period following the closing of the Merger.   The Business Combination is being accounted for as a business combination in accordance with ASC 805. The Company has determined fair values of the assets acquired and liabilities assumed in the Business Combination.   The Company allocated the purchase price of the Business Combination to the assets acquired and the liabilities assumed as of the closing date. The following table summarizes the purchase price allocations relating to the Business Combination (in thousands):   Schedule of assets acquired               Description   Fair Value     Weighted Average Useful Life (in years)   Purchase Price   $ 69,928                         Assets acquired:               Cash and cash equivalents   $ 10,003         Accounts receivable     2,226         Notes and other receivables     209         Prepaid assets and other current assets     408         Operating lease right-of-use asset     557     3 years   Property and equipment, net     133     3 years   Other assets     42         Developed technology     8,697     10 years   Patents     2,703     10 years   Customer relationships     5,604     5 years   Trade names and trademarks     3,294     7 years   Total assets acquired   $ 33,876                         Liabilities assumed:               Accounts payable   $ 443         Accrued liabilities     969         Deferred revenues     2,534         Operating lease obligation, current     194         Operating lease obligation, noncurrent     384         Deferred tax liability     4,217         Total liabilities assumed     8,741         Goodwill   $ 44,793             The value of the intangible assets were calculated by a third party valuation firm based on projections and financial data provided by management of the Company. Goodwill represents the excess fair value after allocation to the intangible assets. The calculated goodwill is not deductible for tax purposes.   Total acquisition-related costs for the Business Combination were approximately $3,543 thousand. Of the total acquisition-related costs, approximately $3,000 thousand were incurred by KINS prior to the close of the Business Combination. These costs are included in the opening retained earnings of the Company on March 15, 2023. The remaining $543 thousand of acquisition-related costs were recorded as expense in the successor period and are included in acquisition related costs on the statements of operations for the year ended December 31, 2023.   Measurement Period   The purchase price allocations for the acquisitions described above are based on initial estimates and provisional amounts. In accordance with ASC 805-10-25-13, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The Company continued to refine its inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) realization of tangible assets and (iv) the accuracy and completeness of liabilities through March 14, 2024, when the purchase price allocation was finalized.   CXApp Proforma Financial Information   The following unaudited proforma financial information presents the condensed consolidated results of operations of the Company for the nine-month period ended September 30, 2023, as if the acquisition had occurred as of the beginning of the first period presented (January 1, 2023) instead of on March 14, 2023. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.   The proforma financial information for the Company and the acquired CXApp is as follows (in thousands):   Schedule of proforma financial information             For the Nine Months Ended September 30, 2023   Revenues   $ 5,647   Net income (loss)     (19,197 )

v3.24.3

Disaggregation of Revenue	9 Months Ended
	Sep. 30, 2024
Disaggregation Of Revenue
Disaggregation of Revenue	NOTE 4 – Disaggregation of Revenue   The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from software as a service, design and implementation services for its enterprise apps solutions systems, and professional services for work performed in conjunction with its systems.   Revenues consisted of the following (in thousands):   Schedule of disaggregation of revenue                                         Successor     Predecessor       Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023     Period from January 1, 2023 to March 14, 2023   Subscription revenue                                         Software   $ 1,660     $ 1,411     $ 4,752     $ 3,164     $ 1,204   Total subscription revenue   $ 1,660     $ 1,411     $ 4,752     $ 3,164     $ 1,204                                             Non-subscription revenue                                         Professional services   $ 102     $ 359     $ 594     $ 863     $ 416   Hardware     135       -       135       -       -   Total non-subscription revenue   $ 237     $ 359     $ 729     $ 863     $ 416                                             Total Revenue   $ 1,897     $ 1,770     $ 5,481     $ 4,027     $ 1,620         Successor     Predecessor       Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023     Period from January 1, 2023 to March 14, 2023   Revenue recognized over time(1)(2)    $ 1,762     $ 1,770     $ 5,346     $ 4,027     $ 1,620   Revenue recognized at a point in time(3)     135       -       135       -       -   Total   $ 1,897     $ 1,770     $ 5,481     $ 4,027     $ 1,620       (1) Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. (2) Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time. (3) Hardware revenue is recognized at a point in time when the control over the goods transfers to the customer - upon delivery to the customers.

v3.24.3

Property and Equipment, net	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Property and Equipment, net	NOTE 5 – Property and Equipment, net   Property and equipment consisted of the following (in thousands):   Schedule of property and equipment                     September 30, 2024     December 31, 2023   Computer and office equipment   $ 199     $ 179   Furniture and fixtures     13       12   Leasehold improvements     6       6   Software     1       1   Total     219       198   Less: accumulated depreciation and amortization     (139 )     (83 ) Total Property and Equipment, net   $ 80     $ 115     Depreciation and amortization expense were approximately $20 thousand, $64 thousand, $24 thousand, $52 thousand, and $19 thousand, for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.

v3.24.3

Goodwill and Intangible Assets	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	NOTE 6 – Goodwill and Intangible Assets   The Company reviews goodwill and intangible assets for impairment on a reporting unit basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company noted that the carrying amount of Goodwill as of September 30, 2024 and December 31, 2023 (Successor) was $8,737 thousand, which was entirely due to the business combination noted in Note 3.   Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a decline in industry and market considerations, technological advancements, and the Company’s financial performance.   We completed our annual goodwill impairment evaluation as of December 31, 2023. As a result, the Company incurred an impairment loss of $36,056 thousand.   The Company determined that there was no impairment present at the reporting date as of September 30, 2024 (Successor).   Intangible assets consisted of the following (in thousands):   Schedule of intangible assets                                                           September 30, 2024     December 31, 2023       Weighted Average Remaining Useful Life (Years)     Gross Amount     Accumulated Amortization     Net Carrying Amount     Gross Amount     Accumulated Amortization     Net Carrying Amount   Trade Name/Trademarks   5.4     $ 3,294     $ (725 )   $ 2,569     $ 3,294     $ (373 )   $ 2,921   Customer Relationships   3.4       5,604       (1,728 )     3,876       5,604       (887 )     4,717   Developed Technology   8.4       8,697       (1,341 )     7,356       8,697       (688 )     8,009   Patents and Intellectual Property   8.4       2,703       (417 )     2,286       2,703       (214 )     2,489   Totals         $ 20,298     $ (4,211 )   $ 16,087     $ 20,298     $ (2,162 )   $ 18,136       Future amortization expense on intangible assets as of September 2024 is anticipated to be as follows (in thousands):   Schedule of amortization expense on intangible assets         For the Years Ending December 31,   Amount   2024 (remainder of year)   $ 683   2025     2,731   2026     2,731   2027     2,731   2028     1,844   2029     1,611   Thereafter     3,756   Total   $ 16,087

v3.24.3

Deferred Revenue	9 Months Ended
	Sep. 30, 2024
Deferred Revenue
Deferred Revenue	NOTE 7 – Deferred Revenue   Deferred revenue consisted of the following (in thousands):   Schedule of deferred revenue                                     License Agreements     Professional Service Agreements     Hardware     Total   Deferred Revenue – January 1, 2024   $ 2,404     $ 474     $ -     $ 2,878   Revenue recognized     (4,752 )     (594 )     (135 )     (5,481 ) Revenue deferred     4,459       323       159       4,941   Deferred Revenue – September 30, 2024   $ 2,111     $ 203     $ 24     $ 2,338         License Agreements     Professional Service Agreements     Hardware     Total   Deferred Revenue – March 15, 2023   $ 2,148     $ 386     $ -     $ 2,534   Revenue recognized     (4,560 )     (1,186 )     -       (5,746 ) Revenue deferred     4,816       1,274       -       6,090   Deferred Revenue – December 31, 2023   $ 2,404     $ 474     $ -     $ 2,878     Deferred revenues were approximately $2,338 thousand and $2,878 thousand at September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.   The fair value of the deferred revenue approximates the services to be rendered.

v3.24.3

Accrued Liabilities	9 Months Ended
	Sep. 30, 2024
Payables and Accruals [Abstract]
Accrued Liabilities	NOTE 8 – Accrued Liabilities   Accrued liabilities consisted of the following (in thousands):   Schedule of accrued liabilities                     September 30, 2024     December 31, 2023   Accrued expenses and reimbursements   $ 1,019     $ 858   Accrued compensation and benefits     311       387   Accrued bonus and commissions     166       108   Accrued insurance premium and interest     90       -   Income tax payables     59       74   Accrued transaction costs     13       13   Accrued sales and other indirect taxes payable     8       12   Accrued liabilities   $ 1,666     $ 1,452     Financed Director & Officers Insurance   The Company entered into a Directors & Officers (“D&O”) insurance agreement with Oakwood D&O Insurance, effective on March 14, 2024. The agreement states that the Company will pay a total of $310 thousand in premiums at an annual percentage rate of 9.5%. The first of ten monthly separate installment payments begin on April 14, 2024. The Company paid a down payment on the policy of $85 thousand. As of September 30, 2024 (Successor), the Company currently owes $91 thousand on the D&O insurance policy.

