Cxapp Inc. (CXAI) 10-K Summary: Fiscal Year Ended December 31, 2024
Business Context and Reporting Period
Cxapp Inc. (CXAI) is an AI-powered employee experience platform providing SaaS solutions for enterprise workplace management, including indoor mapping, navigation, and analytics. The company operates as a single segment and is classified as an emerging growth company and smaller reporting company. This filing covers the fiscal year ended December 31, 2024. The company completed a business combination with KINS Technology Group Inc. in March 2023.
Key Financial Metrics
| Metric | 2024 (Successor) | 2023 (Combined) |
|---|---|---|
| Total Revenue | $7.14 million | $7.37 million |
| Gross Profit | $5.86 million | $5.62 million |
| Gross Margin | 82% | 76% |
| Operating Expenses | $19.60 million | $58.20 million |
| Net Loss | $(19.41) million | $(53.62) million |
| Cash and Equivalents (Year-End) | $4.88 million | $6.28 million |
| Working Capital | $(4.50) million deficit | $(1.29) million deficit |
Revenue Composition: Recurring revenue increased to 87% of total revenue in 2024 (up from 78% in 2023). Software subscriptions accounted for $6.20 million, professional services $0.80 million, and hardware $0.14 million.
Material Changes vs. Prior Period
- Net Loss Reduction: Net loss decreased by approximately $34.2 million (64%) compared to the prior year. This improvement was primarily driven by a $38.6 million reduction in operating expenses.
- Goodwill Impairment: The 2023 period included a significant non-cash goodwill impairment charge of $36.06 million. No goodwill impairment was recorded in 2024.
- Operating Expenses: Excluding the 2023 impairment, operating expenses decreased due to management reduction efforts and cost optimization initiatives.
- Debt Extinguishment: In 2024, the company recorded a $1.05 million loss on the exchange of debt for equity (converting promissory notes to common stock).
- Derivative Liability: The change in fair value of derivative liabilities resulted in a $3.15 million loss in 2024, compared to a $4.71 million loss in 2023.
Guidance, Outlook, Risks, and Unusual Items
Liquidity and Financing: The company reported a working capital deficit of $4.50 million. Management believes current cash ($4.88 million) combined with access to a $10 million Securities Purchase Agreement (with $3 million remaining available as of year-end) and a new $20 million equity line secured in March 2025 provides sufficient liquidity for the next 12 months.
Unusual Items:
- Restatement: The company restated its unaudited interim financial statements for Q2 and Q3 2024 to correct errors related to the accrual of legal fees and the accounting treatment of convertible debt (specifically the bifurcation of embedded derivatives).
- Material Weaknesses: Management identified material weaknesses in internal controls over financial reporting for 2024, specifically regarding tax accounting, expense accruals, and fair value elections for financial instruments.
Risks:
- Going Concern: The company has a history of operating losses and relies on future financing to sustain operations.
- Customer Concentration: The top three customers accounted for approximately 24% of gross revenue in 2024.
- Stock Volatility: The company faces risks related to Nasdaq listing standards and stock price volatility.
Investor Verification Checklist
- Internal Controls: Verify the status of remediation efforts for the identified material weaknesses in internal controls over financial reporting.
- Liquidity Runway: Confirm the terms and availability of the new $20 million Securities Purchase Agreement with Avondale Capital (signed March 2025) and the remaining capacity under the Streeterville Capital agreement.
- Restatement Impact: Review the specific adjustments made to Q2 and Q3 2024 financials regarding legal fee accruals and convertible debt valuation.
- Customer Concentration: Assess the stability of the top three customers representing 24% of revenue.
- Debt Obligations: Monitor the conversion terms and potential dilution associated with the outstanding convertible Pre-Paid Purchases and warrant liabilities.