Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 29, 2024 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
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 | 15,254,389 | |
Class A common stock, $0.0001 par value per share | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | |
Trading Symbol | CXAI | |
Security Exchange Name | NASDAQ | |
Warrants to purchase common stock | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | CXAIW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current Assets | ||
Cash and cash equivalents | $ 5,603 | $ 6,275 |
Accounts receivable, net of allowance for credit losses of $2 as of March 31, 2024 and December 31, 2023 | 1,370 | 1,956 |
Unbilled and other receivables | 156 | 211 |
Prepaid expenses and other current assets | 676 | 587 |
Total current assets | 7,805 | 9,029 |
Property and equipment, net | 110 | 115 |
Intangible assets, net | 17,453 | 18,136 |
Operating lease right-of-use asset, net | 374 | 486 |
Goodwill | 8,737 | 8,737 |
Other assets | 78 | 78 |
Total Assets | 34,557 | 36,581 |
Current Liabilities | ||
Accounts payable | 1,019 | 975 |
Accrued liabilities | 1,675 | 1,452 |
Deferred revenue | 3,632 | 2,878 |
Warrant liability | 3,155 | 1,683 |
Operating lease obligation, current | 231 | 275 |
Note payable | 3,373 | 3,053 |
Total current liabilities | 13,085 | 10,316 |
Operating lease obligation, noncurrent | 160 | 230 |
Deferred tax liability | 429 | 637 |
Other noncurrent liabilities | 2 | |
Total Liabilities | 13,676 | 11,183 |
Stockholders’ Equity | ||
Common Stock value | 2 | 2 |
Additional paid-in capital | 83,881 | 83,282 |
Accumulated deficit | (62,971) | (57,801) |
Accumulated other comprehensive loss | (31) | (85) |
Total Stockholders’ Equity | 20,881 | 25,398 |
Total Liabilities and Stockholders’ Equity | $ 34,557 | $ 36,581 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Allowance for credit losses | $ 2 | $ 2 |
Common Class A [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000,000 | 200,000,000,000 |
Common stock, shares issued | 15,254,389 | 15,254,389 |
Common stock, shares outstanding | 15,254,389 | 15,254,389 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | |
Successor [Member] | |||
Revenues | $ 342 | $ 1,818 | |
Cost of Revenues | 87 | 327 | |
Gross Profit | 255 | 1,491 | |
Operating Expenses | |||
Research and development | 211 | 1,599 | |
Sales and marketing | 174 | 1,114 | |
General and administrative | 241 | 1,682 | |
Amortization of intangible assets | 116 | 683 | |
Total Operating Expenses | 742 | 5,078 | |
Loss from Operations | (487) | (3,587) | |
Other Income (Expense) | |||
Interest income (expense), net | (1) | (262) | |
Change in fair value of derivative liability | 1,686 | (1,472) | |
Other income (expense), net | (56) | ||
Total Other Income (Expense) | 1,685 | (1,790) | |
Net Income (Loss), before tax | 1,198 | (5,377) | |
Income tax benefit | 1,560 | 207 | |
Net Income (Loss) | 2,758 | (5,170) | |
Unrealized foreign exchange gain/(loss) from cumulative translation adjustments | 54 | ||
Comprehensive Income (Loss) | $ 2,758 | $ (5,116) | |
Successor [Member] | Common Class A [Member] | |||
Other Income (Expense) | |||
Basic weighted average shares outstanding | 8,582,699 | 15,254,389 | |
Diluted weighted average shares outstanding | 8,582,699 | 15,254,389 | |
Basic net income (loss) per share | $ 0.20 | $ (0.34) | |
Diluted net income (loss) per share | $ 0.20 | $ (0.34) | |
Successor [Member] | Class C Common Stock [Member] | |||
Other Income (Expense) | |||
Basic weighted average shares outstanding | 5,487,300 | ||
Diluted weighted average shares outstanding | 5,487,300 | ||
Basic net income (loss) per share | $ 0.20 | ||
Diluted net income (loss) per share | $ 0.20 | ||
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 | ||
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 | |||
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) |
CONDENSED CONSOLIDATED STATEM_2
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 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 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | |
Successor [Member] | |||
Operating activities | |||
Net income (loss) | $ 2,758 | $ (5,170) | |
Adjustments to reconcile net income (loss) to net cash used in operating activities | |||
Depreciation and amortization | 4 | 22 | |
Amortization of intangible assets | 116 | 683 | |
Amortization of right of use asset | 8 | 104 | |
Amortization of debt discount and deferred financing cost | 221 | ||
Accrued interest expense on promissory note | 99 | ||
Deferred income taxes | (1,560) | (207) | |
Stock-based compensation expense | 2 | 599 | |
(Gain) loss on foreign currency transactions | 3 | 54 | |
Change in fair value of derivative liability | (1,686) | 1,472 | |
Change in operating assets and liabilities: | |||
Accounts receivable and other receivables | (335) | 644 | |
Prepaid expenses and other current assets | (100) | (89) | |
Other assets | (37) | ||
Accounts payable | 135 | 46 | |
Accrued liabilities | (3,888) | 227 | |
Operating lease liabilities | (7) | (112) | |
Deferred revenue | 156 | 757 | |
Net cash used in operating activities | (4,431) | (650) | |
Investing activities | |||
Purchases of property and equipment | (23) | (18) | |
Investment in capitalized software | |||
Cash acquired in connection with Business Combination | 10,003 | ||
Net cash provided by (used in) investing activities | 9,980 | (18) | |
Financing activities | |||
Net equity investment from parent | |||
Repayment of CXApp acquisition liability | |||
Repayment of related party promissory note | (328) | ||
Net cash provided by (used in) financing activities | (328) | ||
Effect of exchange rate changes on cash and cash equivalents | (4) | ||
Net increase (decrease) in cash and cash equivalents | 5,221 | (672) | |
Cash and cash equivalents, beginning of period | 1,503 | 6,275 | |
Cash and cash equivalents, end of period | 6,724 | $ 1,503 | 5,603 |
Supplemental disclosures of cash flow information | |||
Cash paid for taxes | |||
Cash paid for interest | |||
Supplemental schedule of noncash investing and financing activities | |||
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 | 537 | $ 226 | |
Predecessor [Member] | |||
Operating activities | |||
Net income (loss) | (4,380) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities | |||
Depreciation and amortization | 228 | ||
Amortization of intangible assets | 806 | ||
Amortization of right of use asset | 40 | ||
Amortization of debt discount and deferred financing cost | |||
Accrued interest expense on promissory note | |||
Deferred income taxes | |||
Stock-based compensation expense | 158 | ||
(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 | |||