v3.24.3

Promissory Note	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Promissory Note	NOTE 9 – Promissory Note   Note payable consisted of the following (in thousands):   Promissory note                     September 30, 2024     December 31, 2023   Principal amount   $ 3,885     $ 3,885   Less:  Unamortized original issue discount     181       834     Unamortized debt issuance cost     3       14         3,701       3,037   Add:  Interest     311       16     Accrued monitoring fee     408       -         4,420       3,053   Less:  Extinguishment     1,400        -       $ 3,020     $ 3,053     December 2023 Note Purchase Agreement and Promissory Note   On December 15, 2023, we entered into a note purchase agreement with Streeterville Capital, LLC (the “Lender”), pursuant to which we agreed to issue and sell to the Lender an unsecured promissory note (the “Note”) in an aggregate initial principal amount of $3,885 thousand, which is payable on or before the date that is 12 months from the issuance date. The initial principal amount includes an original issue discount of $870 thousand and $15 thousand that we agreed to pay to the Lender to cover the Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs. The net proceeds of the Note is $3,000 thousand.   Interest on the Note accrues at a rate of 10% per annum and is payable on the maturity date.   A monitoring fee of 10% of the outstanding balance will be charged on the sixth (6th) month from the issuance date of the Note to cover Lender’s accounting, legal and other costs incurred in monitoring the Note based on the then-current outstanding balance of the Note. The foregoing fee shall automatically be added to the outstanding balance on the applicable date without any further action by either party.   The Lender shall have the right to redeem up to an aggregate of 1/6th of the initial principal balance of the Note plus any interest accrued thereunder each month by providing written notice delivered to us; provided, however, that if the Lender does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the Lender to redeem in any further month in addition to such future month’s monthly redemption amount.   Upon receipt of any monthly redemption notice, we shall pay the applicable monthly redemption amount in cash to the Lender within five (5) business days of the Company’s receipt of such monthly redemption notice.   The Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22%. Upon the occurrence of an event of default, interest would accrue on the outstanding balance beginning on the date the applicable event of default occurred at an interest rate equal to the lesser of twenty-two percent (22%) or the maximum rate permitted under applicable law.   Note Exchanges   During the period from July 15, 2024 to August 19, 2024, the Company exchanged $1,400 thousand of the outstanding balance of the Note for approximately 798,298 shares of the Company’s Class A Common Stock at exchange prices between $1.47 and $2.23 per share.   The Company analyzed the exchange of principal under the note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded an approximately $535 thousand loss on the exchange of debt for equity as a separate item in the other income (expense) section of the consolidated statements of operations for the three months ended September 30, 2024.   As of November 12, 2024, there is an aggregate outstanding principal and interest balance of approximately $2,633 thousand underlying the December 2023 Note.   Interest expense for the December 2023 Note recognized on the condensed consolidated statement of operations and comprehensive loss were approximately $317 thousand, $958 thousand, and $0 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), and the period from March 15, 2023 to September 30, 2023 (Successor), respectively.

v3.24.3

Warrants	9 Months Ended
	Sep. 30, 2024
Warrants
Warrants	NOTE 10 – Warrants   Public Warrants   As of September 30, 2024 (Successor) and December 31, 2023 (Successor), there were 10,751,862 Public Warrants outstanding. Each whole warrant entitles the holder thereof to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustments described in the Company’s registration statement on Form S-1 (Registration No. 333-249177) filed in connection with its initial public offering.   The Public Warrants is exercisable and will expire on March 15, 2028 or earlier upon redemption or liquidation. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.   The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.   On July 13, 2023, warrant holders exercised 435,000 public warrants at an exercise price of $11.50, for a total of $5,002 thousand of cash proceeds to the Company.   On July 14, 2023, the Company entered into a Warrant Exchange Agreement (the “Agreement”) with an unaffiliated third party investor (the “Warrant Holder”) with respect to warrants to purchase an aggregate of 2,000 thousand shares of its common stock, par value $0.0001 per share (the “Common Stock”) initially issued by the Company in its initial public offering on December 15, 2020 (the “Public Warrants”). Pursuant to the Agreement, the Company issued an aggregate of 600 thousand shares of Common Stock to the Warrant Holder in exchange for the surrender and cancellation of the Public Warrants held by such holder. This resulted to an additional paid in capital of $4,914 thousand in a non-cash transaction and resulted in a $3,900 thousand loss on the warrant conversion, which is included in change in fair value of derivative liability in the statement of operations.   For the three months ended September 30, 2023, approximately 613,138 thousand public warrants to purchase Class A common stock were exercised on a cashless basis for approximately 50 thousand shares of common stock and are no longer outstanding.   Private Warrants   As of September 30, 2024 (Successor) and December 31, 2023 (Successor), there were 10,280 thousand Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or salable until April 14, 2023, subject to certain limited exceptions.   Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

v3.24.3

Stock Option Plan and Stock-Based Compensation	9 Months Ended
	Sep. 30, 2024
Stock Option Plan And Stock-based Compensation
Stock Option Plan and Stock-Based Compensation	NOTE 11 – Stock Option Plan and Stock-Based Compensation   To calculate the stock-based compensation resulting from the issuance of options, the Company uses the Black-Scholes option pricing model, which is affected by the Company’s fair value of its stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.   2023 Equity Incentive Plan   At the special meeting held on March 10, 2023, the KINS stockholders considered and approved, among other things, the Incentive Plan. The Incentive Plan was previously approved, subject to stockholder approval, by KINS’ board of directors. The Incentive Plan became effective immediately upon the closing of the Business Combination. Pursuant to the terms of the Incentive Plan, there are 2,110,500 shares of CXApp Class A Common Stock available for issuance under the Incentive Plan, which is equal to 15% of the aggregate number of shares of CXApp common stock issued and outstanding immediately after the closing of the Business Combination (giving effect to the redemptions).   Employee Stock Options   On February 6, 2024, a total of 705,000 stock options to purchase the Company’s common stock were granted to employees and consultants of the Company. These options vest over a 4-year period. The options have a life of 10 years and an exercise price of $1.20 per option. The stock options were valued using the Black-Scholes option valuation model and the weighted average fair value of the awards granted during the period was determined to be $0.74 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $1.21 per share.   In June 2024, the Company received a notice for a net exercise of 70,350 options to purchase shares of common stock resulting in the issuance of 12,570 shares of the Company’s Class A Common Stock with par value $0.0001 per share. In accordance with the terms of the Incentive Plan, 51,012 shares were withheld by the Company to cover the exercise price and 6,768 shares were withheld in satisfaction of the taxes required to be paid in connection with the exercise.   On August 26, 2024, the Board approved the award of 230,000 options to purchase common stock pursuant to the 2023 Equity Incentive Plan to Joy Mbanugo, the Chief Financial Officer of the Company. The option has an exercise price of $2.40 per share. The options expire on August 26, 2034. The stock options were valued using the Black-Scholes option valuation model and the fair value of the awards granted was determined to be $1.44 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $2.40 per share.   See below for a summary of the stock options granted under the Incentive Plan:   Schedule of stock options                                     Number of Options     Weighted average exercise price     Weighted average remaining contractual term (years)     Weighted-Average Fair Value at Grant Date   Options outstanding at January 1, 2024     984,900     $ 1.53       9.25     $ 0.90   Granted     935,000     $ 1.50       9.49     $ 0.91   Exercised     (70,350 )   $ 1.53                   Forfeited     -     $ -                   Options outstanding at September 30, 2024     1,849,550     $ 1.51       9.00     $ 0.91   Options exercisable at September 30, 2024     422,100     $ 1.53                     Non-cash stock-based compensation expenses related to stock option were recorded in the financial statements as summarized below:   Schedule of non-cash stock-based compensation expenses   Successor     Predecessor       Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023     Period from January 1, 2023 to March 14, 2023   Research and development   $ 5     $ -     $ 12     $ -     $ -   Sales and marketing     16       -       64       -       -   General and administrative     89       56       356       113       158   Total non-cash stock compensation   $ 110     $ 56     $ 432     $ 113     $ 158     As of September 30, 2024 (Successor), the remaining unrecognized stock compensation expense totaled approximately $564 thousand. This amount will be recognized as expense over the weighted average remaining term of 3.02 years.   The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Key weighted-average assumptions used to apply this pricing model for the nine months ended September 30, 2024 (Successor) and the period from March 15, 2023 to December 31, 2023 (Successor) were as follows:   Schedule of assumptions used   2024   2023   Risk-free interest rate   3.58% – 4.33%   3.67%   Expected life of option grants   6.00 – 6.25 years   5.75 years   Expected volatility of underlying stock   61.65%   61.65%   Dividends assumption   $-   $-     Restricted Stock Units   On January 2024, a total of 47,000 restricted stock units of the Company’s common stock were granted to employees of the Company under the Incentive Plan at various dates.   On August 29, 2024, a total of 473,935 restricted stock units of the Company’s common stock were granted to directors of the Company under the 2023 Equity Incentive Plan.   The fair value of the common stock as of the various grant dates was determined to be $1.25 to $2.11 per restricted stock unit, for a weighted average fair value of $2.04 per restricted stock unit. There was no other activity related to restricted stock units for the nine months ended September 30, 2024.   The following summarizes our RSUs transaction activity for nine months ended September 30, 2024:   Schedule of RSUs transaction activity                     Shares     Weighted Average Grant Date Fair Value   Outstanding at January 1, 2024     486,165     $ 7.80   Granted     520,935     $ 2.04   Vested     (308,165 )   $ 7.52   Forfeited     -           Outstanding at September 30, 2024     698,935                 Shares     Weighted Average Grant Date Fair Value   Outstanding at March 15, 2023     -     $     Granted     526,165     $ 7.80   Forfeited     (40,000 )   $ 7.13   Outstanding at December 31, 2023     486,165             The total fair value of RSUs vested during the three months ended September 30, 2024 was $2,318 thousand.   Non-cash stock-based compensation expenses related to restricted stock units recorded in the financial statements is summarized below:   Schedule of non-cash stock-based compensation expenses related to restricted stock units                                     Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023   Research and development   $ 100     $ -     $ 504     $ -   Sales and marketing     51       -       257       -   General and administrative     648       597       1,152       638   Total non-cash stock compensation   $ 799     $ 597     $ 1,913     $ 638     As of September 30, 2024, the Company has approximately $1,376 thousand of unrecognized restricted stock unit compensation to be expensed over a weighted average period of 1.25 years.

v3.24.3

Convertible Debt	9 Months Ended
	Sep. 30, 2024
Convertible Debt
Convertible Debt	NOTE 12 – Convertible Debt   Convertible debt as of September 30, 2024 consisted of the following (in thousands):   Schedule of convertible debt         Principal amount   $ 3,675   Less:  Unamortized original issue discount     161     Unamortized debt issuance cost     18         3,496   Add:  Accrued interest payable     43       $ 3,539     On May 22, 2024, the Company entered into a Securities Purchase Agreement which the Lender desires to purchase up to $10,000 thousand shares of the Company’s Common Stock, pursuant to which the Company issued an unsecured convertible Pre-Paid Purchase #1 to Streeterville Capital, LLC (“Lender”). The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand and Lender gave consideration of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand.   The convertible Pre-Paid Purchase #1 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #1, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $3.996 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.666, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase.   On June 3, 2024, the Company received the net proceeds from the Lender. For the period ended September 30, 2024, amortization of debt discount and transaction cost of approximately $16 thousand was recorded on the condensed consolidated statements of operations.   On September 30, 2024, the Company issued an unsecured convertible Pre-Paid Purchase #2 to Streeterville Capital, LLC (“Lender”), pursuant to the Securities Purchase Agreement. The convertible Pre-Paid Purchase #2 has the original principal amount of $1,050 thousand and Lender gave consideration of $1,000 thousand, reflecting original issue discount of $50 thousand.   The convertible Pre-Paid Purchase #2 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #2, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.992 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.332, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase.   On September 30, 2024, the Company received the net proceeds from the Lender.   During the period ended September 30, 2024, the Company has issued no shares related to the convertible Pre-Paid Purchases.

