Cxapp Inc. — Form 10-Q Summary
Business context and reporting period
The filing covers the quarter ended March 31, 2023. CXApp provides a SaaS workplace-experience platform, including employee applications, indoor mapping, positioning, augmented reality and analytics. On March 14, 2023, KINS completed its business combination with Inpixon’s enterprise apps business and changed its name to CXApp Inc.
The statements distinguish a “Predecessor” period (January 1–March 14, 2023) from a “Successor” period (March 15–31, 2023), reflecting acquisition accounting and a new accounting basis. These periods are not directly comparable. The filing also provides unaudited pro forma results as if the combination had occurred at the start of the comparison periods.
Financial performance and liquidity
| Metric | Reported amount |
|---|---|
| Revenue | $1.620 million in the Predecessor period and $342,000 in the Successor period; pro forma Q1 2023 revenue was $1.962 million, versus $2.582 million for Q1 2022. |
| Gross profit and margin | $1.137 million and 70% in the Predecessor period; $255,000 and 75% in the Successor period. Q1 2022 margin was 77%. |
| Operating loss | $4.381 million in the Predecessor period and $487,000 in the Successor period. |
| Net income (loss) | Predecessor loss of $4.380 million; Successor income of $2.758 million. Pro forma Q1 2023 net loss was $6.365 million; pro forma Q1 2022 net income was $6.197 million. |
| Adjusted EBITDA | Loss of $3.221 million in the Predecessor period and loss of $362,000 in the Successor period; non-GAAP measure as defined by the company. |
| Operating cash flow | Cash used was $5.144 million in the Predecessor period and $4.431 million in the Successor period. Q1 2022 use was $4.140 million. |
| Cash and working capital | At March 31, cash and cash equivalents were $6.724 million and working capital surplus was $3.052 million. |
| Assets and obligations | Total assets were $76.384 million, including $44.122 million of goodwill and $20.753 million of net intangible assets. Total liabilities were $10.831 million. Operating lease obligations totaled about $571,000; the balance sheet also included a $963,000 warrant liability. |
Material changes and unusual items
- Pro forma revenue declined $620,000, or about 24%, from Q1 2022. Management attributed the decline primarily to timing of sales and booking levels.
- Management said the operating-expense comparison was affected by a $2.827 million earnout-related benefit recorded in Q1 2022.
- Successor-period net income included a $1.686 million gain from a change in warrant-liability fair value and a $1.560 million income-tax benefit. The tax benefit was attributed primarily to the business combination and acquired intangible assets; it is not an indication of operating profitability.
- The business combination was recorded at approximately $69.928 million of share consideration. Preliminary purchase accounting included $44.122 million of goodwill; the allocation remains subject to measurement-period adjustments.
- Deferred revenue rose to $2.690 million from $2.162 million at year-end, principally for software licenses and professional services billed in advance.
Outlook, risks and contingencies
Management stated that recurring losses and operating cash use raise substantial doubt about the company’s ability to continue as a going concern. It believes current liquidity, expense-reduction steps and access to capital provide an opportunity to continue for at least 12 months from issuance, but gives no assurance. The company may seek equity or debt financing if resources are insufficient.
Management cited uncertain demand and project delays related to COVID-19 and broader macroeconomic conditions. Other relevant risks include the ability to generate sufficient revenue, obtain financing on acceptable terms, and support the preliminary goodwill and intangible-asset valuations. The filing reports no material litigation currently pending and no material changes to previously disclosed risk factors. No specific financial guidance was provided.
Important facts for investors to verify
- Review the pro forma results and revenue trend alongside the two non-comparable Predecessor and Successor reporting periods.
- Assess operating cash burn, available liquidity, expense reductions and the company’s stated going-concern uncertainty.
- Separate recurring operating performance from the warrant fair-value gain and acquisition-related tax benefit; clarify the tax valuation-allowance disclosures.
- Monitor final purchase-price allocation, goodwill and intangible-asset valuations, and potential impairment.
- Check the terms and potential dilution from the outstanding warrants and equity incentive plan.