CXAI

Cxapp Inc. (CXAI) - Q3 2025 10-Q Summary

Business Context and Reporting Period

This filing covers the quarterly period ended September 30, 2025. Cxapp Inc. operates a SaaS platform focused on intelligent enterprise workplace experiences, leveraging AI for hybrid workplace management. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company. As of November 11, 2025, there were 28,629,315 shares of Class A common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased 41% in Q3 and 35% YTD compared to 2024. Management attributes this to a strategic shift away from non-recurring professional services and hardware toward a high-margin, recurring SaaS model.
• Margin Expansion: Gross margin improved significantly to 88.96% in Q3 2025 from 80.39% in Q3 2024, driven by the higher mix of subscription revenue.
• Net Loss Reduction: Net loss narrowed to $3.157 million in Q3 2025 from $5.434 million in Q3 2024. This improvement was largely driven by a non-cash gain of $887 million related to the change in fair value of derivative liabilities (warrants and convertible debt).
• Debt Structure: The company extinguished its promissory note with Streeterville Capital in early 2025. It has since entered into new Pre-Paid Purchase agreements with Avondale Capital, resulting in convertible debt recorded at fair value.

Outlook, Risks, and Management Commentary

• Liquidity & Going Concern: The company reported a working capital deficiency of $0.711 million. While recurring losses raise doubt about the ability to continue as a going concern, management believes recent financing (Avondale and Streeterville agreements) and expense reduction initiatives mitigate this risk for at least 12 months, sustaining operations through Q4 2026.
• Financing Pipeline: As of September 30, 2025, approximately $12.65 million remained available under the Avondale agreement and $3.52 million under the Streeterville agreement. A shelf registration (Form S-3) was filed in August 2025 authorizing up to $150 million in securities.
• Strategic Focus: Management is prioritizing AI-first product innovation, expanding the enterprise customer base, and maintaining cost discipline to improve operational efficiency.
• Internal Controls: Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, due to material weaknesses previously identified in tax accounting, expense accruals, and fair value measurements. A remediation plan is underway.
• Subsequent Events: Following the quarter end, the company received $5.0 million from a second tranche of the Avondale agreement and commenced sales under the S-3 shelf registration.

Investor Verification Checklist

• Going Concern Status: Verify the sufficiency of the $16.17 million in remaining committed funding against the current burn rate and working capital deficit.
• Revenue Quality: Confirm the sustainability of the 88.96% gross margin as the company scales its SaaS model and reduces reliance on professional services.
• Dilution Risk: Monitor the conversion terms of the Avondale and Streeterville Pre-Paid Purchases, which allow conversion at a discount to market price, potentially causing significant share dilution.
• Internal Controls: Track the progress of the remediation plan for material weaknesses in internal controls over financial reporting.
• Derivative Volatility: Note that net income is heavily influenced by non-cash fair value adjustments to warrant and debt liabilities, which can fluctuate significantly with stock price volatility.