v3.24.3

Income Taxes	9 Months Ended
	Sep. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	NOTE 13 – Income Taxes   The Company recorded an income tax benefit of approximately $147 thousand, $513 thousand, $417 thousand, and $2,958 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), and for the period from March 15, 2023 to September 30, 2023 (Successor), respectively. The Company did not incur income tax expense for the period from January 1, 2023 to March 14, 2023 (Predecessor).   The effective tax rate for three months ended September 30, 2024 (Successor) and for the nine months ended September 30, 2024 (Successor) was (2.86)% and (3.22)%, respectively. The effective tax rate differs from the U.S. Federal statutory rate primarily due to recording a valuation allowance against deferred tax assets in the foreign jurisdictions and the significant permanent differences including impairment of goodwill and change in fair value of derivative warrant liabilities.

v3.24.3

Credit Risk and Concentrations	9 Months Ended
	Sep. 30, 2024
Risks and Uncertainties [Abstract]
Credit Risk and Concentrations	NOTE 14 – Credit Risk and Concentrations   Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash and cash equivalents. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk of its customers, establishes an allowance for credit losses and, consequently, believes that its accounts receivable credit risk exposure beyond such allowances is limited.   The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. Cash is also maintained at foreign financial institutions for its Canadian and Philippine subsidiaries. Cash in foreign financial institutions as of September 30, 2024 (Successor) was $31 thousand. Cash in foreign financial institutions as of December 31, 2023 (Successor) was $300 thousand.   The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). However, any loss incurred or lack of access to such funds could have a significant impact on the Company’s financial condition, results of operations, and cash flows.

v3.24.3

Foreign Operations	9 Months Ended
	Sep. 30, 2024
Foreign Operations
Foreign Operations	NOTE 15 – Foreign Operations   The Company’s operations are located primarily in the United States, Canada, and the Philippines. Revenues by geographic area are attributed by country of domicile of the Company’s subsidiaries. The financial data by geographic area are as follows (in thousands):   Schedule of financial data by geographic area                                             United States     Canada     Philippines     Eliminations     Total   For the Three Months Ended September 30, 2024 (Successor): Revenues by geographic area   $ 1,804     $ 93     $ 236     $ (236 )   $ 1,897   Operating loss by geographic area   $ (2,634 )   $ (467 )   $ (225 )   $ -     $ (3,326 ) Net loss by geographic area   $ (4,386 )   $ (388 )   $ (230 )   $ -     $ (5,004 )                                           For the Nine Months Ended September 30, 2024 (Successor): Revenues by geographic area   $ 5,140     $ 341     $ 709     $ (709 )   $ 5,481   Operating loss by geographic area   $ (8,714 )   $ (1,650 )   $ (199 )   $ -     $ (10,563 ) Net loss by geographic area   $ (13,568 )   $ (1,658 )   $ (204 )   $ -     $ (15,430 )                                                                                     For the Three Months Ended September 30, 2023 (Successor): Revenues by geographic area   $ 1,504     $ 266     $ 228     $ (228 )   $ 1,770   Operating income (loss) by geographic area   $ (3,470 )   $ (769 )   $ 10     $ -     $ (4,229 ) Net income (loss) by geographic area   $ 2,224     $ (795 )   $ 12     $ -     $ 1,441                                           For the Period from January 1, 2023 to March 14, 2023 (Predecessor): Revenues by geographic area   $ 1,395     $ 285     $ 160     $ (220 )   $ 1,620   Operating income (loss) by geographic area   $ (3,479 )   $ (905 )   $ 3     $ -     $ (4,381 ) Net income (loss) by geographic area   $ (3,342 )   $ (1,041 )   $ 3     $ -     $ (4,380 )   For the Period from March 15, 2023 to September 30, 2023 (Successor): Revenues by geographic area   $ 3,326     $ 701     $ 643     $ (643 )   $ 4,027   Operating income (loss) by geographic area   $ (6,882 )   $ (1,693 )   $ 176     $ -     $ (8,399 ) Net income (loss) by geographic area   $ (8,976 )   $ (1,714 )   $ 180     $ (21 )   $ (10,531 )                                           As of September 30, 2024 (Successor) Identifiable assets by geographic area   $ 30,752     $ 337     $ 486     $ -     $ 31,575   Long lived assets by geographic area   $ 16,450     $ 217     $ 73     $ -     $ 16,740   Goodwill by geographic area   $ 8,737     $ -     $ -     $ -     $ 8,737                                                                                       As of December 31, 2023 (Successor) Identifiable assets by geographic area   $ 38,143     $ 627     $ 434     $ (2,623 )   $ 36,581   Long lived assets by geographic area   $ 18,269     $ 320     $ 148     $ -     $ 18,737   Goodwill by geographic area   $ 8,737     $ -     $ -     $ -     $ 8,737

v3.24.3

Leases	9 Months Ended
	Sep. 30, 2024
Leases [Abstract]
Leases	NOTE 16 – Leases   The Company has operating leases for administrative offices in Canada, the Philippines, and the United States. The Manila, Philippines office lease expires in May 2025, the Canada lease expires in May 2026, and the United States office lease expires in April 2026. The Company has no other operating or financing leases with terms greater than 12 months.   Lease expense for operating leases recorded on the balance sheet is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs. Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in the Company’s unaudited condensed consolidated statement of operations for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor) was approximately $109 thousand, $331 thousand, $56 thousand, $121 thousand, and $57 thousand, respectively.   Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of ASC 842 “Leases” (“ASC 842”). As of September 30, 2024 (Successor), the weighted average remaining lease term is 1.3 years and the weighted average discount rate used to determine the operating lease liabilities was 8.0%. As of December 31, 2023 (Successor), the weighted average remaining lease term is 1.4 years and the weighted average discount rate used to determine the operating lease liabilities was 8.0%.   Schedule of operating leases         (in thousands)   Operating Leases   Year 2024   $ 113   Year 2025     386   Year 2026     130   Total lease payments     629   Less: Imputed interest     (44 ) Present value of lease liabilities   $ 585

v3.24.3

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies
Commitments and Contingencies	NOTE 17 – Commitments and Contingencies   Risks and Uncertainties   Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics) may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a Business Combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a Business Combination and the value of the Company’s securities.   Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.   Litigation   Certain conditions may exist as of the date the condensed consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.   If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed.   Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

v3.24.3

Subsequent Events	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	NOTE 18 – Subsequent Events   During October 2024, the Company issued a total of 394,869 shares of the Company’s Class A Common Stock in exchange for $500 thousand of convertible debt related to convertible Pre-Paid Purchase #1, and none for convertible Pre-Paid Purchase #2. Shares issued are valued at a price disclosed in Note 12 – Convertible Debt.   Stockholder Quorum Requirement   On November 8, 2024, the Board acted by unanimous consent to amend and restate our bylaws and reduce our quorum requirement, effective immediately. Following the amendment, our quorum requirement was reduced from stockholders holding at least fifty percent (50%) of the issued and outstanding shares to stockholders holding at least thirty-three and one third percent (33.3%) of the issued and outstanding shares. A 33.3% quorum is the lowest quorum requirement permitted under Delaware law and Nasdaq. The Board approved the reduction because it had found it exceedingly difficult to satisfy our former quorum requirement, which is necessary to constitute a valid and duly called meeting of our stockholders. The foregoing description of the Amended and Restated Bylaws of the Company does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Bylaws, a copy of which are attached hereto as Exhibit 3.2 and incorporated herein by reference.