Net equity investment from parent | 9,089 | ||
Repayment of CXApp acquisition liability | (197) | ||
Repayment of related party promissory note | |||
Net cash provided by (used in) 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 | $ 10,003 | 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 | |||
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 |
Organization, Nature of Busines
Organization, Nature of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – Summary of Significant Accounting Policies Liquidity As of March 31, 2024 (Successor), the Company had a working capital deficiency of approximately $ 5,280 5,603 5,170 650 The Company cannot assure that it will ever earn revenues sufficient to support their operations, or that it will ever achieve profitable operations. The Company’s recurring losses and utilization of cash in its operations are indicators of substantial doubt that the entity can continue as a going concern however, with the Company’s current liquidity position the Company has taken the following steps to achieve efficient operations: ● In January 2024, the Company streamlined its operations to conserve cash resources by laying off approximately 20% of the global employee headcount; ● In February 2024, Google agreed to add 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; and ● In March 2024, the Company successfully negotiated for a 50% reduction in D&O insurance premium. On May 22, 2024, the Company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand in the second quarter of 2024. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of 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 months ended March 31, 2024 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, temporary investments and certificates of deposit with maturities of three months or less when purchased. As of March 31, 2024 (Successor), the Company had cash equivalents of approximately $4,916 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 $ 5,584 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 $ 2 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 10 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 10 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 a 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 no 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 their 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 their 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 Income (Loss) and Foreign Currency Translation The Company reports comprehensive income (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 general and administrative 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 were approximately $54 thousand, $0 thousand, and loss of $28 thousand for the three months ended March 31, 2024 (Successor), for the period from March 15, 2023 to March 31, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). 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. Revenue Recognition The Company recognizes revenue, in accordance with ASC 606, 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 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 months ended March 31, 2024 (Successor), for the period from March 15, 2023 to March 31, 2023 (Successor), and for 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. 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 $ 3,632 2,878 1,030 170 865 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”), acting as the Chief Operating Decision Maker (“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 of 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 of 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 amounted to a loss of $ 1,472 1,686 0 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 months ended March 31, 2024 (Successor) and for the period from March 15, 2023 to March 31, 2023 (Successor) basic and dilutive net income (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 income (loss) per common shares would have been anti-dilutive. For the period from March 15, 2023 to March 31, 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 months ended March 31, 2024 (Successor) and net income for the period from March 15, 2023 to March 31, 2023 (Successor). Schedule of antidilutive shares (in thousands) Three Months Ended Period from Stock options 1,689,900 1,377,000 Restricted stock units 533,165 - Warrants 21,032,000 24,080,000 Total 23,255,065 25,457,000 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 March 31, 2024 and period ended March 31, 2023, the Company recognized, in the consolidated statements of operations and comprehensive income, an unrealized loss of $ 1,472 1,686 0 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 Warrant liability – March 15, 2023 $ 2,649 Change in FV of derivative instruments (1,686 ) Warrant liability – March 31, 2023 $ 963 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 these financial statements using available market information and appropriate methodologies. 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 grou |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 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 1,547,700 5,487,300 9.94 44,200 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 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 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 Property and equipment, net 133 3 Other assets 42 Developed technology 8,697 10 Patents 2,703 10 Customer relationships 5,604 5 Tradenames and trademarks 3,294 7 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 $ 3,000 543 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. For the period ended March 14, 2024 (Successor), there was no measurement period adjustment. CXApp Proforma Financial Information The following unaudited proforma financial information presents the condensed consolidated results of operations of the Company for the three-month period ended March 31, 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 Revenues $ 1,962 Net income (loss) (6,365 ) |
Disaggregation of Revenue
Disaggregation of Revenue | 3 Months Ended |
Mar. 31, 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 Period from Period from January 1, 2023 Subscription revenue Software $ 1,588 $ 240 $ 1,204 Total subscription revenue $ 1,588 $ 240 $ 1,204 Non-subscription revenue Professional services $ 230 $ 102 $ 416 Total non-subscription revenue 230 $ 102 $ 416 Total Revenue $ 1,818 $ 342 $ 1,620 Successor Predecessor Three Months ended Period from Period from Revenue recognized over time (1)(2) $ 1,818 $ 342 $ 1,620 Total $ 1,818 $ 342 $ 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. |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
