CXApp Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2025. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2025. Remediation of Prior Year Material Weaknesses In our Annual Report on Form 10-K for the year ended December 31, 2024, we disclosed the following material weaknesses in our internal control over financial reporting: ● Tax accounting — deficiencies related to the completeness and technical review of tax accruals and provisions; ● Expense accrual process — deficiencies related to the completeness and review of month-end expense accruals; and ● Fair value election and embedded derivatives — deficiencies related to the identification, valuation, classification, and disclosure of embedded derivative features and instruments for which the fair value option was elected. 57 During the year ended December 31, 2025, management implemented enhanced controls and processes to address each of these material weaknesses, including the engagement of external consultants to support the tax provision process, the implementation of a formalized month-end close checklist, and the development of a revised process for identifying and evaluating new and amended contracts for derivative features and fair value considerations. Based on the steps taken and the testing performed as of December 31, 2025, management has concluded that each of these previously reported material weaknesses has been fully remediated and no longer exists as of December 31, 2025. Changes in Internal Control Over Financial Reporting We have not identified any changes in our internal control over financial reporting in connection with our evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Insider Trading Arrangements and Policies During the quarter ended December 31, 2025, no director or executive officer of CXApp notified CXApp of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. Securities Purchase Agreement On March 27, 2026, the Company entered into a Securities Purchase Agreement with Avondale Capital, LLC, pursuant to which the Company may issue and sell one or more Pre-Paid Purchases, in the aggregate purchase amount of up to $40,000,000, for the purchase of the Company’s Common Stock and the Company issued an unsecured convertible Pre-Paid Purchase #1 to the Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $1,050,000. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 58 PART III. Item 10. Directors, Executive Officers and Corporate Governance. Our officers and directors are as follows: Name Age Title Khurram Sheikh 55 Chairman, Chief Executive Officer and Director Joy Mbanugo 45 Chief Financial Officer Di-Ann Eisnor 54 Director Camillo Martino 64 Director George Mathai 59 Director Shanti Priya 56 Director Mr. Khurram Sheikh has served as the Founder, Chairman and Chief Executive Officer of KINS since its inception and Chief Financial Officer from August 2020 until August 2024. Mr. Sheikh has been at the forefront of innovation in the technology, mobile, semiconductor, telecom and media industries for the past 25 years with CEO and CTO roles at leading technology companies. Since March 2020, Mr. Sheikh has been the Founder, Executive Chairman & CEO of Aijaad, a boutique strategic advisory firm where he advises both large private equity firms as well as boards of public companies on the future of 5G, IoT, Edge Computing and AI technologies and is actively involved in M&A, technology strategy and market development. From 2016 to early 2020, Mr. Sheikh was the CEO of Kwikbit, a private company building a “network as a service” solution using gigabit radios, edge compute, virtualization, and artificial intelligence. Prior to Kwikbit, in 2014, Mr. Sheikh was appointed as the Chief Strategy and Technology Officer for Silicon Image (SIMG) and the President/CEO of its millimeter wave/5G subsidiary SiBEAM. SIMG was acquired by Lattice Semiconductor (Nasdaq:LSCC) in 2015 for $600 million after which Mr. Sheikh was appointed the Chief Strategy and Technology Officer of the combined company responsible for corporate strategy, roadmap, M&A and technology development and was there until 2016. From 2007 onwards, he was the CTO for Powerwave Technologies, a large wireless infrastructure vendor. Powerwave filed for Chapter 11 bankruptcy protection in January 2013, and in April 2013 Mr. Sheikh was appointed as the CEO of Powerwave to help with the sale of the company. Later that year, Mr. Sheikh successfully facilitated the sale of approximately 1,400 patents owned by Powerwave to private equity firm Gores Group. From 2005 to 2007, Mr. Sheikh was Vice President, Wireless Strategy and Development at Time Warner Cable leading the cable company’s entry into the wireless space. From 1996 to 2005, Mr. Sheikh held senior technology roles at Sprint including CTO Mobile Broadband responsible for deploying the world’s first 4G system and acquisition of multi-billion-dollar spectrum assets at 2.5GHz. Mr. Sheikh holds a Bachelor of Science degree in Electrical Engineering with highest honors from the University of Engineering & Technology in Pakistan, as well as a Master of Science degree in Electrical Engineering from Stanford University. Mr. Sheikh is well qualified to serve as Chairman of our board because of his extensive experience advising boards of directors of public and private companies and his extensive professional experience. Ms. Joy Mbanugo is currently the Chief Financial Officer and joined CXAppp in August 2024. Before joining CXApp, Ms. Mbanugo was the Chief Financial Officer at ServiceRocket. Ms. Mbanugo led the Finance, Accounting, Workforce Planning, and People teams while overseeing strategic finance, forecasting, budgeting, treasury management, tax, compensation planning, and more. With over 20 years of experience in audit, tax, business operations, financial services, and financial planning/analysis across diverse industries and markets, Ms. Mbanugo is a seasoned professional. Before her role at ServiceRocket, Ms. Mbanugo spent five years at Google, where she played a crucial role in evaluating Google Cloud Partnerships and Solutions, organizing Alphabet’s financial data in Controllership, and optimizing the management of over $100 billion in cash in Treasury and Tax. Her extensive experience also includes a three-year stint at BlackRock, where she led the taxation of financial instruments, securities lending, information reporting, and withholding, among other responsibilities. During her 12-year tenure at EY, she further honed her expertise, offering tax and audit services to clients in international tax, financial services, and capital markets. Ms. Mbanugo holds a Juris Doctor from Cleveland State and a Master of Accountancy from Case Western Reserve University. She also has a double bachelor’s degree in accounting and Black World Studies from Miami University of Ohio. 59 Ms. Di-Ann Eisnor has served