v3.24.3

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Liquidity	Liquidity   As of September 30, 2024 (Successor), the Company had a working capital deficiency of approximately $7,404 thousand and cash and cash equivalents of approximately $5,082 thousand. For the three and nine months ended September 30, 2024 (Successor), the Company incurred net losses of approximately $5,004 thousand and $15,430 thousand, respectively. During the nine months ended September 30, 2024 (Successor), the Company used approximately $4,629 thousand of cash for operating activities.   The Company acknowledges that there are challenges in generating sufficient revenue to fully support its operations and achieving long-term profitability. The Company’s recurring losses and cash usage in operations have raised concerns about its ability to continue as a going concern. Given the current liquidity position, management has taken several strategic measures to improve operational efficiency and strengthen the financial outlook. These initiatives include streamlining operations through workforce reductions, renegotiating contractual agreements, adjusting professional service fees, and optimizing expenses such as software licenses and contractor-related costs. Additionally, the Company has made progress in forming strategic partnerships such as the addition of its platform to key marketplaces and has successfully negotiated cost reductions in areas such as insurance premiums. Management believes that these actions will contribute to improved operational efficiency and long-term financial stability. However with the current liquidity position, management has implemented the following strategic measures to improve operational efficiency and strengthen the financial outlook:   ● In January 2024, the Company streamlined its operations to conserve cash resources by laying off approximately 20% of the global employee headcount;   ● In March 2024, the Company successfully negotiated for a 50% reduction in D&O insurance premium; and   ● In August 2024, Google added the CXAI application platform to the Google Marketplace and signed a go-to-market partnership agreement. Google Cloud’s sales and marketing teams will work with CXAI on targeting key clients and providing them the best workplace platform experience. With this, the Management believes that this partnership would help boost the Company’s product capability revenue.   These steps, along with anticipated revenue growth from organic sales and other partnerships, provide the Company with the necessary resources to support operations mitigating liquidity risk.   On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand. On June 3, 2024, the Company received net proceeds of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand. On September 30, 2024, the Company received net proceeds of $1,000 thousand, reflecting original issue discount of $50 thousand, pursuant to the convertible Pre-Paid Purchase #2 dated on the same day.   Management believes that the recent funding initiatives provide sufficient capital to address any potential uncertainties regarding the Company’s ability to continue as a going concern. This funding ensures that the Company is well-positioned to meet its obligations and continue operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements. If additional funding is required, the Management is confident in its ability to secure financing, as necessary. The Company has access to multiple funding sources and expects these to be sufficient for its strategic needs.   Looking beyond this period, the Company is focused on executing its business plan and exploring additional strategic initiatives to enhance liquidity and support long-term growth. While the ability to continue as a going concern depends on various factors, including the successful implementation of these plans and market conditions, management remains optimistic about the Company’s long-term prospects and its capacity to adapt and thrive in a dynamic market environment.   The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, reflecting the Company’s expectation to realize its assets and meet its liabilities in the ordinary course of business. No adjustments have been made to the financial statements regarding the recoverability or classification of recorded asset amounts or liabilities, as the Company believes it will effectively manage the uncertainties described above.
Basis of Presentation	Basis of Presentation   The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, since they are interim statements, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 (Successor) are not necessarily indicative of the results that may be expected for other quarters or the year ending December 31, 2024. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements as of that date. For more complete financial information, these condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on May 23, 2024.
Principles of Consolidation	Principles of Consolidation   The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.
Use of Estimates	Use of Estimates   The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of:     ● the valuation of stock-based compensation;     ● the valuation of warrant liabilities;     ● the allowance for credit losses;     ● the valuation allowance for deferred tax assets; and     ● impairment of long-lived assets and goodwill.
Cash and Cash Equivalents	Cash and Cash Equivalents   Cash and cash equivalents consist of cash, checking accounts, money market accounts, and certificates of deposit with maturities of three months or less when purchased. As of September 30, 2024 (Successor), the Company had cash equivalents of approximately $4,688 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2023 (Successor), the Company had approximately $5,584 thousand in cash equivalents.
Accounts Receivable, net and Allowance for Credit Losses	Accounts Receivable, net and Allowance for Credit Losses   Accounts receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to uncollectability. Allowance for credit losses are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in such customer’s operating results or financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for credit losses is approximately $0 thousand and $2 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.
Property and Equipment, net	Property and Equipment, net   Property and equipment are recorded at cost, less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Leasehold improvements are amortized over the useful life of the asset or the initial lease term, whichever is shorter. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized.
Intangible Assets, net	Intangible Assets, net   Intangible assets primarily consist of developed technology, customer lists/relationships, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 to 10 years, which approximates customer attrition rate and technology obsolescence. The Company assesses the carrying value of its intangible assets for impairment annually, or more frequently if an event or other circumstances indicates that the Company may not be able to recover the carrying amount of the assets. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).
Goodwill	Goodwill   The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.   The Company calculates the estimated fair value of a reporting unit using weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables, including public company method, guideline transaction method, and market price method.   The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Based on its assessments, the Company did not incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor). See Note 6 for impairment that occurred during the period ended December 31, 2023.
Leases and Right-of-Use Assets and Liabilities	Leases and Right-of-Use Assets and Liabilities   The Company determines if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company generally uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use assets related to the Company’s operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company’s lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options. The Company amortizes its right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year.
Income Taxes	Income Taxes   The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.
Comprehensive Loss and Foreign Currency Translation	Comprehensive Loss and Foreign Currency Translation   The Company reports comprehensive loss and its components in its condensed consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under GAAP, are excluded from net loss.   Assets and liabilities related to the Company’s foreign operations are calculated using the Philippine Peso and Canadian Dollar and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period. Gains or losses resulting from transactions denominated in foreign currencies are included in other income (expenses) in the condensed consolidated statements of operations. The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar. Aggregate foreign currency net transaction gain or loss were approximately $42 thousand loss, $34 thousand gain, $31 thousand gain, $8 thousand loss, and $28 thousand loss for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.
Convertible Debt	Convertible Debt   The Company issued convertible debt in May 2024, and evaluated to determine whether they contain features that qualify as embedded derivatives in accordance with ASC 815. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance of the convertible debt, the Company treats the instrument wholly as a liability, in accordance with ASC 470, as the conversion features do not require bifurcation as a derivative in accordance with ASC 815 and the convertible debt was not issued at a substantial premium.   Costs directly associated with the borrowing have been capitalized and are netted against the corresponding debt liabilities in the Company’s Condensed Consolidated Balance Sheets at issuance and amortized over the contractual term of the convertible debt instrument using the effective interest rate method.
Debt Issuance Costs	Debt Issuance Costs   The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the related debt using the effective interest method. The amendments to FASB ASC 835-30 require that debt issuance costs be presented in the Condensed Consolidated Balance Sheets as a direct deduction from the carrying amount of long-term debt, consistent with debt discounts or premiums.
Debt Extinguishment	Debt Extinguishment   The note exchanges are accounted for under ASC 470-50 on Modifications and Extinguishments. This standard requires the recognition of a gain or loss on the difference between the reacquisition price and the net carrying amount of the extinguished debt.
Revenue Recognition	Revenue Recognition   The Company recognizes revenue, in accordance with ASC 606, when control of the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from its software as a service for cloud-based software, as well as design, implementation and other professional services for work performed in conjunction with its cloud-based software. The Company enters into contracts with its customers whereby it grants a non-exclusive cloud-based license for the use of its proprietary software and for professional services. The contracts may also provide for on-going services for a specified price, which may include maintenance services, designated support, and enhancements, upgrades and improvements to the software, depending on the contract. Licenses for cloud software provide the customer with a right to use the software as it exists when made available to the customer. All software provides customers with the same functionality and differs mainly in the duration over which the customer benefits from the software.   The Company recognizes revenue in accordance with ASC 606 – Revenue from Contracts with Customers. The standard’s core principle is that an entity will recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new standard is a principles-based standard intended to better match the accounting for the transaction with the economics of the transaction. This requires entities to use more judgment and make more estimates than under previous revenue standards.   The standard introduces a five-step model for revenue recognition that replaces the four criteria for revenue recognition under previous GAAP. The five steps are shown below:   1. Identify the contract with a customer;   2. Identify the performance obligations in the contract;   3. Determine the transaction price;   4. Allocate the transaction price to performance obligations; and   5. Recognize revenue when (or as) the entity satisfies a performance obligation   License Subscription Revenue Recognition (Software As A Service)   With respect to sales of the Company’s license agreements, customers generally pay fixed annual fees in advance in exchange for the Company’s software service provided via electronic means, which are generally recognized ratably over the license term. Some agreements allow the customer to terminate their subscription contracts before the end of the applicable term, and in such cases the customer is generally entitled to a refund pro-rata but only for the elapsed time remaining at the point of termination, which would approximate the deferred revenue at such time. The Company’s performance obligation is satisfied over time as the electronic services are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice.   The timing of the Company’s revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a service. Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software.   Renewals or extensions of licenses are evaluated as distinct licenses and revenue attributed to the distinct service is not recognized until: (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. The Company recognizes revenue resulting from renewal of licensed software over time.   Professional Services Revenue Recognition   The Company provides integration and software customization professional services to its customers.   Professional services under milestone contracts are accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract.   Professional services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts provided by in-house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known.   For the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company did not incur any such losses. These amounts are based on known and estimated factors.   Hardware Revenue Recognition   For sales of hardware, the Company’s performance obligation is fulfilled when the products are shipped to the customer, transferring title and ownership risks. Deliveries occur via drop-shipment by a third-party vendor and the Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse. The Company negotiates sale prices, pays suppliers directly, manages credit risk, and ensures product acceptability, acting as the principal in the transaction and recording revenue on a gross basis. Customers typically pay within 30 to 60 days of invoice receipt. The Company has elected the practical expedient to expense the costs of obtaining a contract when they are incurred because the amortization period of the asset that otherwise would have been recognized is less than a year.   Contract Balances   The timing of the Company’s revenue recognition may differ from the timing of invoicing to and payment by its customers. The Company records an unbilled receivable when revenue is recognized prior to invoicing and the Company has an unconditional right to payment. Alternatively, when invoicing a customer precedes the Company providing of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $2,338 thousand and $2,878 thousand as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively, related to customer invoices rendered in advance for software licenses, professional services, and hardware provided by the Company’s technical staff.   The Company expects to satisfy its remaining performance obligations for the deferred revenue associated with hardware, professional services, and recognize the deferred revenue related to licenses generally over the remaining contract term which is generally twelve months following the commencement of the license. The Company recognized revenue in the reporting period of $2,359 thousand, $893 thousand, and $865 thousand, that was included in the contract liability balance at the beginning of the period, for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively.   Costs to Obtain a Contract   The Company recognizes eligible sales commissions as an asset within prepaid expenses and other current assets as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs. The capitalized costs are amortized over the expected contract term.   Cost to Fulfill a Contract   The Company incurs costs to fulfill their obligations under a contract once it has obtained the contract. These costs are generally not significant and are recorded to expense as incurred.   Multiple Performance Obligations   The Company enters into contracts with customers for its technology that include multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation.   Sales and Use Taxes   The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis.   Shipping and Handling Costs   Shipping and handling costs are expensed as incurred as part of cost of revenues. These costs were deemed to be de minimis during each of the reporting periods.
Research and Development	Research and Development   Research and development (“R&D”) costs are expensed when incurred. R&D expenses consist primarily of personnel and related headcount costs, costs of professional services associated with the ongoing development of the Company’s technology, and allocated overhead.
Business Combinations	Business Combinations   The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are included as of and subsequent to the acquisition date.
Segments	Segments   The Company and its Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”), acting as the Chief Operating Decision Makers (“CODM”), determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.
Stock-based Compensation	Stock-based Compensation   The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award.   The grant date fair value of options is estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates.
Derivative Warrant Liabilities	Derivative Warrant Liabilities   The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability.   For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance as a warrant liability and adjusted to the then fair value in each balance sheet date thereafter.   Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations and amounting to $1,052 thousand loss, $3,575 thousand loss, $5,220 thousand gain, $5,134 thousand loss, and $0 thousand for the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), respectively. The Company utilized the Public Warrant quoted market price as the fair value of the Warrants as of each relevant date.
Earnings Per Share	Earnings Per Share   The Company computes basic and diluted earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three and nine months ended September 30, 2024 (Successor), basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options, warrants, and vesting of restricted units in the calculation of diluted net loss per common shares would have been anti-dilutive. For the period from March 15, 2023 to September 30, 2023 (Successor), the common shares issuable were excluded from the calculation because (i) the warrants were below their exercise price and (ii) the stock options were not vested.   The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), and for the period from March 15, 2023 to September 30, 2023 (Successor).   Schedule of antidilutive shares                                 (in thousands)   Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023   Stock options     1,850       985       1,602       985   Restricted stock units     699       821       514       821   Warrants     21,032       21,032       21,032       21,032   Total     23,581       22,838       23,148       22,838
Fair Value Measurements	Fair Value Measurements   FASB ASC 820, “Fair Value Measurements” (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. The Company follows this authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:     ● Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.     ● Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.     ● Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.   Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management. The fair value of the warrants has been measured based on the listed market price of such warrants, a Level 1 measurement. For the three months ended September 30, 2024 (Successor), for the nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company recognized, in the consolidated statements of operations and comprehensive income, unrealized loss of $1,052 thousand, unrealized loss $3,575 thousand, unrealized gain $5,220 thousand, $5,134 thousand unrealized loss, and $0 thousand, respectively. See Note 10.   The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the condensed consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability is de-recognized at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the de-recognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that governs the cashless conversion.   The following table shows the changes in fair value of the liabilities:   Schedule of changes in fair value of the liabilities         Warrant liability – January 1, 2024   $ 1,683   Change in FV of derivative instruments     1,472   Warrant liability – March 31, 2024     3,155   Change in FV of derivative instruments     1,051   Warrant liability – June 30, 2024     4,206   Change in FV of derivative instruments     1,052   Warrant liability – September 30, 2024   $ 5,258     Warrant liability – March 15, 2023   $ 2,649   Change in FV of derivative instruments     (1,686 )  Warrant liability – March 31, 2023     963   Change in FV of derivative instruments     12,040   Warrant liability – June 30, 2023     13,003   Change in FV of derivative instruments     (5,220 ) FV of Warrants cash exercised and exchanged for Class A common stock (see Note 10 – Warrants)     (1,237 ) Loss on warrant extinguishment     (3,894 ) FV of Warrants cashless exercised for Class A common stock (see Note 10 – Warrants)     (549 ) Warrant liability – September 30, 2023   $ 2,103
Fair Value of Financial Instruments	Fair Value of Financial Instruments   Financial instruments consist of cash and cash equivalents, accounts receivable, unbilled and other receivables and accounts payable. The Company determines the estimated fair value of such financial instruments presented in the financial statements is equal to its carrying value due to their short-term nature.
Carrying Value, Recoverability and Impairment of Long-Lived Assets	Carrying Value, Recoverability and Impairment of Long-Lived Assets   The Company follows FASB ASC 360 “Property, Plant, and Equipment” (“ASC 360”) for its long-lived assets. Pursuant to ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.   Pursuant to ASC 360-10-35-21, the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.   The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.   Based on its assessments, the Company recorded no impairment charges on long-lived assets for the three and nine months ended September 30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor).
Recently Issued Accounting Standards Not Yet Adopted	Recently Issued Accounting Standards Not Yet Adopted   In October 2023, the FASB issued ASU 2023-06 “Disclosure Improvements”, which amends the codification in response to the SEC’s Disclosure Update and Simplification Initiative. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is currently assessing the potential impact of ASU 2023-06 and does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and disclosures.    In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) that enhances transparency into income tax disclosures. Requires annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Eliminates certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.   In March 2024, the FASB issued ASU 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards,” which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718, or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 adds an example with multiple fact patterns and illustrates how an entity evaluates common terms and characteristics of profits interests and similar awards to reach a conclusion about whether an award meets the conditions in Topic 718. It also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to all periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.   In March 2024, the FASB issued ASU 2024-02 “Codification Improvements—Amendments to Remove References to the Concept Statements”, which amends the Codification to remove references to various FASB Concepts Statements and impacts a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and are not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to the beginning of the earliest comparative period presented or prospectively to all new or modified transactions recognized on or after the date of adoption. We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