Mar. 31, 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 March 31, December 31, Computer and office equipment $ 187 $ 179 Furniture and fixtures 12 12 Leasehold improvements 6 6 Software 1 1 Total 206 198 Less: accumulated depreciation and amortization (96 ) (83 ) Total Property and Equipment, Net $ 110 $ 115 Depreciation and amortization expense were approximately $ 22 4 19 |
Software Development Costs, net
Software Development Costs, net | 3 Months Ended |
Mar. 31, 2024 | |
Software Development Costs Net | |
Software Development Costs, net | NOTE 6 – Software Development Costs, net Amortization expense for capitalized software development costs was approximately $ 209 no |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 7 – 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 March 31, 2024 (Successor) was $ 8,737 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 The Company noted that there were no qualitative or quantitative indicators of impairment present at the reporting date as of March 31, 2024 (Successor). Intangible assets consisted of the following (in thousands): Schedule of intangible assets March 31, 2024 December 31, 2023 Weighted Remaining Gross Accumulated Amortization Net Carrying Gross Accumulated Net Carrying Trade Name/Trademarks 5.9 $ 3,294 $ (490 ) $ 2,804 $ 3,294 $ (373 ) $ 2,921 Customer Relationships 3.9 5,604 (1,168 ) 4,436 5,604 (887 ) 4,717 Developed Technology 8.9 8,697 (906 ) 7,791 8,697 (688 ) 8,009 Patents and Intellectual Property 8.9 2,703 (281 ) 2,422 2,703 (214 ) 2,489 Totals $ 20,298 $ (2,845 ) $ 17,453 $ 20,298 $ (2,162 ) $ 18,136 Future amortization expense on intangible assets as of March 2024 is anticipated to be as follows (in thousands): For the Years Ending December 31, Amount 2024 (remainder of year) $ 2,048 2025 2,731 2026 2,731 2027 2,731 2028 1,844 2029 and thereafter 5,368 Total $ 17,453 |
Deferred Revenue
Deferred Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Revenue | |
Deferred Revenue | NOTE 8 – Deferred Revenue Deferred revenue consisted of the following (in thousands): Schedule of deferred revenue License Professional Total Deferred Revenue – January 1, 2024 $ 2,404 $ 474 $ 2,878 Revenue recognized (1,588 ) (230 ) (1,818 ) Revenue deferred 2,406 166 2,572 Deferred Revenue – March 31, 2024 $ 3,222 $ 410 $ 3,632 License Professional 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 $ 3,632 2,878 The fair value of the deferred revenue approximates the services to be rendered. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | NOTE 9 – Accrued Liabilities Accrued liabilities consisted of the following (in thousands): Schedule of accrued Liabilities March 31, December 31, Accrued compensation and benefits $ 251 $ 387 Accrued bonus and commissions 279 108 Income tax payables 78 74 Accrued insurance premium and interest 225 - Accrued transaction costs 13 13 Accrued sales and other indirect taxes payable 8 12 Accrued other 821 858 Accrued liabilities $ 1,675 $ 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, 2023. The Company paid a down payment on the policy of $ 85 226 |
Promissory Note
Promissory Note | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Promissory Note | NOTE 10 – Promissory Note Note payable consisted of the following (in thousands): Promissory note March 31, December 31, Principal amount $ 3,885 $ 3,885 Less: Unamortized original issue discount 616 834 Unamortized debt issuance cost 11 14 3,258 3,037 Add: Accrued interest payable 115 16 $ 3,373 $ 3,053 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 3,000 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 starting six (6) months from the issuance of the Note to cover Lender’s accounting, legal and other costs incurred in monitoring. 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. As of May 15, 2024, there is an aggregate outstanding principal and interest balance of approximately $ 4,050 Interest expense recognized on the condensed consolidated statement of operations and comprehensive loss were approximately $ 320 0 53 |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2024 | |
Warrants | |
Warrants | NOTE 11 – Warrants Public Warrants As of March 31, 2024 (Successor) there were 10,751,862 11.50 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 11.50 5,002 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 0.0001 600 4,914 3,900 For the three months ended September 30, 2023, about 613 50 Private Warrants As of March 31, 2024 (Successor) and December 31, 2023 (Successor), there were 10,280 10,280 |
Stock Option Plan and Stock-Bas
Stock Option Plan and Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Stock Option Plan And Stock-based Compensation | |
Stock Option Plan and Stock-Based Compensation | NOTE 12 – 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 Employee Stock Options On February 6, 2024, a total of 705,000 4 10 1.20 1.21 See below for a summary of the stock options granted under the Incentive Plan: Schedule of stock options Number of Weighted-average Weighted Weighted-Average Fair Value at Options outstanding at January 1, 2024 984,900 $ 1.53 9.00 $ 0.90 Granted 705,000 1.20 9.86 0.74 Forfeited - - Options outstanding at March 31, 2024 1,689,900 Options exercisable at March 31, 2024 492,450 $ 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 Period from Period from Research and development $ 3 $ - $ - Sales and marketing 32 - - General and administrative 185 2 158 Total non-cash stock compensation $ 220 $ 2 $ 158 As of March 31, 2024 (Successor), the remaining unrecognized stock compensation expense totaled approximately $ 500 3.78 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 three months ended March 31, 2024 (Successor) and the period from March 15, 2023 to December 31, 2023 (Successor) were as follows: Schedule of assumptions used Risk-free interest rate 3.67% 4.03% Expected life of option grants 5.75 6.25 Expected volatility of underlying stock 61.65% Dividends assumption $ - Restricted Stock Units On January 2024, a total of 47,000 The fair value of the common stock as of the various grant dates was determined to be $ 1.25 1.38 1.29 Non-cash stock-based compensation expenses related to restricted stock units for the three months ended March 31, 2024 were recorded in the financial statements as summarized below: Schedule of non-cash stock-based compensation expenses related to restricted stock units Three Months ended Research and development $ 98 Sales and marketing 51 General and administrative 232 Total non-cash stock compensation $ 381 There were no non-cash stock-based compensation expenses related restricted stock units for the period from March 15, 2023 to March 31, 2023 (Successor) and period from January 1, 2023 to March 14, 2023 (Predecessor). As of March 31, 2024 (Successor), the Company has approximately $ 1,454 1.76 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13 – Income Taxes The Company recorded an income tax benefit of approximately $ 207 1,560 no The effective tax rate for three months ended March 31, 2024 (Successor) and for the period from March 15, 2023 to March 31, 2023 (Successor) was 3.85% (164.0)% |