as a member of our board of directors since August 2020. Since November 2019, Ms. Eisnor has served as Co-Founder and CEO of Core, a venture-backed construction labor marketplace. Before that, from February 2019 until October 2019, she was an executive of The We Company, a part of the We Work Companies, where she was responsible for development of their city’s platform. Prior to that, Ms. Eisnor served as Director of Urban Systems at Google, from June 2018 until February 2019. Previously, Ms. Eisnor was with Waze, Inc., a crowd-sourced navigation and real-time traffic application owned by Alphabet, Inc., for 10 years, most recently serving as the VP Platform and Director of Growth. Prior to joining Waze, Ms. Eisnor was co-founder and Chief Executive Officer of Platial Inc., a collaborative, user-generated cartographic website. Ms. Eisnor currently serves on the board of Saia Inc. (Nasdaq: SAIA) and Gray Area Foundation for the Arts. She is a venture partner at Obvious Ventures and is co-founder with Lupe Fiasco of Neighborhood Start Fund, a neighborhood-based micro-fund in underserved urban neighborhoods. She holds a bachelor’s degree in Studio Art and Business Administration from New York University. She is a 2014 Henry Crown Fellow of the Aspen Institute and a member of the Aspen Global Leadership Network. Ms. Eisnor is well qualified to serve on our board because of her extensive experience advising boards of directors of public and private companies and her extensive professional experience. Mr. Camillo Martino has served as a member of our Board of Directors since August 2020. Mr. Martino was a senior global semiconductor company executive and now serves as a board member and executive advisor to many global technology companies. Prior to his current board roles, Mr. Martino was a chief executive officer and C-suite executive of a number of high technology companies worldwide. He is currently Chair of the Board of Directors of Magnachip Semiconductor (NYSE: MX) and has served on this Board since August 2016. Since 2018, he has also served on the Board of Directors at Sensera (ASX: SE1). Mr. Martino also serves on the Board of Directors at multiple privately held companies, including VVDN Technologies (fastest growing ODM based in India with a focus on Wireless, Networking & IoT) and Sakuu Corporation (multi-material, multi-process Additive Manufacturing platform). Mr. Martino’s prior board service includes serving on the boards of Cypress Semiconductor from June 2017 through the sale of the company to Infineon in April 2020 and Moschip Technologies (BOM: 532407) from April 2017 to May 2019. As an operating executive, Mr. Martino served as Chief Executive Officer of Silicon Image, Inc. (where he also served as a director) from 2010 until the completion of its sale to Lattice Semiconductor Corporation (Nasdaq: LSCC) in March 2015, Chief Operating Officer of SAI Technology Inc. from January 2008 to December 2009 (where he also served as director from 2006 to 2010), and Chief Executive Officer of Cornice Inc. from 2005 to 2007 (where he also served as a director). From August 2001 to July 2005, Mr. Martino served as the executive vice president and chief operating officer at Zoran Corporation, a global SoC semiconductor company. Prior to that, Mr. Martino held multiple positions with National Semiconductor Corporation for a total of nearly 14 years. Mr. Martino holds a Bachelor of Applied Science from the University of Melbourne and a Graduate Diploma (in Digital Communications) from Monash University in Australia. Mr. Martino is well qualified to serve on our board because of his extensive experience advising boards of directors of public and private companies and his extensive professional experience. Mr. George Mathai has enjoyed decades working, consulting, and investing in early stage and small businesses at the crossroads of distinct technologies, multiple industries and novel markets. A technically trained business professional, his early experience in bridge design and infrastructure repair was at Edwards & Kelcey in New York, now Jacobs Engineering. In January 1993, Mr. Mathai transitioned to managing renovations projects and gaining strong communications and project execution skills, while driving revenue and profitability, at a small New York construction company. As a founder, he later parlayed his prior management and technical expertise in leading the biosensor development program at GenoRx in June 2000, an early stage, venture-backed concern in Hayward, California. His team accomplished a manufacturable process for detecting DNA electronically on a silicon biochip with the eventual sale of the technology to Bridger Technologies in April 2011. Thereafter, Mr. Mathai helped raise financing for an innovative antibiotic skin care start-up and worked to fundraise for an early-stage immune-mediated cancer therapeutic while at a boutique brokerage firm Objective Equity LLC. Overlapping these endeavors, were local business interests in retail, as well as due diligence consulting for mergers and acquisitions. The above broad and varied interests are also reflected in his educational history which includes bachelors and masters in civil engineering from University of California, Berkeley (May 1989) and City College of New York (June 1992), respectively, as well as, most recently upskilling at CalTech’s cybersecurity program (December 2020). Mr. Mathai’s extensive experience in several diverse industries, markets and customer types will bring a unique and inestimable resource to the board. 60 Ms. Shanti Priya has been the CFO of Maxfield Enterprises, Inc., a luxury retail company based in Los Angeles and has been leading the organization’s finance and operations since February 2018. Prior to that, Ms. Priya worked for over 12 years in corporate finance at Gap Inc. with her last role at the company as the Global Director of FP&A and Control overseeing the North American, European, and Asian markets. Before transitioning into a career in finance, Ms. Priya worked as a Producer managing content creation at a tech start-up, Knowledge Kids Network, an online educational media site. She holds a Bachelor of Arts in Honors English Literature with a minor in Biology from Scripps College. In addition, she holds a Master of Arts in Print Journalism and a Master of Business Administration both from the University of Southern California. Ms. Priya also serves on the board and as treasurer of Secular Student Alliance, a non-profit organization that educates high school and college students regarding secularism and scientific reasoning. She has previously served on the board of Sequoyah School, a non-profit private school serving the ages from K-8. Ms. Priya is well qualified to serve on our board of directors because of her substantial financial and operations experience. Family Relationships There are no family relationships between any of our directors and executive officers. Director Independence Our board consists of five members. Our directors, other than Mr. Sheikh, are independent directors in accordance with the listing requirements of Nasdaq. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his, her or their family members has engaged in various types of business dealings with us. There are no family relationships among any of our directors or executive officers. Classified Board of Directors Our board is divided into three classes with staggered, three-year terms, in accordance with the terms of the Charter. At each annual meeting of stockholders, the directors whose terms then expire will be eligible for reelection until the third annual meeting following reelection. The directors are divided among the three classes as follows: ● the Class I directors is Di-Ann Eisnor, and her term will expire at our 2027 annual meeting of stockholders; ● the Class II directors are Camillo Martino and Shanti Priya, and their terms will expire at our 2028 annual meeting of stockholders; and ● the Class III directors are Khurram P. Sheikh and George Mathai, and their terms will expire at our 2026 annual meeting of stockholders. The Charter provides that the authorized number of directors may be changed only by resolution of our board. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board into three classes with staggered three-year terms may delay or prevent a change of our board or a change in control of us. Our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock then entitled to vote in an election of directors. 61 Board Leadership Structure Our board does not anticipate implementing a policy requiring the positions of the Chairman of the Board and Chief Executive Officer to be separate or held by the same individual. Any further determination to create such a policy is expected to be based on circumstances existing from time to time, based on criteria that are in our best interests and the best interests of our stockholders, including the composition, skills and experience of our board and its members, specific challenges faced by us or the industry in which it operates, and governance efficiency. We elected Mr. Sheikh as Chairman of the Board because of Mr. Sheikh’s strategic vision for the business, his in-depth knowledge of our operations, and his experience in capital markets make him well qualified to serve as both Chairman of the board and Chief Executive Officer. Combining the roles of Chairman and Chief Executive Officer will help provide strong and consistent leadership for the management team and our board. However, our board may decide in the future to separate the roles of Chairman and Chief Executive Officers if it determines that such structure provides better and more effective oversight and management. If our board convenes for a meeting, it is expected that the non-management directors will meet in one or more executive sessions, if the circumstances warrant it. Our board may also consider appointing a lead independent director if the circumstances warrant it. Committees of the Board of Directors Our board of directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance. Role of Board in Risk Oversight Process Our board has responsibility for the oversight of our risk management processes and, either as a whole or through its committees, will regularly discuss with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process will include receiving regular reports from board committees and members of senior management to enable our board to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk. The audit committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically, the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the audit committee includes direct communication with our external auditors, and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The compensation committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk taking. The nominating and corporate governance committee manages risks associated with the independence of our board, corporate disclosure practices and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board will be regularly informed through committee reports about such risks. Matters of significant strategic risk will be considered by our board as a whole. Audit Committee The audit committee’s main function is to oversee our accounting and financial reporting processes and the audits of our financial statements. This committee’s responsibilities are set forth in a charter that include, among other things: ● assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors; ● the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; 62 ● pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; ● reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence; ● setting clear hiring policies for employees or former employees of the independent auditors; ● setting clear policies for audit partner rotation in compliance with applicable laws and regulations; ● obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; ● meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor; ● reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and ● reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. The members of our audit committee are Shanti Priya, Camillo Martino and Di-Ann Eisnor. Shanti Priya serves as the chair of the committee. All members of our audit committee are independent directors and meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. Shanti Priya is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq listing standards. Compensation Committee The compensation committee’s main function is to oversee our policies relating to compensation and benefits of our officers and employees. This committee’s responsibilities are set forth in a charter that include, among other things: ● reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; ● reviewing and approving on an annual basis the compensation of all of our other officers; ● reviewing on an annual basis our executive compensation policies and plans; ● implementing and administering our incentive compensation equity-based remuneration plans; ● assisting management in complying with our proxy statement and annual report disclosure requirements; 63 ● approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; ● if required, producing a report on executive compensation to be included in our annual proxy statement; and; ● reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and is directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC. The members of our compensation committee are Camillo Martino, Di-Ann Eisnor, and George Mathai. Di-Ann Eisnor serves as the chair of the committee. Each of Camillo Martino, Di-Ann Eisnor, and George Mathai is independent under