v3.24.3

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Schedule of antidilutive shares	Schedule of antidilutive shares                                 (in thousands)   Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023   Stock options     1,850       985       1,602       985   Restricted stock units     699       821       514       821   Warrants     21,032       21,032       21,032       21,032   Total     23,581       22,838       23,148       22,838
Schedule of changes in fair value of the liabilities	Schedule of changes in fair value of the liabilities         Warrant liability – January 1, 2024   $ 1,683   Change in FV of derivative instruments     1,472   Warrant liability – March 31, 2024     3,155   Change in FV of derivative instruments     1,051   Warrant liability – June 30, 2024     4,206   Change in FV of derivative instruments     1,052   Warrant liability – September 30, 2024   $ 5,258     Warrant liability – March 15, 2023   $ 2,649   Change in FV of derivative instruments     (1,686 )  Warrant liability – March 31, 2023     963   Change in FV of derivative instruments     12,040   Warrant liability – June 30, 2023     13,003   Change in FV of derivative instruments     (5,220 ) FV of Warrants cash exercised and exchanged for Class A common stock (see Note 10 – Warrants)     (1,237 ) Loss on warrant extinguishment     (3,894 ) FV of Warrants cashless exercised for Class A common stock (see Note 10 – Warrants)     (549 ) Warrant liability – September 30, 2023   $ 2,103

v3.24.3

Business Combination (Tables)	9 Months Ended
	Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Schedule of assets acquired	Schedule of assets acquired               Description   Fair Value     Weighted Average Useful Life (in years)   Purchase Price   $ 69,928                         Assets acquired:               Cash and cash equivalents   $ 10,003         Accounts receivable     2,226         Notes and other receivables     209         Prepaid assets and other current assets     408         Operating lease right-of-use asset     557     3 years   Property and equipment, net     133     3 years   Other assets     42         Developed technology     8,697     10 years   Patents     2,703     10 years   Customer relationships     5,604     5 years   Trade names and trademarks     3,294     7 years   Total assets acquired   $ 33,876                         Liabilities assumed:               Accounts payable   $ 443         Accrued liabilities     969         Deferred revenues     2,534         Operating lease obligation, current     194         Operating lease obligation, noncurrent     384         Deferred tax liability     4,217         Total liabilities assumed     8,741         Goodwill   $ 44,793
Schedule of proforma financial information	Schedule of proforma financial information             For the Nine Months Ended September 30, 2023   Revenues   $ 5,647   Net income (loss)     (19,197 )

v3.24.3

Disaggregation of Revenue (Tables)	9 Months Ended
	Sep. 30, 2024
Disaggregation Of Revenue
Schedule of disaggregation of revenue	Schedule of disaggregation of revenue                                         Successor     Predecessor       Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023     Period from January 1, 2023 to March 14, 2023   Subscription revenue                                         Software   $ 1,660     $ 1,411     $ 4,752     $ 3,164     $ 1,204   Total subscription revenue   $ 1,660     $ 1,411     $ 4,752     $ 3,164     $ 1,204                                             Non-subscription revenue                                         Professional services   $ 102     $ 359     $ 594     $ 863     $ 416   Hardware     135       -       135       -       -   Total non-subscription revenue   $ 237     $ 359     $ 729     $ 863     $ 416                                             Total Revenue   $ 1,897     $ 1,770     $ 5,481     $ 4,027     $ 1,620

v3.24.3

Property and Equipment, net (Tables)	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	Schedule of property and equipment                     September 30, 2024     December 31, 2023   Computer and office equipment   $ 199     $ 179   Furniture and fixtures     13       12   Leasehold improvements     6       6   Software     1       1   Total     219       198   Less: accumulated depreciation and amortization     (139 )     (83 ) Total Property and Equipment, net   $ 80     $ 115

v3.24.3

Goodwill and Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible assets	Schedule of intangible assets                                                           September 30, 2024     December 31, 2023       Weighted Average Remaining Useful Life (Years)     Gross Amount     Accumulated Amortization     Net Carrying Amount     Gross Amount     Accumulated Amortization     Net Carrying Amount   Trade Name/Trademarks   5.4     $ 3,294     $ (725 )   $ 2,569     $ 3,294     $ (373 )   $ 2,921   Customer Relationships   3.4       5,604       (1,728 )     3,876       5,604       (887 )     4,717   Developed Technology   8.4       8,697       (1,341 )     7,356       8,697       (688 )     8,009   Patents and Intellectual Property   8.4       2,703       (417 )     2,286       2,703       (214 )     2,489   Totals         $ 20,298     $ (4,211 )   $ 16,087     $ 20,298     $ (2,162 )   $ 18,136
Schedule of amortization expense on intangible assets	Schedule of amortization expense on intangible assets         For the Years Ending December 31,   Amount   2024 (remainder of year)   $ 683   2025     2,731   2026     2,731   2027     2,731   2028     1,844   2029     1,611   Thereafter     3,756   Total   $ 16,087

v3.24.3

Deferred Revenue (Tables)	9 Months Ended
	Sep. 30, 2024
Deferred Revenue
Schedule of deferred revenue	Schedule of deferred revenue                                     License Agreements     Professional Service Agreements     Hardware     Total   Deferred Revenue – January 1, 2024   $ 2,404     $ 474     $ -     $ 2,878   Revenue recognized     (4,752 )     (594 )     (135 )     (5,481 ) Revenue deferred     4,459       323       159       4,941   Deferred Revenue – September 30, 2024   $ 2,111     $ 203     $ 24     $ 2,338         License Agreements     Professional Service Agreements     Hardware     Total   Deferred Revenue – March 15, 2023   $ 2,148     $ 386     $ -     $ 2,534   Revenue recognized     (4,560 )     (1,186 )     -       (5,746 ) Revenue deferred     4,816       1,274       -       6,090   Deferred Revenue – December 31, 2023   $ 2,404     $ 474     $ -     $ 2,878

v3.24.3

Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2024
Payables and Accruals [Abstract]
Schedule of accrued liabilities	Schedule of accrued liabilities                     September 30, 2024     December 31, 2023   Accrued expenses and reimbursements   $ 1,019     $ 858   Accrued compensation and benefits     311       387   Accrued bonus and commissions     166       108   Accrued insurance premium and interest     90       -   Income tax payables     59       74   Accrued transaction costs     13       13   Accrued sales and other indirect taxes payable     8       12   Accrued liabilities   $ 1,666     $ 1,452