Credit Risk and Concentrations
Credit Risk and Concentrations | 3 Months Ended |
Mar. 31, 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 Philippines subsidiaries and its majority-owned India subsidiary. Cash in foreign financial institutions as of March 31, 2024 (Successor) was $ 326 300 |
Foreign Operations
Foreign Operations | 3 Months Ended |
Mar. 31, 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 Canada Philippines Eliminations Total For the Three Months Ended March 31, 2024 (Successor) Revenues by geographic area $ 1,667 $ 151 $ 240 $ (240 ) $ 1,818 Operating income (loss) by geographic area $ (3,000 ) $ (602 ) $ 15 $ - $ (3,587 ) Net income (loss) by geographic area $ (4,527 ) $ (657 ) $ 14 $ - $ (5,170 ) 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 March 31, 2023 (Successor) Revenues by geographic area $ 272 $ 70 $ 196 $ (196 ) $ 342 Operating income (loss) by geographic area $ (486 ) $ (158 ) $ 157 $ - $ (487 ) Net income (loss) by geographic area $ 2,780 $ (158 ) $ 157 $ (21 ) $ 2,758 As of March 31, 2024 (Successor) Identifiable assets by geographic area $ 36,681 $ 600 $ 445 $ (3,169 ) $ 34,557 Long lived assets by geographic area $ 17,533 $ 282 $ 122 $ - $ 17,937 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 |
Leases
Leases | 3 Months Ended |
Mar. 31, 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 2024. 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 March 31, 2024 (Successor), for the period from March 15, 2023 to March 31, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor) was approximately $ 113 9 57 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 March 31, 2024 (Successor), the weighted average remaining lease term is 1.1 8.0% 1.4 8.0% Schedule of operating leases Schedule of operating leases (in thousand) Operating Year 2024 $ 197 Year 2025 174 Year 2026 59 Total lease payments 430 Less: Imputed interest (39 ) Present value of lease liabilities $ 391 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 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 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
Subsequent Events | NOTE 18 – Subsequent Events On April 1, 2024, it is announced to the public that CXApp will be partnering with Google Cloud to define a new category in enterprise software: Employee Experiences. Google Cloud powers most of CXApp’s enterprise customer applications and is a natural partner to aid in expanding service offerings. As part of the agreement, Google and its service partners will provide advanced services including end-to-end security, analytics and monitoring as well as usage-based SaaS performance enhancements to create the best-in-class cloud-mobile experience to CXApp’s clients on the new CXAI Platform. CXAI Platform is expected to be first deployed in the summer. Google has agreed to add the CXAI application platform to the Google Marketplace and signed a go-to-market partnership agreement. This would enable all of Google’s existing clients to have access to the CXAI platform with seamless and automated delivery. On April 18, 2024, the Company received a notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the Company is delinquent in filing its 2023 Form 10-K, the Company no longer complies with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires companies with securities listed on Nasdaq to timely file all required periodic reports with the SEC. In accordance with Nasdaq’s listing rules, the Company has 60 calendar days after the Notice to submit a plan of compliance (the “Plan”) to Nasdaq addressing how the Company intends to regain compliance with Nasdaq’s listing rules, and Nasdaq has the discretion to grant the Company up to 180 calendar days from the due date of the 2023 Form 10-K, or October 14, 2024, to regain compliance. The Company intends to submit the Plan and take the necessary steps to regain compliance with Nasdaq’s listing rules as soon as practicable. On May 22, 2024, the Company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand in the second quarter of 2024. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Liquidity | Liquidity As of March 31, 2024 (Successor), the Company had a working capital deficiency of approximately $ 5,280 5,603 5,170 650 The Company cannot assure that it will ever earn revenues sufficient to support their operations, or that it will ever achieve profitable operations. The Company’s recurring losses and utilization of cash in its operations are indicators of substantial doubt that the entity can continue as a going concern however, with the Company’s current liquidity position the Company has taken the following steps to achieve efficient operations: ● In January 2024, the Company streamlined its operations to conserve cash resources by laying off approximately 20% of the global employee headcount; ● In February 2024, Google agreed to add 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; and ● In March 2024, the Company successfully negotiated for a 50% reduction in D&O insurance premium. On May 22, 2024, the Company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand in the second quarter of 2024. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of 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 months ended March 31, 2024 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, temporary investments and certificates of deposit with maturities of three months or less when purchased. As of March 31, 2024 (Successor), the Company had cash equivalents of approximately $4,916 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 $ 5,584 |
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 $ 2 |
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 10 |
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 10 |
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 a 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 no |
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 their 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 their 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 Income (Loss) and Foreign Currency Translation | Comprehensive Income (Loss) and Foreign Currency Translation The Company reports comprehensive income (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 general and administrative 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 were approximately $54 thousand, $0 thousand, and loss of $28 thousand for the three months ended March 31, 2024 (Successor), for the period from March 15, 2023 to March 31, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). |