the applicable Nasdaq listing standards and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. Nominating and Corporate Governance Committee The nominating and corporate governance committee is responsible for assisting our board in discharging the board of directors’ responsibilities regarding the identification of qualified candidates to become board members, the selection of nominees for election as directors at our annual meetings of stockholders (or special meetings of stockholders at which directors are to be elected), and the selection of candidates to fill any vacancies on our board and any committees thereof. In addition, the nominating and corporate governance committee is responsible for overseeing our corporate governance policies, reporting and making recommendations to our board concerning governance matters and oversight of the evaluation of our board. The charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms. The members of our nominating and corporate governance committee are Camillo Martino, Di-Ann Eisnor, and Shanti Priya. Camillo Martino serves as the chair of the committee. All members of our nominating and corporate governance committee are independent directors under the applicable Nasdaq listing standards. Compensation Committee Interlocks and Insider Participation No member of the compensation committee serves or served during the fiscal year ended December 31, 2024, as a member of our board or compensation committee of a company that has one or more executive officers serving as a member of the board of directors or compensation committee. Board Composition Our nominating and corporate governance committee is responsible for reviewing with our board, on an annual basis, the appropriate characteristics, skills and experience required for our board as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members) for election or appointment, the nominating and corporate governance committee and our board take into account many factors, including the following: ● personal and professional integrity, ethics and values; 64 ● experience in corporate management, such as serving as an officer or former officer of a public company; ● experience as a board member or executive officer of another public company; ● strong finance experience; ● wide range of expertise and experience in substantive matters pertaining to our business relative to other board members; ● variety of background and perspectives, including, but not limited to, with respect to place of residence and specialized experience; ● experience relevant to our business industry and with relevant social policy concerns; and ● relevant academic expertise or other proficiency in an area of our business operations. Our board evaluates, each individual in the context of the board of directors as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its wide range of experience in these various areas. Insider Trading Policy The Company has insider trading policies and procedures that govern the purchase, sale, and other dispositions of its securities by directors, officers, employees, and contractors, as well as by the Company itself. We believe these policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards. A copy of our Insider Trading Policy is attached as Exhibit 19.1 to this Annual Report. Code of Ethics We have adopted a written code of business conduct and ethics that applies to its directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our code of business conduct and ethics is available under the Corporate Governance section of our website at www.cxapp.com. In addition, we intend to post on its website all disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through its website, and you should not consider it to be a part of this Annual Report. 65 Item 11. Executive Compensation. This section discusses the material components of the executive compensation program for CXApp’s executive officers who are named in the “Summary Compensation Table” below. CXApp complies with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act, which for 2025 require compensation disclosure for CXApp’s named executive officers. Overview The form and amount of the compensation to be paid to each of our directors and executive officers were determined by our board. Each executive officers’ compensation were established by our compensation committee which is comprised solely of independent directors in accordance with Nasdaq listing standards. The following tables disclose compensation received by our named executive officers. Summary Compensation Table The following table provides certain information regarding the compensation earned by the named executive officers from their services to CXApp, as applicable, during the fiscal years ended December 31, 2025, and 2024. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards (1) ($) Option Awards (1) ($) All Other Compensation ($) (1) Total ($) Khurram P. Sheikh 2025 $ 325,000 $ 268,125 $ 200,000 $ 250,000 $ - $ 1,043,125 Chief Executive Officer 2024 $ 325,000 $ 255,938 $ 200,001 $ 360,000 $ - $ 1,140,939 Joy Mbanugo 2025 $ 250,000 $ 60,000 $ - $ 100,000 $ - $ 410,000 Chief Financial Officer 2024 $ 92,948 $ 8,485 $ - $ 552,000 $ 25,000 $ 678,433 (1) The amounts reported in the “Stock Awards” and “Option Awards” columns represent the aggregate grant-date fair value of awards granted during the applicable fiscal year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation. For the year ended December 31, 2025, stock awards granted to Mr. Sheikh had an aggregate grant-date fair value of $200,000. Option awards granted to Mr. Sheikh and Ms. Mbanugo had aggregate grant-date fair values of $250,000 and $100,000, respectively. The assumptions used in calculating these values are described in Note 10 to the Company’s financial statements included in this Annual Report on Form 10-K. (2) Except as disclosed in the “All Other Compensation” column, the Company confirms that there were no employer contributions to defined contribution plans, perquisites, or other compensation items required to be reported for the named executive officers for the fiscal years presented. Narrative Disclosure to the Summary Compensation Table The Company’s executive compensation program is designed to attract, retain, and motivate executive officers while aligning their interests with those of stockholders. Compensation consists of base salary, annual cash bonuses, and long-term equity incentives. The Company maintains an annual bonus program intended to reward performance against corporate and individual objectives. Bonus awards are determined based on a combination of financial performance and individual contributions, as evaluated by the Board of Directors. Equity awards are a key component of the Company’s long-term incentive program and are intended to align executive compensation with stockholder value creation. 