CXApp Inc. Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing was signed March 20, 2023. The business combination with KINS closed March 14, 2023, after year-end; the combined company began trading as CXApp on Nasdaq on March 15, 2023.
Business context and financial reporting basis
CXApp provides a SaaS workplace-experience platform for enterprise customers, including employee apps, desk and room booking, indoor mapping and navigation, analytics, event tools, and on-device positioning. Its revenue includes recurring software fees and design, deployment, implementation, and other professional services.
Important reporting distinction: The MD&A operating results below are for the Enterprise Apps business, presented as historical combined carve-out financials. The audited consolidated financial statements in the filing are for KINS, the SPAC that had not commenced operations by December 31, 2022. KINS’s SPAC results are not CXApp’s operating results. The carve-out results also include allocated parent-company costs and may not reflect standalone costs.
Enterprise Apps business: key financial metrics
| Metric | FY 2022 | FY 2021 | Change and context |
|---|---|---|---|
| Revenue | $8.470 million | $6.368 million | Up 33%; primarily reflects a full year of the CXApp product line in 2022 versus eight months in 2021 after its acquisition. |
| Cost of revenue | $2.064 million | $1.646 million | Up about 25%, mainly from hosting and professional-services costs. |
| Gross profit / margin | $6.406 million / 76% | $4.722 million / 74% | Higher-margin smart-office app sales contributed to margin improvement. |
| Operating expenses | $35.431 million | $49.225 million | Down $13.794 million, including lower goodwill impairment, earnout expense, and stock compensation; partly offset by transaction-related and other cost increases. |
| Operating loss | $(29.025) million | $(44.503) million | Loss narrowed by $15.478 million. |
| Net loss | $(29.175) million | $(41.975) million | Loss narrowed by $12.800 million; the 2021 period included a $2.527 million tax benefit. |
| Adjusted EBITDA, non-GAAP | $(17.886) million | $(17.129) million | Loss widened by about $0.757 million despite lower GAAP net loss. The filing cautions that this measure is not a substitute for GAAP results or cash flow. |
Cash flow, liquidity, and obligations
- The Enterprise Apps business ended 2022 with $6.308 million of cash and a $3.154 million working-capital surplus, versus $5.028 million of cash and a $9.702 million working-capital deficit at year-end 2021.
- Operating cash use was $18.895 million in 2022, compared with $16.919 million in 2021. Investing cash use was $0.482 million, versus $15.469 million in 2021, which included acquisition spending. Financing provided $20.728 million in 2022, including $26.0 million of cash flows from Inpixon, offset in part by acquisition-related payments.
- The business historically depended on Inpixon for working capital and financing. The filing said Inpixon would contribute cash so the business had $10 million at the transaction closing, with a further expected $1.6 million from the KINS trust account; transaction expenses would reduce available cash. These are transaction-related disclosures, not year-end cash balances.
- At December 31, 2022, disclosed Enterprise Apps obligations included approximately $0.7 million of operating lease liabilities, of which $0.3 million was expected within 12 months, and $0.2 million of acquisition liabilities, expected to be paid within 12 months. The filing does not report a conventional funded-debt balance for the carve-out business.
Separate KINS SPAC financial statements and going-concern disclosure
KINS reported 2022 net income of $17.635 million, but this was not revenue or operating profit from CXApp. KINS had no operating revenue; its $2.950 million operating and formation costs were more than offset by non-operating items, including a $10.553 million gain from changes in warrant-liability fair value and a $9.660 million gain from forgiveness of deferred underwriting fees.
KINS reported $224,489 of cash outside the trust account, $3.924 million held in trust, a $3.003 million working-capital deficit, and a $347,961 related-party promissory note at year-end. Its auditor highlighted substantial doubt about KINS’s ability to continue as a going concern if a business combination was not completed by June 15, 2023. That combination subsequently closed on March 14, 2023. This SPAC-specific opinion should not be confused with the Enterprise Apps carve-out’s liquidity discussion.
Material changes, outlook, and risks
- About 65% of Enterprise Apps revenue was recurring in 2022, up from about 53% in 2021. The top three customers represented about 27% of gross revenue in each year; one customer represented 11% in 2022.
- Management cited operating-cost reductions, including headcount reductions in Q4 2022 and Q1 2023, and expected lower transaction, professional-fee, and insurance costs. The filing provides no formal revenue or earnings guidance.
- Management described a product roadmap covering machine-learning positioning, predictive analytics, mapping and digital twins, app integrations, and augmented reality. It expected certain positioning enhancements in the first half of 2023 and general availability of an analytics release before the end of Q1 2023; these are plans, not reported results. Management said additional funding may be needed for longer-term development initiatives.
- Management said the Enterprise Apps business’s recurring losses and operating cash use indicate going-concern risk, but believed cost reductions and transaction capital could mitigate the concern for at least one year from issuance of the carve-out financial statements. It also warned that further capital may be required and may not be available on acceptable terms.
- Key risks include sustained losses and cash burn, reliance on a limited number of customers, competition and technology changes, execution of the standalone-company transition, cybersecurity and privacy regulation, and dependence on successful customer growth and product development. The filing also describes tax-related restrictions and potential liabilities under the Tax Matters Agreement following the separation.
- The company reported no material legal proceedings. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022; the auditor did not provide an internal-control attestation because of the company’s emerging-growth-company status.
Important facts for investors to verify
- Confirm that comparisons use the Enterprise Apps carve-out results, not KINS’s separate SPAC financial statements; note that 2022 revenue growth partly reflects a longer consolidation period.
- Review post-merger cash, transaction expenses, cash burn, and financing needs against the year-end carve-out figures and the transaction cash disclosures.
- Assess the persistence of recurring revenue, customer concentration, renewals and churn, and the timing of customer expansions.
- Track whether operating-cost reductions and planned product releases were achieved, and whether those actions improve cash use and operating performance.
- Review the Tax Matters Agreement’s restrictions and potential tax consequences, as well as any subsequent Nasdaq listing or compliance updates.