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. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue, in accordance with ASC 606, 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 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 months ended March 31, 2024 (Successor), for the period from March 15, 2023 to March 31, 2023 (Successor), and for 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. 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 $ 3,632 2,878 1,030 170 865 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”), acting as the Chief Operating Decision Maker (“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 of 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 of 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 amounted to a loss of $ 1,472 1,686 0 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 months ended March 31, 2024 (Successor) and for the period from March 15, 2023 to March 31, 2023 (Successor) basic and dilutive net income (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 income (loss) per common shares would have been anti-dilutive. For the period from March 15, 2023 to March 31, 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 months ended March 31, 2024 (Successor) and net income for the period from March 15, 2023 to March 31, 2023 (Successor). Schedule of antidilutive shares (in thousands) Three Months Ended Period from Stock options 1,689,900 1,377,000 Restricted stock units 533,165 - Warrants 21,032,000 24,080,000 Total 23,255,065 25,457,000 |
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 March 31, 2024 and period ended March 31, 2023, the Company recognized, in the consolidated statements of operations and comprehensive income, an unrealized loss of $ 1,472 1,686 0 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 Warrant liability – March 15, 2023 $ 2,649 Change in FV of derivative instruments (1,686 ) Warrant liability – March 31, 2023 $ 963 |
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 these financial statements using available market information and appropriate methodologies. |
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 |
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 of this update is for fiscal years beginning after June 30, 2027, including interim periods within those fiscal years. The Company is currently assessing potential impact of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures. In the fourth quarter of 2023, the FASB issued three ASU’s: No. 2023-07 “Segment Reporting (Topic 280)”, No. 2023-08 “Intangibles Goodwill and Other Crypto Assets (Subtopic 350-60), and No. 2023-09 “Income Taxes (Topic 740)”. The Management sees the Company as one single unit, instead of as segments, leading to a more in-depth consideration should FASB ASU No. 2023-07 be considered. FASB ASU No. 2023-07 is effective after fiscal year ended December 15, 2023. The effects of ASU 2023-08 and ASU 2023-09 are both being considered and assessed for their potential effects, but the Company does not expect any material impact on the financial statements and disclosures. Both FASB ASU 2023-08 and 2023-09 are effective after fiscal year ended December 15, 2024. 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 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 consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of antidilutive shares | Schedule of antidilutive shares (in thousands) Three Months Ended Period from Stock options 1,689,900 1,377,000 Restricted stock units 533,165 - Warrants 21,032,000 24,080,000 Total 23,255,065 25,457,000 |
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 Warrant liability – March 15, 2023 $ 2,649 Change in FV of derivative instruments (1,686 ) Warrant liability – March 31, 2023 $ 963 |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |
Schedule of assets acquired | Schedule of assets acquired Description Fair Value Weighted 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 Property and equipment, net 133 3 Other assets 42 Developed technology 8,697 10 Patents 2,703 10 Customer relationships 5,604 5 Tradenames and trademarks 3,294 7 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 Revenues $ 1,962 Net income (loss) (6,365 ) |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Disaggregation Of Revenue | |
Schedule of disaggregation of revenue | Schedule of disaggregation of revenue Successor Predecessor Three Months Ended Period from Period from January 1, 2023 Subscription revenue Software $ 1,588 $ 240 $ 1,204 Total subscription revenue $ 1,588 $ 240 $ 1,204 Non-subscription revenue Professional services $ 230 $ 102 $ 416 Total non-subscription revenue 230 $ 102 $ 416 Total Revenue $ 1,818 $ 342 $ 1,620 Successor Predecessor Three Months ended Period from Period from Revenue recognized over time (1)(2) $ 1,818 $ 342 $ 1,620 Total $ 1,818 $ 342 $ 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. |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment March 31, December 31, Computer and office equipment $ 187 $ 179 Furniture and fixtures 12 12 Leasehold improvements 6 6 Software 1 1 Total 206 198 Less: accumulated depreciation and amortization (96 ) (83 ) Total Property and Equipment, Net $ 110 $ 115 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Schedule of intangible assets March 31, 2024 December 31, 2023 Weighted Remaining Gross Accumulated Amortization Net Carrying Gross Accumulated Net Carrying Trade Name/Trademarks 5.9 $ 3,294 $ (490 ) $ 2,804 $ 3,294 $ (373 ) $ 2,921 Customer Relationships 3.9 5,604 (1,168 ) 4,436 5,604 (887 ) 4,717 Developed Technology 8.9 8,697 (906 ) 7,791 8,697 (688 ) 8,009 Patents and Intellectual Property 8.9 2,703 (281 ) 2,422 2,703 (214 ) 2,489 Totals $ 20,298 $ (2,845 ) $ 17,453 $ 20,298 $ (2,162 ) $ 18,136 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | For the Years Ending December 31, Amount 2024 (remainder of year) $ 2,048 2025 2,731 2026 2,731 2027 2,731 2028 1,844 2029 and thereafter 5,368 Total $ 17,453 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Revenue | |
Schedule of deferred revenue | Schedule of deferred revenue License Professional Total Deferred Revenue – January 1, 2024 $ 2,404 $ 474 $ 2,878 Revenue recognized (1,588 ) (230 ) (1,818 ) Revenue deferred 2,406 166 2,572 Deferred Revenue – March 31, 2024 $ 3,222 $ 410 $ 3,632 License Professional 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 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Payables and Accruals [Abstract] | |