66 Khurram P. Sheikh, our chief executive officer, received (i) a salary of $325,000 and a bonus of $268,125 as compensation during the fiscal year ended December 31, 2025, and (ii) a salary of $325,000 and a bonus of $255,938 as compensation for his services to CXApp during the fiscal year ended December 31, 2024; and Joy Mbanugo, our Chief Financial Officer, received (i) a salary of $250,000 and a bonus of $60,000 as compensation for her services during the fiscal year ended December 31, 2025, and (ii) a salary of $92,948 and a bonus of $8,485 as compensation for her services during the fiscal year ended December 31, 2024. Outstanding Equity Awards at Fiscal Year-End Other than as set forth below, there were no outstanding unexercised options, unvested stock, and/or equity incentive plan awards issued to our Named Executive Officers as of December 31, 2025. Option Awards Stock Awards Name Grant Date Expiration Date Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) Option exercise price ($) Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) Khurram P. Sheikh Mar 29, 2023 Mar 29, 2033 844,200 - - 1.53 - - - - Aug 14, 2023 Aug 14, 2033 - - - - 10,000 3,300 - - Feb 6, 2024 Feb 6, 2034 - 300,000 (1) - 1.20 - - - - May 23, 2025 May 23, 2035 - - - - 200,000 66,000 - - May 23, 2025 May 23, 2035 - 250,000 (1) - 1.00 - - - - Joy Mbanugo Aug 26, 2024 Aug 6, 2034 76,667 153,333 (2) - 2.40 - - - - May 23, 2025 May 23, 2035 - 100,000 (2) - 1.00 - - - - (1) This option vests in four years with 50% vesting in the second year of anniversary, and 25% in the third year of anniversary, and 25% on its fourth year of anniversary. (2) This option vests in three years with 1/3 vesting in the first year of anniversary, then monthly for the following two years. 67 Executive Compensation Arrangements We have entered into an employment agreement with Khurram Sheikh who serves as our Chief Executive Officer for a term commencing on the consummation of the Business Combination and will continue until terminated by us or the employee or in accordance with the terms of the employment agreement. Mr. Sheikh will be paid an annualized base salary of $325,000, as revised periodically by us, as well as an annual bonus with a target amount of $325,000 for each complete calendar year. The employment agreement contains provisions regarding non-solicitation, confidentiality of information and arbitration of disputes. Mr. Sheikh may terminate his employment by giving advance written notice to us. We may also terminate the employment agreement for cause, as defined in the employment agreement, a copy of which is attached hereto as Exhibit 10.5 and is also incorporated herein by reference. In connection with Mrs. Mbanugo’s appointment as Chief Financial Officer, the Company entered into a letter agreement with Mrs. Mbanugo (the “CFO Offer Letter”). Pursuant to the CFO Offer Letter, Mrs. Mbanugo will receive (i) an annual base salary of $250,000 and (ii) a total annual bonus of $100,000 to be paid in quarterly installments subject to achievement of certain performance goals. Pursuant to the CFO Offer Letter, Mrs. Mbanugo will also receive a one-time sign-on cash bonus of $25,000 and an option award to purchase 230,000 shares of the Company’s Class A common stock (the “Stock Options”). The Stock Options (i) will be subject to the terms and conditions of the Company’s 2023 Equity Incentive Plan and a stock option agreement, (ii) are subject to the approval of the Company’s compensation committee, and (iii) will vest with one-third becoming vested on the first anniversary of the grant date, and the remaining two thirds vesting in equal monthly installments over the next 24 months. 2023 Equity Incentive Plan At the special meeting held on March 10, 2023, the KINS stockholders considered and approved, among other things, the CXApp Inc. 2023 Equity Incentive Plan (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. Pursuant to the terms of the Incentive Plan, there are 2,110,500 shares of CXApp Class A common stock available for issuance under the Incentive Plan, which is equal to 15% of the aggregate number of shares of CXApp common stock issued and outstanding immediately after the Closing (giving effect to the redemptions). In addition, at the Company’s annual meeting held on May 20, 2025, the Company’s stockholders considered and approved, among other things, the amendment and restatement of the 2023 Equity Incentive Plan, including the reservation of a total of 5,676,000 shares of common stock for issuance under the plan. This description is qualified in its entirety by reference to the text of the Incentive Plan, a copy of which is attached hereto as Exhibit 10.7 and also is incorporated herein by reference. Director Compensation The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Directors in the year ended December 31, 2024, except Khurram Sheikh whose aggregate compensation information has been disclosed above. Name Fees Earned or paid in cash ($) Option Awards ($) Restricted Stock Units ($) (1) Non-equity Incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All Other Compensation ($) Total ($) Camillo Martino $ 37,000 $ - $ 200,000 $ - $ - $ - $ 237,000 Di-Ann Eisnor $ 37,000 $ - $ 200,000 $ - $ - $ - $ 237,000 Shanti Priya $ 37,000 $ - $ 200,000 $ - $ - $ - $ 237,000 George Mathai $ 37,000 $ - $ 200,000 $ - $ - $ - $ 237,000 (1) The fair value of director restricted stock unit granted are valued using the closing price of the Company’s common stock on the date of grant. Directors are entitled to reimbursement of ordinary and reasonable expenses incurred in exercising their responsibilities and duties as a director. On August 26, 2024, the Board decided to maintain the current compensation structure and approved a grant of $200,000 restricted stock units to each director. 68 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth the beneficial ownership of our common stock as of March 24, 2026, by the following persons: ● each person who is known to be the beneficial owner of more than 5% of shares of our common stock; ● each of our current named executive officers and directors; and ● all our current executive officers and directors as a group. Except as indicated in the footnotes to the following table, subject to applicable community property laws, each stockholder named in the table has sole voting and investment power. Shares of common stock subject to options, warrants, or other rights currently exercisable or exercisable within 60 days of March 24, 2026, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the stockholder holding the options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other stockholder. The information provided in the following table is based on our records, information filed with the SEC, and information furnished by our stockholders. Name of and Address of Beneficial Owner Amount held by beneficial owner % (1) 5% of More Stockholders Avondale Capital, LLC (2) 2,860,068 5.01 % Directors and Executive Officers Khurram P. Sheikh 1,859,178 3.26 % Camillo Martino 201,010 * Di-Ann Eisnor 130,471 * Shanti Priya 66,016 * George Mathai 34,342 * Joy Mbanugo - * All directors and executive officers as a group (6 individuals) 2,291,017 4.01 % * Represents beneficial ownership of less than 1% (1) Based on 57,115,772 shares outstanding as of March 24, 2026. (2) Includes (i) sole voting power over 2,860,068 of Common Stock and (ii) sole dispositive power over 2,860,068 shares of Common Stock as reported in the Schedule 13G filed with SEC on December 11, 2025. The principal address of Avondale Capital, LLC is 297 W Auto Mall Drive, Suite 4, St. George, UT 84770. 