v3.24.3

Promissory Note (Tables)	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Promissory note	Promissory note                     September 30, 2024     December 31, 2023   Principal amount   $ 3,885     $ 3,885   Less:  Unamortized original issue discount     181       834     Unamortized debt issuance cost     3       14         3,701       3,037   Add:  Interest     311       16     Accrued monitoring fee     408       -         4,420       3,053   Less:  Extinguishment     1,400        -       $ 3,020     $ 3,053

v3.24.3

Stock Option Plan and Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2024
Stock Option Plan And Stock-based Compensation
Schedule of stock options	Schedule of stock options                                     Number of Options     Weighted average exercise price     Weighted average remaining contractual term (years)     Weighted-Average Fair Value at Grant Date   Options outstanding at January 1, 2024     984,900     $ 1.53       9.25     $ 0.90   Granted     935,000     $ 1.50       9.49     $ 0.91   Exercised     (70,350 )   $ 1.53                   Forfeited     -     $ -                   Options outstanding at September 30, 2024     1,849,550     $ 1.51       9.00     $ 0.91   Options exercisable at September 30, 2024     422,100     $ 1.53
Schedule of non-cash stock-based compensation expenses	Schedule of non-cash stock-based compensation expenses   Successor     Predecessor       Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023     Period from January 1, 2023 to March 14, 2023   Research and development   $ 5     $ -     $ 12     $ -     $ -   Sales and marketing     16       -       64       -       -   General and administrative     89       56       356       113       158   Total non-cash stock compensation   $ 110     $ 56     $ 432     $ 113     $ 158
Schedule of assumptions used	Schedule of assumptions used   2024   2023   Risk-free interest rate   3.58% – 4.33%   3.67%   Expected life of option grants   6.00 – 6.25 years   5.75 years   Expected volatility of underlying stock   61.65%   61.65%   Dividends assumption   $-   $-
Schedule of RSUs transaction activity	Schedule of RSUs transaction activity                     Shares     Weighted Average Grant Date Fair Value   Outstanding at January 1, 2024     486,165     $ 7.80   Granted     520,935     $ 2.04   Vested     (308,165 )   $ 7.52   Forfeited     -           Outstanding at September 30, 2024     698,935                 Shares     Weighted Average Grant Date Fair Value   Outstanding at March 15, 2023     -     $     Granted     526,165     $ 7.80   Forfeited     (40,000 )   $ 7.13   Outstanding at December 31, 2023     486,165
Schedule of non-cash stock-based compensation expenses related to restricted stock units	Schedule of non-cash stock-based compensation expenses related to restricted stock units                                     Three Months Ended September 30, 2024     Three Months Ended September 30, 2023     Nine Months Ended September 30, 2024     Period from March 15, 2023 to September 30, 2023   Research and development   $ 100     $ -     $ 504     $ -   Sales and marketing     51       -       257       -   General and administrative     648       597       1,152       638   Total non-cash stock compensation   $ 799     $ 597     $ 1,913     $ 638

v3.24.3

Convertible Debt (Tables)	9 Months Ended
	Sep. 30, 2024
Convertible Debt
Schedule of convertible debt	Schedule of convertible debt         Principal amount   $ 3,675   Less:  Unamortized original issue discount     161     Unamortized debt issuance cost     18         3,496   Add:  Accrued interest payable     43       $ 3,539

v3.24.3

Foreign Operations (Tables)	9 Months Ended
	Sep. 30, 2024
Foreign Operations
Schedule of financial data by geographic area	Schedule of financial data by geographic area                                             United States     Canada     Philippines     Eliminations     Total   For the Three Months Ended September 30, 2024 (Successor): Revenues by geographic area   $ 1,804     $ 93     $ 236     $ (236 )   $ 1,897   Operating loss by geographic area   $ (2,634 )   $ (467 )   $ (225 )   $ -     $ (3,326 ) Net loss by geographic area   $ (4,386 )   $ (388 )   $ (230 )   $ -     $ (5,004 )                                           For the Nine Months Ended September 30, 2024 (Successor): Revenues by geographic area   $ 5,140     $ 341     $ 709     $ (709 )   $ 5,481   Operating loss by geographic area   $ (8,714 )   $ (1,650 )   $ (199 )   $ -     $ (10,563 ) Net loss by geographic area   $ (13,568 )   $ (1,658 )   $ (204 )   $ -     $ (15,430 )                                                                                     For the Three Months Ended September 30, 2023 (Successor): Revenues by geographic area   $ 1,504     $ 266     $ 228     $ (228 )   $ 1,770   Operating income (loss) by geographic area   $ (3,470 )   $ (769 )   $ 10     $ -     $ (4,229 ) Net income (loss) by geographic area   $ 2,224     $ (795 )   $ 12     $ -     $ 1,441                                           For the Period from January 1, 2023 to March 14, 2023 (Predecessor): Revenues by geographic area   $ 1,395     $ 285     $ 160     $ (220 )   $ 1,620   Operating income (loss) by geographic area   $ (3,479 )   $ (905 )   $ 3     $ -     $ (4,381 ) Net income (loss) by geographic area   $ (3,342 )   $ (1,041 )   $ 3     $ -     $ (4,380 )   For the Period from March 15, 2023 to September 30, 2023 (Successor): Revenues by geographic area   $ 3,326     $ 701     $ 643     $ (643 )   $ 4,027   Operating income (loss) by geographic area   $ (6,882 )   $ (1,693 )   $ 176     $ -     $ (8,399 ) Net income (loss) by geographic area   $ (8,976 )   $ (1,714 )   $ 180     $ (21 )   $ (10,531 )                                           As of September 30, 2024 (Successor) Identifiable assets by geographic area   $ 30,752     $ 337     $ 486     $ -     $ 31,575   Long lived assets by geographic area   $ 16,450     $ 217     $ 73     $ -     $ 16,740   Goodwill by geographic area   $ 8,737     $ -     $ -     $ -     $ 8,737                                                                                       As of December 31, 2023 (Successor) Identifiable assets by geographic area   $ 38,143     $ 627     $ 434     $ (2,623 )   $ 36,581   Long lived assets by geographic area   $ 18,269     $ 320     $ 148     $ -     $ 18,737   Goodwill by geographic area   $ 8,737     $ -     $ -     $ -     $ 8,737

v3.24.3

Leases (Tables)	9 Months Ended
	Sep. 30, 2024
Leases [Abstract]
Schedule of operating leases	Schedule of operating leases         (in thousands)   Operating Leases   Year 2024   $ 113   Year 2025     386   Year 2026     130   Total lease payments     629   Less: Imputed interest     (44 ) Present value of lease liabilities   $ 585

v3.24.3

Summary of Significant Accounting Policies (Details) - Successor [Member] - shares shares in Thousands	3 Months Ended		7 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024
Total	23,581	22,838	22,838	23,148
Stock Options [Member]
Total	1,850	985	985	1,602
Restricted Stock Units (RSUs) [Member]
Total	699	821	821	514
Warrant [Member]
Total	21,032	21,032	21,032	21,032

v3.24.3

Summary of Significant Accounting Policies (Details 1) - Successor [Member] - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2023	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023
Warrant liability at beginning	$ 2,649	$ 4,206	$ 3,155	$ 1,683	$ 13,003	$ 963
Change in FV of derivative instruments	(1,686)	1,052	1,051	1,472	(5,220)	12,040
FV of Warrants cash exercised and exchanged for Class A common stock					(1,237)
Loss on warrant extinguishment					(3,894)
FV of Warrants cashless exercised for Class A common stock					549
Warrant liability at ending	$ 963	$ 5,258	$ 4,206	$ 3,155	$ 2,103	$ 13,003

v3.24.3

Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	May 22, 2024	Sep. 30, 2023	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Equity line financing agreement description	Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $2,625 thousand. On June 3, 2024, the Company received net proceeds of $2,480 thousand, reflecting original issue discount of $125 thousand and Lender’s transaction cost of $20 thousand. On September 30, 2024, the Company received net proceeds of $1,000 thousand, reflecting original issue discount of $50 thousand, pursuant to the convertible Pre-Paid Purchase #2 dated on the same day.
Successor [Member]
Property, Plant and Equipment [Line Items]
Working capital				$ 7,404			$ 7,404
Cash and cash equivalents				5,082			5,082	$ 6,275
Net income				5,004	$ (1,441)	$ 10,531	15,430
Cash for operating activities		$ 8,937					$ 4,629
Cash and cash equivalents, description							As of September 30, 2024 (Successor), the Company had cash equivalents of approximately $4,688 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2023 (Successor), the Company had approximately $5,584 thousand in cash equivalents.
Allowance for credit losses				0			$ 0	2
Impairment charge on goodwill				0	0	0	0
Foreign currency net transaction gain				42	31	8	34
Deferred revenue			$ 2,534	2,338			2,338	$ 2,878
Revenue recognized						893	2,359
Changes in estimated fair value of warrants				1,052	5,220	5,134	3,575
Change in FV of derivative instruments				1,052	5,220	5,134	3,575
Impairment charges of long-lived assets				$ 0	$ 0	$ 0	$ 0
Successor [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, net useful life				5 years			5 years
Intangible assets useful life				5 years			5 years
Successor [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, net useful life				10 years			10 years
Intangible assets useful life				10 years			10 years
Predecessor [Member]
Property, Plant and Equipment [Line Items]
Net income			4,380
Cash for operating activities			5,144
Impairment charge on goodwill			0
Foreign currency net transaction gain			28
Revenue recognized			865
Changes in estimated fair value of warrants			0
Change in FV of derivative instruments			0
Impairment charges of long-lived assets			$ 0

v3.24.3

Business Combination (Details) - Predecessor [Member] $ in Thousands	2 Months Ended
	Mar. 14, 2023 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Purchase Price	$ 69,928
Cash and cash equivalents	10,003
Accounts receivable	2,226
Notes and other receivables	209
Prepaid assets and other current assets	408
Operating lease right of use asset	557
Property and equipment, net	133
Other assets	42
Total assets acquired	33,876
Accounts payable	443
Accrued liabilities	969
Deferred revenues	2,534
Operating lease obligation, current	194
Operating lease obligation, noncurrent	384
Deferred tax liability	4,217
Total liabilities assumed	8,741
Goodwill	$ 44,793
Developed Technology Rights [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	10 years
Intangible assets	$ 8,697
Patents [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	10 years
Intangible assets	$ 2,703
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	5 years
Intangible assets	$ 5,604
Trademarks and Trade Names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	7 years
Intangible assets	$ 3,294
Property Subject to Operating Lease [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	3 years
Property, Plant and Equipment [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life	3 years