Schedule of accrued Liabilities | Schedule of accrued Liabilities March 31, December 31, Accrued compensation and benefits $ 251 $ 387 Accrued bonus and commissions 279 108 Income tax payables 78 74 Accrued insurance premium and interest 225 - Accrued transaction costs 13 13 Accrued sales and other indirect taxes payable 8 12 Accrued other 821 858 Accrued liabilities $ 1,675 $ 1,452 |
Promissory Note (Tables)
Promissory Note (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Promissory note | Promissory note March 31, December 31, Principal amount $ 3,885 $ 3,885 Less: Unamortized original issue discount 616 834 Unamortized debt issuance cost 11 14 3,258 3,037 Add: Accrued interest payable 115 16 $ 3,373 $ 3,053 |
Stock Option Plan and Stock-B_2
Stock Option Plan and Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Stock Option Plan And Stock-based Compensation | |
Schedule of stock options | Schedule of stock options Number of Weighted-average Weighted Weighted-Average Fair Value at Options outstanding at January 1, 2024 984,900 $ 1.53 9.00 $ 0.90 Granted 705,000 1.20 9.86 0.74 Forfeited - - Options outstanding at March 31, 2024 1,689,900 Options exercisable at March 31, 2024 492,450 $ 1.53 |
Schedule of non-cash stock-based compensation expenses | Schedule of non-cash stock-based compensation expenses Successor Predecessor Three Months ended Period from Period from Research and development $ 3 $ - $ - Sales and marketing 32 - - General and administrative 185 2 158 Total non-cash stock compensation $ 220 $ 2 $ 158 |
Schedule of assumptions used | Schedule of assumptions used Risk-free interest rate 3.67% 4.03% Expected life of option grants 5.75 6.25 Expected volatility of underlying stock 61.65% Dividends assumption $ - |
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 Research and development $ 98 Sales and marketing 51 General and administrative 232 Total non-cash stock compensation $ 381 |
Foreign Operations (Tables)
Foreign Operations (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Foreign Operations | |
Schedule of financial data by geographic area | Schedule of financial data by geographic area United Canada Philippines Eliminations Total For the Three Months Ended March 31, 2024 (Successor) Revenues by geographic area $ 1,667 $ 151 $ 240 $ (240 ) $ 1,818 Operating income (loss) by geographic area $ (3,000 ) $ (602 ) $ 15 $ - $ (3,587 ) Net income (loss) by geographic area $ (4,527 ) $ (657 ) $ 14 $ - $ (5,170 ) 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 March 31, 2023 (Successor) Revenues by geographic area $ 272 $ 70 $ 196 $ (196 ) $ 342 Operating income (loss) by geographic area $ (486 ) $ (158 ) $ 157 $ - $ (487 ) Net income (loss) by geographic area $ 2,780 $ (158 ) $ 157 $ (21 ) $ 2,758 As of March 31, 2024 (Successor) Identifiable assets by geographic area $ 36,681 $ 600 $ 445 $ (3,169 ) $ 34,557 Long lived assets by geographic area $ 17,533 $ 282 $ 122 $ - $ 17,937 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 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of operating leases | Schedule of operating leases Schedule of operating leases (in thousand) Operating Year 2024 $ 197 Year 2025 174 Year 2026 59 Total lease payments 430 Less: Imputed interest (39 ) Present value of lease liabilities $ 391 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Successor [Member] - shares shares in Thousands | 1 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 31, 2024 | |
Total | 25,457,000 | 23,255,065 |
Stock Options [Member] | ||
Total | 1,377,000 | 1,689,900 |
Restricted Stock Units (RSUs) [Member] | ||
Total | 533,165 | |
Warrant [Member] | ||
Total | 24,080,000 | 21,032,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - Successor [Member] - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 31, 2024 | |
Warrant liability at beginning | $ 2,649 | $ 1,683 |
Change in FV of derivative instruments | (1,686) | 1,472 |
Warrant liability at ending | $ 963 | $ 3,155 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | ||
May 22, 2024 | Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Property, Plant and Equipment [Line Items] | |||||
Equity line financing agreement description | Company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand in the second quarter of 2024. | ||||
Successor [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Working capital | $ 5,280 | ||||
Cash and cash equivalents | 5,603 | $ 6,275 | |||
Net income | $ (2,758) | 5,170 | |||
Cash for operating activities | 4,431 | $ 650 | |||
Cash and cash equivalents, description | As of March 31, 2024 (Successor), the Company had cash equivalents of approximately $4,916 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 $5,584 cash equivalents. | ||||
Cash and cash equivalents | 5,584 | ||||
Allowance for credit losses | $ 2 | 2 | |||
Impairment charge on goodwill | 0 | 0 | |||
Deferred revenue | $ 2,534 | 3,632 | $ 2,878 | ||
Revenue recognized | 170 | 1,030 | |||
Changes in estimated fair value of warrants | 1,686 | 1,472 | |||
Change in FV of derivative instruments | 1,686 | 1,472 | |||
Impairment charges of long-lived assets | $ 0 | $ 0 | |||
Successor [Member] | Minimum [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, net useful life | 5 years | ||||
Intangible assets useful life | 5 years | ||||
Successor [Member] | Maximum [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, net useful life | 10 years | ||||
Intangible assets useful life | 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 | ||||
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 |
Business Combination (Details)
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 |
Business Combination (Details 1
Business Combination (Details 1) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |
Revenues | $ 1,962 |
Net loss | $ (6,365) |
Business Combination (Details N
Business Combination (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | 10 Months Ended |
Mar. 14, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Business Acquisition [Line Items] | |||
Measurement period adjustment description | 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. For the period ended March 14, 2024 (Successor), there was no measurement period adjustment. | ||
Predecessor [Member] | |||
Business Acquisition [Line Items] | |||
Share price | $ 9.94 | ||
Business combination goodwill | $ 44,200 | ||
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 | $ 543 |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | ||
Successor [Member] | ||||
Total Revenue | $ 342 | $ 1,818 | ||
Successor [Member] | Transferred over Time [Member] | ||||
Total Revenue | [1],[2] | 342 | 1,818 | |
Successor [Member] | Warrant Exercise Period Condition One | ||||
Total Revenue | 240 | 1,588 | ||