69 Item 13. Certain Relationships and Related Transactions, and Director Independence. Agreements with Inpixon CXApp and Inpixon operate separately, each as a public company. In connection with the Separation, Legacy CXApp has entered into various agreements to effect the Separation and provide a framework for CXApp’s relationship with Inpixon after the Separation, including the Separation and Distribution Agreement, an Employee Matters Agreement, a Tax Matters Agreement and a Transition Services Agreement. These agreements provide for the allocation between Legacy CXApp and Inpixon of Inpixon’s assets, employees, liabilities and obligations (including its property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after Legacy CXApp’s separation from Inpixon and will govern certain relationships between CXApp and Inpixon after the Separation. The following summaries of each of the agreements listed above are qualified in their entirety by reference to the full text of the applicable agreements which are filed as exhibits to this Annual Report. Separation and Distribution Agreement On September 25, 2022, in connection with the execution of the Merger Agreement, Inpixon, Legacy CXApp, Design Reactor and KINS entered into the Separation and Distribution Agreement which sets forth the principal actions to be taken in connection with the Separation. The Separation and Distribution Agreement identifies assets to be transferred, liabilities to be assumed and contracts to be assigned to each of Inpixon and Legacy CXApp as part of the internal reorganization described therein and requires an Inpixon contribution to be made to Legacy CXApp. The Separation and Distribution Agreement also sets forth other agreements that govern certain aspects of Legacy CXApp’s relationship with Inpixon following the Business Combination. In connection with the Separation and Distribution Agreement and related ancillary agreements, Legacy CXApp issued additional shares of Legacy CXApp common stock to Inpixon. Inpixon distributed on a pro rata basis all of the outstanding shares of Legacy CXApp common stock to the Inpixon securityholders as of March 6, 2023 by delivering to the distribution agent a book-entry authorization representing the shares of Legacy CXApp common stock being distributed for the account of Inpixon securityholders. The distribution agent held such book-entry shares for the account of Legacy CXApp’s stockholders (as of immediately after consummation of the Distribution) pending the Merger. On the date of the Distribution, Inpixon distributed on a pro rata basis all of the outstanding shares of Legacy CXApp common stock to the holders of Inpixon common stock and certain other holders of its securities as of March 6, 2023. The Distribution was effected by Inpixon delivering to the distribution agent a book-entry authorization representing the shares of Legacy CXApp common stock being distributed in the Distribution for the account of Inpixon securityholders. The distribution agent held such book-entry shares for the account of Legacy CXApp’s stockholders (as of immediately after consummation of the Distribution) pending the Merger. The shares of Legacy CXApp common stock were not transferrable prior to the exchange of such shares for the shares of KINS common stock pursuant to the Merger. Employee Matters Agreement Prior to the Distribution, KINS, Inpixon, Legacy CXApp and Merger Sub entered into the Employee Matters Agreement, which set forth the terms and conditions of certain employee-related matters in connection with the transaction, including allocation of benefit plan assets and liabilities between Inpixon and Legacy CXApp, treatment of incentive equity awards in the Distribution and the Business Combination and related covenants and commitments of the parties. Tax Matters Agreement Prior to the Distribution, KINS, Legacy CXApp and Inpixon entered into the Tax Matters Agreement that governs each party’s respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes. 70 In general, KINS and Legacy CXApp are liable for all U.S. federal, state, local and foreign taxes (and any related interest, penalties or audit adjustments) that are (i) imposed with respect to tax returns that include both Legacy CXApp and Inpixon, to the extent such taxes are attributable to Legacy CXApp or the Enterprise Apps Business, or (ii) imposed with respect to tax returns that include Legacy CXApp but not Inpixon, in each case, for tax periods (or portions thereof) beginning after the Distribution. Notwithstanding the foregoing, KINS and Legacy CXApp may be liable for certain taxes resulting from the restructuring transactions undertaken to effectuate the Distribution. The Distribution, together with certain related transactions, is intended to qualify as a reorganization under Sections 355 and 368(a) (1)(D) of the Code. If the Distribution does not so qualify, the difference between the fair market value and the tax basis of the Legacy CXApp shares distributed by Inpixon to the Inpixon stockholders will be taxable income to Inpixon. Even if the contribution and distribution, taken together, otherwise qualify as a transaction described in Sections 355 and 368(a)(1) (D) of the Code, the Distribution is still taxable to Inpixon (but not to Inpixon stockholders) pursuant to Section 355(e) of the Code if one or more persons acquire a 50% or greater interest (measured by vote or value) in the stock of Inpixon or Legacy CXApp, directly or indirectly (including through acquisitions of our stock), as part of a plan or series of related transactions that includes the Distribution. For purposes of this test, the Merger is treated as part of a plan that includes the Distribution, but the Merger standing alone did not cause the Distribution to be taxable to Inpixon under Section 355(e) of the Code because holders of Legacy CXApp common stock own more than 50% of our common stock. Per the terms of the Sponsor Support Agreement, the Sponsor has agreed to exchange up to 1 million shares of KINS Class B common stock for