v3.24.3

Business Combination (Details1) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Revenues	$ 5,647
Net loss	$ (19,197)

v3.24.3

Business Combination (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended	10 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Business Acquisition [Line Items]
Measurement period adjustment description					The Company continued to refine its inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) realization of tangible assets and (iv) the accuracy and completeness of liabilities through March 14, 2024, when the purchase price allocation was finalized.
Predecessor [Member]
Business Acquisition [Line Items]
Share price	$ 9.94
Business combination goodwill	$ 44,200
Acquisition-related costs
Predecessor [Member] | KINS [Member]
Business Acquisition [Line Items]
Acquisition-related costs	3,000
Predecessor [Member] | Merger Agreement [Member]
Business Acquisition [Line Items]
Aggregate purchase price assets and liabilities	$ 69,928
Predecessor [Member] | Merger Agreement [Member] | Common Class A [Member]
Business Acquisition [Line Items]
Consideration transferred in connection	1,547,700
Predecessor [Member] | Merger Agreement [Member] | Common Class C [Member]
Business Acquisition [Line Items]
Consideration transferred in connection	5,487,300
Successor [Member]
Business Acquisition [Line Items]
Acquisition-related costs			$ 30	$ 194		$ 543

v3.24.3

Disaggregation of Revenue (Details) - USD ($) $ in Thousands		2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
		Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024
Successor [Member]
Total Revenue			$ 1,897	$ 1,770	$ 4,027	$ 5,481
Successor [Member] | Transferred over Time [Member]
Total Revenue	[1],[2]		1,762	1,770	4,027	5,346
Successor [Member] | Transferred at Point in Time [Member]
Total Revenue	[3]		135			135
Successor [Member] | Warrant Exercise Period Condition One
Total Revenue			1,660	1,411	3,164	4,752
Successor [Member] | Warrant Exercise Period Condition One | Software [Member]
Total Revenue			1,660	1,411	3,164	4,752
Successor [Member] | Non Subscription Revenue [Member]
Total Revenue			237	359	863	729
Successor [Member] | Non Subscription Revenue [Member] | Professional Services [Member]
Total Revenue			102	359	863	594
Successor [Member] | Non Subscription Revenue [Member] | Hardware [Member]
Total Revenue			$ 135			$ 135
Predecessor [Member]
Total Revenue		$ 1,620
Predecessor [Member] | Transferred over Time [Member]
Total Revenue	[1],[2]	1,620
Predecessor [Member] | Transferred at Point in Time [Member]
Total Revenue	[3]
Predecessor [Member] | Warrant Exercise Period Condition One
Total Revenue		1,204
Predecessor [Member] | Warrant Exercise Period Condition One | Software [Member]
Total Revenue		1,204
Predecessor [Member] | Non Subscription Revenue [Member]
Total Revenue		416
Predecessor [Member] | Non Subscription Revenue [Member] | Professional Services [Member]
Total Revenue		416
Predecessor [Member] | Non Subscription Revenue [Member] | Hardware [Member]
Total Revenue
[1] Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. [2] Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time. [3] Hardware revenue is recognized at a point in time when the control over the goods transfers to the customer - upon delivery to the customers.

v3.24.3

Property and Equipment, net (Details) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total	$ 219	$ 198
Less: accumulated depreciation and amortization	(139)	(83)
Total Property and Equipment, Net	80	115
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	199	179
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total	13	12
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total	6	6
Software [Member]
Property, Plant and Equipment [Line Items]
Total	$ 1	$ 1

v3.24.3

Property and Equipment, net (Details Narrative) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024
Successor [Member]
Depreciation and amortization expense		$ 20	$ 24	$ 52	$ 64
Predecessor [Member]
Depreciation and amortization expense	$ 19

v3.24.3

Goodwill and Intangible Assets (Details) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 20,298	$ 20,298
Accumulated Amortization	(4,211)	(2,162)
Net carrying amount	$ 16,087	18,136
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining weighted average useful life	5 years 4 months 24 days
Gross carrying amount	$ 3,294	3,294
Accumulated Amortization	(725)	(373)
Net carrying amount	$ 2,569	2,921
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining weighted average useful life	3 years 4 months 24 days
Gross carrying amount	$ 5,604	5,604
Accumulated Amortization	(1,728)	(887)
Net carrying amount	$ 3,876	4,717
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining weighted average useful life	8 years 4 months 24 days
Gross carrying amount	$ 8,697	8,697
Accumulated Amortization	(1,341)	(688)
Net carrying amount	$ 7,356	8,009
Patents And Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining weighted average useful life	8 years 4 months 24 days
Gross carrying amount	$ 2,703	2,703
Accumulated Amortization	(417)	(214)
Net carrying amount	$ 2,286	$ 2,489

v3.24.3

Goodwill and Intangible Assets (Details 1) - Successor [Member] $ in Thousands	Sep. 30, 2024 USD ($)
2024 (remainder of year)	$ 683
2025	2,731
2026	2,731
2027	2,731
2028	1,844
2029	1,611
Thereafter	3,756
Total	$ 16,087

v3.24.3

Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands	1 Months Ended
	Dec. 31, 2023	Sep. 30, 2024
Goodwill, Impairment Loss	$ 36,056
Successor [Member]
Goodwill	$ 8,737	$ 8,737

v3.24.3

Deferred Revenue (Details) - Successor [Member] - USD ($) $ in Thousands	9 Months Ended	10 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Deferred revenue, beginning balance	$ 2,878	$ 2,534
Revenue recognized	(5,481)	(5,746)
Revenue deferred	4,941	6,090
Deferred revenue, ending balance	2,338	2,878
Licensing Agreements [Member]
Deferred revenue, beginning balance	2,404	2,148
Revenue recognized	(4,752)	(4,560)
Revenue deferred	4,459	4,816
Deferred revenue, ending balance	2,111	2,404
Professional Service Agreements [Member]
Deferred revenue, beginning balance	474	386
Revenue recognized	(594)	(1,186)
Revenue deferred	323	1,274
Deferred revenue, ending balance	203	474
Hardware [Member]
Deferred revenue, beginning balance
Revenue recognized	(135)
Revenue deferred	159
Deferred revenue, ending balance	$ 24

v3.24.3

Deferred Revenue (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Mar. 14, 2023
Successor [Member]
Deferred revenue, ending balance	$ 2,338	$ 2,878	$ 2,534

v3.24.3

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued expenses and reimbursements	$ 1,019	$ 858
Accrued compensation and benefits	311	387
Accrued bonus and commissions	166	108
Accrued insurance premium and interest	90
Income tax payables	59	74
Accrued transaction costs	13	13
Accrued sales and other indirect taxes payable	8	12
Accrued liabilities	$ 1,666	$ 1,452

v3.24.3

Accrued Liabilities (Details Narrative) - Successor [Member] - USD ($) $ in Thousands	Apr. 14, 2024	Sep. 30, 2024
Down Payment	$ 85
Due to related parties		$ 91

v3.24.3

Promissory Note (Details) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Principal amount	$ 3,885	$ 3,885
Less: Unamortized original issue discount	181	834
Unamortized debt issuance cost	3	14
Note payable before accrued interest payable	3,701	3,037
Add: Accrued interest payable	311	16
Accrued monitoring fee	408
Note payable gross	4,420	3,053
Less: Extinguishment	1,400
Note payable	$ 3,020	$ 3,053

v3.24.3

Promissory Note (Details Narrative) - Successor [Member] - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Aug. 19, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Nov. 12, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Principal amount		$ 3,885		$ 3,885		$ 3,885
Proceeds from note payable				$ 3,000
Interest rate				10.00%
Conversion of stock, amount converted	$ 1,400
Conversion of stock, shares issued	798,298
Aggregate outstanding principal and interest balance					$ 2,633
Interest expense		$ 317	$ 0	$ 958
Minimum [Member]
Debt Instrument [Line Items]
Conversion price	$ 1.47
Maximum [Member]
Debt Instrument [Line Items]
Conversion price	$ 2.23

v3.24.3

Warrants (Details Narrative) - Successor [Member] - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	9 Months Ended
	Jul. 14, 2023	Jul. 13, 2023	Sep. 30, 2023	Sep. 30, 2024
Non-cash transaction				$ 4,914
Fair value of derivative liability				$ 3,900
Warrant Holder [Member]
Number of Warrant exercised		435,000
Number of warrant purchase	2,000,000
Common stock par value	$ 0.0001
Number of Warrant exchange	600,000
Public Warrants [Member]
Warrants outstanding				10,751,862
Warrant Price				$ 11.50
Proceeds from public warrants exercised		$ 5,002
Number of public warrants exercised			613,138,000
Number public warrants exercised			50,000
Private Warrants [Member]
Exercise Price per share		$ 11.50
Private Placements Warrants [Member]
Warrants outstanding				10,280,000

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Stock Option Plan And Stock-based Compensation
Number of options outstanding, beginning	984,900
Weighted-average exercise price, beginning	$ 1.53
Weighted average remaining contractual term (years)	9 years	9 years 3 months
Weighted-Average Fair Value at Grant Date	$ 0.91	$ 0.90
Number of options, Granted	935,000
Weighted-average exercise price, Granted	$ 1.50
Weighted average remaining contractual term, Granted	9 years 5 months 26 days
Weighted-Average Fair Value at Grant Date, Granted	$ 0.91
Number of options, Exercised	(70,350,000)
Weighted-average exercise price, Exercised	$ 1.53
Number of options, Forfeited
Weighted-average exercise price, Forfeited
Number of options outstanding, ending	1,849,550	984,900
Weighted-average exercise price, Ending	$ 1.51	$ 1.53
Number of options exercisable	422,100
Weighted-average exercise price, options exercisable	$ 1.53

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details 1) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2024
Successor [Member]
Stock-based compensation		$ 110	$ 56	$ 113	$ 432
Successor [Member] | Research and Development Expense [Member]
Stock-based compensation		5			12
Successor [Member] | Selling and Marketing Expense [Member]
Stock-based compensation		16			64
Successor [Member] | General and Administrative Expense [Member]
Stock-based compensation		$ 89	$ 56	$ 113	$ 356
Predecessor [Member]
Stock-based compensation	$ 158
Predecessor [Member] | Research and Development Expense [Member]
Stock-based compensation
Predecessor [Member] | Selling and Marketing Expense [Member]
Stock-based compensation
Predecessor [Member] | General and Administrative Expense [Member]
Stock-based compensation	$ 158