Successor [Member] | Warrant Exercise Period Condition One | Software [Member] | ||||
Total Revenue | 240 | 1,588 | ||
Successor [Member] | Non Subscription Revenue [Member] | ||||
Total Revenue | 102 | 230 | ||
Successor [Member] | Non Subscription Revenue [Member] | Professional Services [Member] | ||||
Total Revenue | $ 102 | $ 230 | ||
Predecessor [Member] | ||||
Total Revenue | $ 1,620 | |||
Predecessor [Member] | Transferred over Time [Member] | ||||
Total Revenue | [1],[2] | 1,620 | ||
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 | |||
[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. |
Property and Equipment, net (De
Property and Equipment, net (Details) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 206 | $ 198 |
Less: accumulated depreciation and amortization | (96) | (83) |
Total Property and Equipment, Net | 110 | 115 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 187 | 179 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 12 | 12 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 6 | 6 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 1 | $ 1 |
Property and Equipment, net (_2
Property and Equipment, net (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | |
Successor [Member] | |||
Depreciation and amortization expense | $ 4 | $ 22 | |
Predecessor [Member] | |||
Depreciation and amortization expense | $ 19 |
Software Development Costs, n_2
Software Development Costs, net (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | |
Predecessor [Member] | |||
Amortization expense | $ 209 | ||
Successor [Member] | |||
Amortization expense | $ 0 | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 20,298 | $ 20,298 |
Accumulated Amortization | (2,845) | (2,162) |
Net carrying amount | $ 17,453 | 18,136 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 5 years 10 months 24 days | |
Gross carrying amount | $ 3,294 | 3,294 |
Accumulated Amortization | (490) | (373) |
Net carrying amount | $ 2,804 | 2,921 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 3 years 10 months 24 days | |
Gross carrying amount | $ 5,604 | 5,604 |
Accumulated Amortization | (1,168) | (887) |
Net carrying amount | $ 4,436 | 4,717 |
Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 8 years 10 months 24 days | |
Gross carrying amount | $ 8,697 | 8,697 |
Accumulated Amortization | (906) | (688) |
Net carrying amount | $ 7,791 | 8,009 |
Patents And Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 8 years 10 months 24 days | |
Gross carrying amount | $ 2,703 | 2,703 |
Accumulated Amortization | (281) | (214) |
Net carrying amount | $ 2,422 | $ 2,489 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - Successor [Member] $ in Thousands | Mar. 31, 2024 USD ($) |
2024 (remainder of year) | $ 2,048 |
2025 | 2,731 |
2026 | 2,731 |
2027 | 2,731 |
2028 | 1,844 |
2029 and thereafter | 5,368 |
Total | $ 17,453 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | |
Dec. 31, 2023 | Mar. 31, 2024 | |
Goodwill, Impairment Loss | $ 36,056 | |
Successor [Member] | ||
Goodwill | $ 8,737 | $ 8,737 |
Deferred Revenue (Details)
Deferred Revenue (Details) - Successor [Member] - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Deferred revenue, beginning balance | $ 2,878 | $ 2,534 |
Revenue recognized | (1,818) | (5,746) |
Revenue deferred | 2,572 | 6,090 |
Deferred revenue, ending balance | 3,632 | 2,878 |
Licensing Agreements [Member] | ||
Deferred revenue, beginning balance | 2,404 | 2,148 |
Revenue recognized | (1,588) | (4,560) |
Revenue deferred | 2,406 | 4,816 |
Deferred revenue, ending balance | 3,222 | 2,404 |
Professional Service Agreements [Member] | ||
Deferred revenue, beginning balance | 474 | 386 |
Revenue recognized | (230) | (1,186) |
Revenue deferred | 166 | 1,274 |
Deferred revenue, ending balance | $ 410 | $ 474 |
Deferred Revenue (Details Narra
Deferred Revenue (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 14, 2023 |
Successor [Member] | |||
Deferred revenue, ending balance | $ 3,632 | $ 2,878 | $ 2,534 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accrued compensation and benefits | $ 251 | $ 387 |
Accrued bonus and commissions | 279 | 108 |
Income tax payables | 78 | 74 |
Accrued insurance premium and interest | 225 | |
Accrued transaction costs | 13 | 13 |
Accrued sales and other indirect taxes payable | 8 | 12 |
Accrued other | 821 | 858 |
Accrued liabilities | $ 1,675 | $ 1,452 |
Accrued Liabilities (Details Na
Accrued Liabilities (Details Narrative) - Successor [Member] - USD ($) $ in Thousands | Apr. 14, 2024 | Mar. 31, 2024 |
Down Payment | $ 85 | |
Due to related parties | $ 226 |
Promissory Note (Details)
Promissory Note (Details) - Successor [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Principal amount | $ 3,885 | $ 3,885 |
Less: Unamortized original issue discount | 616 | 834 |
Unamortized debt issuance cost | 11 | 14 |
Note payable before accrued interest payable | 3,258 | 3,037 |
Add: Accrued interest payable | 115 | 16 |
Note payable | $ 3,373 | $ 3,053 |
Promissory Note (Details Narrat
Promissory Note (Details Narrative) - Successor [Member] - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 10 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | May 15, 2024 | |
Principal amount | $ 3,885 | $ 3,885 | ||
Proceeds from note payable | 3,000 | |||
Aggregate outstanding principal and interest balance | $ 4,050 | |||
Interest expense | $ 0 | $ 320 | $ 53 |
Warrants (Details Narrative)
Warrants (Details Narrative) - Successor [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Jul. 14, 2023 | Jul. 13, 2023 | Mar. 31, 2024 | Sep. 30, 2023 | Dec. 31, 2023 | |
Non-cash transaction | $ 4,914 | ||||
Fair value of derivative liability | $ 3,900 | ||||
Warrant Holder [Member] | |||||
Number of Warrant exercised | 435,000,000 | ||||
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 | 613,000 | ||||
Number public warrants exercised | 50,000 | ||||
Private Warrants [Member] | |||||
Exercise Price per share | $ 11.50 | ||||
Private Placements Warrants [Member] | |||||
Warrants outstanding | 10,280,000 | 10,280,000 |
Stock Option Plan and Stock-B_3
Stock Option Plan and Stock-Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Stock Option Plan And Stock-based Compensation | |
Number of options outstanding, beginning | shares | 984,900 |
Weighted-average exercise price, beginning | $ / shares | $ 1.53 |
Weighted average remaining contractual term (years) | 9 years |
Weighted-Average Fair Value at Grant Date | $ / shares | $ 0.90 |
Number of options, Granted | shares | 705,000 |
Weighted-average exercise price, Granted | $ / shares | $ 1.20 |
Weighted average remaining contractual term, Granted | 9 years 10 months 9 days |
Weighted-Average Fair Value at Grant Date, Granted | $ / shares | $ 0.74 |