such number of shares of KINS Class A common stock as shall be necessary to ensure that the number of shares of KINS common stock issued as aggregate merger consideration to the holders of Legacy CXApp common stock exceeds 50% by at least one share than the number of shares of KINS common stock owned by all other holders of KINS common stock. Pursuant to the Sponsor Support Agreement, the Sponsor and related parties have agreed, subject to the limitation set forth therein, to forfeit 22,224 shares of KINS common stock (as of immediately prior to the consummation of the Merger). The Tax Matters Agreement requires KINS and Legacy CXApp to comply with the representations made in the materials submitted to RSM US LLP in connection with a distribution tax opinion that Inpixon received regarding the intended tax treatment of the Distribution and certain related transactions. The Tax Matters Agreement also includes covenants restricting Legacy CXApp’s and KINS’ ability to take or fail to take any action if such action or failure to act could reasonably be expected to adversely affect the intended tax treatment. In particular, in the two years following the Distribution, such restrictive covenants will generally prevent KINS and Legacy CXApp from (i) entering into any transaction which could, when combined with other transactions (including the Merger), result in a 45% or greater change in ownership of KINS’ or Legacy CXApp’s equity as part of a plan or series of related transactions that includes the Distribution, (ii) ceasing the active conduct of certain of Legacy CXApp’s businesses, (iii) voluntarily dissolving or liquidating KINS or Legacy CXApp and (iv) causing, permitting, or agreeing to the sale, transfer, or disposal of assets of Legacy CXApp that, in the aggregate, constitute more than 30% of the consolidated gross assets of Legacy CXApp, in each case, unless Legacy CXApp obtains a private letter ruling from the IRS, an unqualified opinion of a nationally recognized tax advisor that such action will not cause a failure of the intended tax treatment, or Inpixon consents to the undertaking of such action. Notwithstanding receipt of such ruling, opinion or consent, in the event that such action causes a failure of the intended tax treatment, KINS and Legacy CXApp could be responsible for all taxes arising therefrom. Director Independence For information on director independence, see Item 10. Directors, Executive Officers and Corporate Governance . 71 Item 14. Principal Accountant Fees and Services. WithumSmith+Brown, PC (“Withum”) acts as our independent registered public accounting firm. Withum acted as the independent registered public accounting firm for the year ended December 31, 2025 and for the year ended December 31, 2024. Audit Fees. For the year ended December 31, 2025 and for the year ended December 31, 2024, fees were approximately $501,495 and $319,000, respectively, for the services Withum performed in connection with the audits of our annual financial statements in our Annual Reports on Form 10-K and for reviews of the quarterly financial statements included in the Company’s Quarterly Reports on Form 10 Q. Audit-Related Fees. For the year ended December 31, 2025 and the year ended December 31, 2024, our independent registered public accounting firms did not render audit-related services. Tax Fees. For the year ended December 31, 2025 and for the year ended December 31, 2024, fees for our independent registered public accounting firm, Withum, were approximately $31,500 and $38,000 respectively, for preparation of the Company’s federal and state tax returns. All Other Fees. For the year ended December 31, 2025 and for the year ended December 31, 2024, fees for our independent registered public accounting firm, Withum, were approximately $59,000 and $34,000, respectively. for the services performed by Withum related to our Form S-1, Form S-3 and Form S-8 filings. Pre-Approval Policy Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit Committee has responsibility for engaging, setting compensation for and reviewing the performance of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee pre-approves all audit and permitted non-audit services provided by any independent registered public accounting firm prior to each engagement. 72 PART IV. Item 15. Exhibits, Financial Statement Schedules The following documents are filed as part of this Annual Report: (1) Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 100) F-2 Consolidated Financial Statements: Consolidated Balance Sheets F-5 Consolidated Statements of Operations and Comprehensive Loss F-6 Consolidated Statements of Changes in Stockholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 to F-42 (2) Financial Statement Schedules: None. (3) Exhibits We hereby file as part of this Annual Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov. 73 CXAPP INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 100) F-2 Consolidated Financial Statements: Consolidated Balance Sheets F-5 Consolidated Statements of Operations and Comprehensive Loss F-6 Consolidated Statements of Changes in Stockholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 to F-42 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of CXApp Inc. and Subsidiaries: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CXApp Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, consolidated statements of changes in stockholders’ equity, and consolidated statements of cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to those charged with governance and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Impairment Assessment of Goodwill As described in Notes 2 and 5 to the consolidated financial statements, the Company evaluates goodwill for impairment annually and more frequently if events or changes in circumstances indicate that the carrying amount of the reporting unit may not be recoverable. The Company’s goodwill impairment assessment utilizes a weighting of the income and market approach to estimate the reporting unit’s fair value. The income approach is based on a discounted future cash flow analysis and involves the use of assumptions, including projections of revenues and expenses, long-term growth rates and estimated discount rates. The Company’s goodwill impairment assessment indicated that the carrying values of the Company’s reporting unit exceeded its estimated fair value, resulting in a goodwill impairment charge of $2,148 thousand for the year ended December 31, 2025. F- 2 We identified the impairment assessment of goodwill as a critical audit matter because of the significant judgment required by management to develop the fair value measurement of the reporting unit and the valuation methodologies. This required a high degree of auditor judgment and an increased level of effort when performing audit procedures, including the