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details 2) - Successor [Member]	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Risk-free interest rate		3.67%
Expected life of option grants		5 years 9 months
Expected volatility of underlying stock	61.65%	61.65%
Dividends assumption
Minimum [Member]
Risk-free interest rate	3.58%
Expected life of option grants	6 years
Maximum [Member]
Risk-free interest rate	4.33%
Expected life of option grants	6 years 3 months

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details 3) - $ / shares	9 Months Ended	10 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023	Dec. 31, 2023
Number of options outstanding, beginning	984,900
Number of options, Granted	935,000
Weighted-average fair value at grant date, granted	$ 0.91		$ 0.90
Number of options outstanding, ending	1,849,550	984,900	984,900
Successor [Member] | Restricted Stock Units (RSUs) [Member]
Number of options outstanding, beginning	486,165
Weighted-average fair value at grant date, beginning	$ 7.80
Number of options, Granted	520,935	526,165
Weighted-average fair value at grant date, granted	$ 2.04	$ 7.80
Number of options, Vested	(308,165)
Weighted-average fair value at grant date, Vested	$ 7.52
Number of options, Forfeited		(40,000)
Weighted-average fair value at grant date, forfeited		$ 7.13
Number of options outstanding, ending	698,935	486,165	486,165

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details 4) - Successor [Member] - USD ($) $ in Thousands	3 Months Ended		7 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024
Stock-based compensation	$ 110	$ 56	$ 113		$ 432
Research and Development Expense [Member]
Stock-based compensation	5				12
Selling and Marketing Expense [Member]
Stock-based compensation	16				64
General and Administrative Expense [Member]
Stock-based compensation	89	56	$ 113		356
Restricted Stock Units (RSUs) [Member]
Stock-based compensation	799	597		$ 638	1,913
Restricted Stock Units (RSUs) [Member] | Research and Development Expense [Member]
Stock-based compensation	100				504
Restricted Stock Units (RSUs) [Member] | Selling and Marketing Expense [Member]
Stock-based compensation	51				257
Restricted Stock Units (RSUs) [Member] | General and Administrative Expense [Member]
Stock-based compensation	$ 648	$ 597		$ 638	$ 1,152

v3.24.3

Stock Option Plan and Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended			9 Months Ended	10 Months Ended	12 Months Ended
	Feb. 06, 2024	Jan. 03, 2024	Aug. 29, 2024	Aug. 26, 2024	Jun. 30, 2024	Sep. 30, 2024	Dec. 31, 2023	Dec. 31, 2023	Mar. 10, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option granted						935,000
Fair value of common stock as of grant date						$ 0.91		$ 0.90
Weighted average remaining term						9 years 5 months 26 days
Successor [Member] | Employee Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Employee stock options, description					Company received a notice for a net exercise of 70,350 options to purchase shares of common stock resulting in the issuance of 12,570 shares of the Company’s Class A Common Stock with par value $0.0001 per share. In accordance with the terms of the Incentive Plan, 51,012 shares were withheld by the Company to cover the exercise price and 6,768 shares were withheld in satisfaction of the taxes required to be paid in connection with the exercise.
Unrecognized stock compensation expense						$ 564
Weighted average remaining term						3 years 7 days
Successor [Member] | Employee Stock Options [Member] | Employees And Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option granted	705,000
Vesting period	4 years
Option life	10 years
Weighted average fair value	$ 1.20
Fair value of common stock as of grant date	$ 1.21
Successor [Member] | Employee Stock Options [Member] | Chief Financial Officer [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option granted				230,000
Weighted average fair value				$ 1.44
Fair value of common stock as of grant date				$ 2.40
Successor [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option granted						520,935	526,165
Fair value of common stock as of grant date						$ 2.04	$ 7.80
Unrecognized stock compensation expense						$ 1,376
Weighted average remaining term						1 year 3 months
Fair value of RSUs vested						$ 2,318
Successor [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Fair value of common stock as of grant date						$ 1.25
Successor [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Fair value of common stock as of grant date						$ 2.11
Successor [Member] | Restricted Stock Units (RSUs) [Member] | Employees And Nonemployees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock units stock granted		47,000
2023 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares available for issuance									2,110,500
2023 Equity Incentive Plan [Member] | Successor [Member] | Restricted Stock Units (RSUs) [Member] | Director [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock units stock granted			473,935

v3.24.3

Convertible Debt (Details) - Successor [Member] - USD ($) $ in Thousands	Sep. 30, 2024	May 22, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Principal amount	$ 3,885		$ 3,885
Less: Unamortized original issue discount	181		834
Unamortized debt issuance cost	3		14
Add: Accrued interest payable	311		$ 16
Convertible Debt [Member]
Debt Instrument [Line Items]
Principal amount	3,675	$ 2,625
Less: Unamortized original issue discount	161
Unamortized debt issuance cost	18
Convertible Debt before accrued interest payable	3,496
Add: Accrued interest payable	43
Convertible Debt	$ 3,539

v3.24.3

Convertible Debt (Details Narrative) - Successor [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2024	May 22, 2024	Dec. 31, 2023
Principal amount	$ 3,885		$ 3,885
Convertible Debt [Member]
Principal amount	3,675	$ 2,625
Consideration amount	1,000	2,480
Original issue discount	50	125
Transaction cost		$ 20
Amortization of debt discount	16
Convertible Debt [Member] | Streeterville Capital L L C [Member]
Principal amount	$ 1,050

v3.24.3

Income Taxes (Details Narrative) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024
Successor [Member]
Income tax benefit/(provision)		$ 147	$ 417	$ 2,958	$ 513
Effective tax rate		(2.86%)			(3.22%)
Predecessor [Member]
Income tax benefit/(provision)	$ 0

v3.24.3

Credit Risk and Concentrations (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Successor [Member]
Cash	$ 31	$ 300

v3.24.3

Foreign Operations (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Successor [Member]
Revenues by geographic area		$ 1,897	$ 1,770	$ 4,027	$ 5,481
Operating income (loss) by geographic area		(3,326)	(4,229)	(8,399)	(10,563)
Net income (loss) by geographic area		(5,004)	1,441	(10,531)	(15,430)
Identifiable assets by geographic area		31,575			31,575	$ 36,581
Long lived assets by geographic area		16,740			16,740	18,737
Goodwill by geographic area		8,737			8,737	8,737
Successor [Member] | UNITED STATES
Revenues by geographic area		1,804	1,504	3,326	5,140
Operating income (loss) by geographic area		(2,634)	(3,470)	(6,882)	(8,714)
Net income (loss) by geographic area		(4,386)	2,224	(8,976)	(13,568)
Identifiable assets by geographic area		30,752			30,752	38,143
Long lived assets by geographic area		16,450			16,450	18,269
Goodwill by geographic area		8,737			8,737	8,737
Successor [Member] | CANADA
Revenues by geographic area		93	266	701	341
Operating income (loss) by geographic area		(467)	(769)	(1,693)	(1,650)
Net income (loss) by geographic area		(388)	(795)	(1,714)	(1,658)
Identifiable assets by geographic area		337			337	627
Long lived assets by geographic area		217			217	320
Goodwill by geographic area
Successor [Member] | PHILIPPINES
Revenues by geographic area		236	228	643	709
Operating income (loss) by geographic area		(225)	10	176	(199)
Net income (loss) by geographic area		(230)	12	180	(204)
Identifiable assets by geographic area		486			486	434
Long lived assets by geographic area		73			73	148
Goodwill by geographic area
Successor [Member] | Eliminations [Member]
Revenues by geographic area		(236)	(228)	(643)	(709)
Operating income (loss) by geographic area
Net income (loss) by geographic area				$ (21)
Identifiable assets by geographic area						(2,623)
Long lived assets by geographic area
Goodwill by geographic area
Predecessor [Member]
Revenues by geographic area	$ 1,620
Operating income (loss) by geographic area	(4,381)
Net income (loss) by geographic area	(4,380)
Predecessor [Member] | UNITED STATES
Revenues by geographic area	1,395
Operating income (loss) by geographic area	(3,479)
Net income (loss) by geographic area	(3,342)
Predecessor [Member] | CANADA
Revenues by geographic area	285
Operating income (loss) by geographic area	(905)
Net income (loss) by geographic area	(1,041)
Predecessor [Member] | PHILIPPINES
Revenues by geographic area	160
Operating income (loss) by geographic area	3
Net income (loss) by geographic area	3
Predecessor [Member] | Eliminations [Member]
Revenues by geographic area	(220)
Operating income (loss) by geographic area
Net income (loss) by geographic area

v3.24.3

Leases (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Leases [Abstract]
Year 2024	$ 113
Year 2025	386
Year 2026	130
Total lease payments	629
Less: Imputed interest	(44)
Present value of lease liabilities	$ 585

v3.24.3

Leases (Details Narrative) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 14, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Successor [Member]
Operating lease expenses		$ 109	$ 56	$ 121	$ 331
Weighted average remaining lease term		1 year 3 months 18 days			1 year 3 months 18 days	1 year 4 months 24 days
Weighted average discount rate used to determine operating lease		8.00%			8.00%	8.00%
Predecessor [Member]
Operating lease expenses	$ 57

v3.24.3

Subsequent Events (Details Narrative) - USD ($) $ in Thousands	1 Months Ended		9 Months Ended
	Oct. 31, 2024	Aug. 19, 2024	Sep. 30, 2024
Stockholder quorum requirement, description			Board acted by unanimous consent to amend and restate our bylaws and reduce our quorum requirement, effective immediately. Following the amendment, our quorum requirement was reduced from stockholders holding at least fifty percent (50%) of the issued and outstanding shares to stockholders holding at least thirty-three and one third percent (33.3%) of the issued and outstanding shares. A 33.3% quorum is the lowest quorum requirement permitted under Delaware law and Nasdaq.
Successor [Member]
Conversion of stock, shares issued		798,298
Conversion of stock, amount converted		$ 1,400
Successor [Member] | Convertible Debt [Member] | Common Class A [Member]
Conversion of stock, shares issued	394,869
Conversion of stock, amount converted	$ 500

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