Number of options, Forfeited | shares | |
Number of options outstanding, ending | shares | 1,689,900 |
Number of options exercisable | shares | 492,450 |
Weighted-average exercise price, options exercisable | $ / shares | $ 1.53 |
Stock Option Plan and Stock-B_4
Stock Option Plan and Stock-Based Compensation (Details 1) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2024 | Mar. 14, 2023 | Mar. 31, 2024 | |
Successor [Member] | |||
Stock-based compensation | $ 2 | $ 220 | |
Successor [Member] | Research and Development Expense [Member] | |||
Stock-based compensation | 3 | ||
Successor [Member] | Selling and Marketing Expense [Member] | |||
Stock-based compensation | 32 | ||
Successor [Member] | General and Administrative Expense [Member] | |||
Stock-based compensation | $ 2 | $ 185 | |
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 |
Stock Option Plan and Stock-B_5
Stock Option Plan and Stock-Based Compensation (Details 2) - Successor [Member] | 3 Months Ended |
Mar. 31, 2024 | |
Expected volatility of underlying stock | 61.65% |
Dividends assumption | |
Minimum [Member] | |
Risk-free interest rate | 3.67% |
Expected life of option grants | 5 years 9 months |
Maximum [Member] | |
Risk-free interest rate | 4.03% |
Expected life of option grants | 6 years 3 months |
Stock Option Plan and Stock-B_6
Stock Option Plan and Stock-Based Compensation (Details 3) - Successor [Member] - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Mar. 31, 2024 | Mar. 31, 2024 | |
Stock-based compensation | $ 2 | $ 220 |
Research and Development Expense [Member] | ||
Stock-based compensation | 3 | |
Selling and Marketing Expense [Member] | ||
Stock-based compensation | 32 | |
General and Administrative Expense [Member] | ||
Stock-based compensation | $ 2 | 185 |
Restricted Stock Units (RSUs) [Member] | ||
Stock-based compensation | 381 | |
Restricted Stock Units (RSUs) [Member] | Research and Development Expense [Member] | ||
Stock-based compensation | 98 | |
Restricted Stock Units (RSUs) [Member] | Selling and Marketing Expense [Member] | ||
Stock-based compensation | 51 | |
Restricted Stock Units (RSUs) [Member] | General and Administrative Expense [Member] | ||
Stock-based compensation | $ 232 |
Stock Option Plan and Stock-B_7
Stock Option Plan and Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Feb. 06, 2024 | Jan. 03, 2024 | Mar. 31, 2024 | Mar. 10, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Stock option granted | 705,000 | |||
Fair value of common stock as of grant date | $ 0.90 | |||
Weighted average remaining term | 9 years 10 months 9 days | |||
Successor [Member] | Employee Stock Options [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Unrecognized stock compensation expense | $ 500 | |||
Weighted average remaining term | 3 years 9 months 10 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 | 705,000,000 | |||
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] | Restricted Stock Units (RSUs) [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Unrecognized stock compensation expense | $ 1,454 | |||
Weighted average remaining term | 1 year 9 months 3 days | |||
Weighted average fair value restricted stock unit | $ 1.29 | |||
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 | $ 1.38 | |||
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 | 47,000,000 | |||
2023 Equity Incentive Plan [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Shares available for issuance | 2,110,500 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | |
Successor [Member] | |||
Income tax benefit/(provision) | $ 1,560 | $ 207 | |
Effective tax rate | 3.85% | ||
Predecessor [Member] | |||
Income tax benefit/(provision) | $ 0 | ||
Effective tax rate | (164.00%) |
Credit Risk and Concentrations
Credit Risk and Concentrations (Details Narrative) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Successor [Member] | ||
Cash | $ 326 | $ 300 |
Foreign Operations (Details)
Foreign Operations (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Successor [Member] | ||||
Revenues by geographic area | $ 342 | $ 1,818 | ||
Operating income (loss) by geographic area | (487) | (3,587) | ||
Net income (loss) by geographic area | 2,758 | (5,170) | ||
Identifiable assets by geographic area | 34,557 | $ 36,581 | ||
Long lived assets by geographic area | 17,937 | 18,737 | ||
Goodwill by geographic area | 8,737 | 8,737 | ||
Successor [Member] | UNITED STATES | ||||
Revenues by geographic area | 272 | 1,667 | ||
Operating income (loss) by geographic area | (486) | (3,000) | ||
Net income (loss) by geographic area | 2,780 | (4,527) | ||
Identifiable assets by geographic area | 36,681 | 38,143 | ||
Long lived assets by geographic area | 17,533 | 18,269 | ||
Goodwill by geographic area | 8,737 | 8,737 | ||
Successor [Member] | CANADA | ||||
Revenues by geographic area | 70 | 151 | ||
Operating income (loss) by geographic area | (158) | (602) | ||
Net income (loss) by geographic area | (158) | (657) | ||
Identifiable assets by geographic area | 600 | 627 | ||
Long lived assets by geographic area | 282 | 320 | ||
Goodwill by geographic area | ||||
Successor [Member] | PHILIPPINES | ||||
Revenues by geographic area | 196 | 240 | ||
Operating income (loss) by geographic area | 157 | 15 | ||
Net income (loss) by geographic area | 157 | 14 | ||
Identifiable assets by geographic area | 445 | 434 | ||
Long lived assets by geographic area | 122 | 148 | ||
Goodwill by geographic area | ||||
Successor [Member] | Eliminations [Member] | ||||
Revenues by geographic area | (196) | (240) | ||
Operating income (loss) by geographic area | ||||
Net income (loss) by geographic area | $ (21) | |||
Identifiable assets by geographic area | (3,169) | (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 |
Leases (Details)
Leases (Details) - Successor [Member] $ in Thousands | Mar. 31, 2024 USD ($) |
Year 2024 | $ 197 |
Year 2025 | 174 |
Year 2026 | 59 |
Total lease payments | 430 |
Less: Imputed interest | (39) |
Present value of lease liabilities | $ 391 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 14, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Successor [Member] | ||||
Operating lease expenses | $ 9 | $ 113 | ||
Weighted average remaining lease term | 1 year 1 month 6 days | 1 year 4 months 24 days | ||
Weighted average discount rate used to determine operating lease | 8% | 8% | ||
Predecessor [Member] | ||||
Operating lease expenses | $ 57 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 1 Months Ended |
May 22, 2024 | |
Subsequent Events | |
Equity line financing agreement description | Company entered into an equity line financing agreement for up to $10,000 thousand, with an initial draw of $2,500 thousand in the second quarter of 2024. |