involvement of professionals with specialized skills and knowledge. The primary procedures we performed to address this critical audit matter included: ● We compared the significant assumptions of projected revenue growth rates and projected operating income margins used by management to peer companies while also evaluating the reasonableness of these peer companies used to develop the fair value estimates of the reporting unit. ● We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. ● We tested management’s reconciliation of the fair value of the reporting unit to the market capitalization of the Company. ● We recalculated the goodwill impairment charge and evaluated the related goodwill disclosures included in Notes 2 and 5 to the consolidated financial statements. ● With the assistance of our personnel with specialized knowledge and skills in valuation, we (i) evaluated the appropriateness of the valuation methodologies used and the weighting assigned to those methods, (ii) evaluated the reasonableness of the discount rate, selected market multiples, and control premium assumptions used in the valuation, and (iii) evaluated the reasonableness of management’s reconciliation of the concluded fair value to market capitalization. Impairment Assessment of Acquired Intangible Assets and Other Long-Lived Assets As described in Note 2 to the consolidated financial statements, the Company reviews its acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. These assets are evaluated together with other long-lived assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. The impairment assessment begins with a comparison of the carrying amount of the asset group to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. If the carrying amount exceeds the estimated undiscounted cash flows, an impairment loss is recognized for the amount by which the carrying value exceeds fair value. The Company recorded no impairment charges for acquired intangible assets or other long-lived assets for the year ended December 31, 2025. We identified the impairment assessment of acquired finite-lived intangible assets and other long-lived assets as a critical audit matter because the analysis required significant judgment by management in estimating the future undiscounted cash flows of the asset group and in determining certain significant assumptions used in the recoverability analysis. This required a high degree of auditor judgment and an increased level of effort when performing audit procedures, including the involvement of professionals with specialized skills and knowledge. The primary procedures we performed to address this critical audit matter included: ● We evaluated the reasonableness of management’s assumptions used in projecting future cash flows of the related asset group, including projected revenue, operating margins, and other significant operating assumptions, by comparing them to historical results, approved forecasts, and relevant industry and economic trends. ● We tested the completeness and accuracy of the data used in management’s impairment analysis. ● We evaluated the reasonableness of the expected remaining useful life of the acquired assets used in the analysis. ● With the assistance of our personnel with specialized knowledge and skills in valuation, we (i) assessed the appropriateness of the forecast used in the recoverability analysis by way of sensitivities performed, and (ii) evaluated the appropriateness of the valuation methodology used, where fair value measurement was required, and in assessing the reasonableness of certain significant assumptions incorporated into the analysis. F- 3 Fair Value Measurement of Convertible Debt As described in Notes 2 and 11 to the consolidated financial statements, the Company issues convertible debt instruments in the normal course of business to raise capital. In order to determine the proper accounting for these convertible debt instruments, management evaluated the relevant guidance and elected the fair value option for the instruments. Under the fair value option election, the convertible debt is initially measured at its issuance date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis. The estimated fair value adjustment is presented within change in fair value of derivative liability in the consolidated statements of operations and comprehensive loss. The Company measures the convertible debt instruments at fair value at each reporting period. Management estimated the fair value of the instruments using a probability-weighted valuation model that considered the various contractual settlement outcomes available under the agreements. The valuation incorporated significant assumptions and inputs including the Company’s stock price, risk-free rate, expected term, contractual pricing features, expected timing of settlement, ownership-related conversion limitations, the discount rate used to present value the exchange scenario, and the probability assigned to each scenario. We identified the fair value measurement of the convertible debt as a critical audit matter because of complexity and judgment involved in evaluating the classification and embedded features of the instruments and in applying the accounting framework and the complexity and judgment made by management in estimating the fair value of the convertible debt under the fair value option. This required a high degree of auditor judgment and an increased level of effort when performing audit procedures, including the involvement of professionals with specialized skills and knowledge. The primary procedures we performed to address this critical audit matter included: ● We assessed the accounting for complex financial instruments to evaluate the appropriateness of management’s application of the authoritative accounting guidance. ● We tested the completeness and accuracy of the underlying data used by management in the valuation by comparing it to the debt agreement, share price, and stock register. ● With the assistance of our personnel with specialized knowledge and skills in valuation, we (i) assessed the appropriateness of the methodology used in estimating the fair value of the convertible debt; (ii) evaluated the reasonableness of certain significant assumptions, such as volatility, discount rate, risk-free rate, expected term, stock price, contractual pricing provisions such as fixed price, floor price, and variable conversion pricing, expected settlement outcomes, and share conversion limitations; and (iii) developed a range of independent estimates and comparing those to the fair value of the convertible debt determined by management. /s/ WithumSmith+Brown, PC We have served as the Company’s auditors since 2020. San Francisco, CA March 30, 2026 PCAOB ID Number 100 F- 4 CXAPP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2025 December 31, 2024 Assets Current Assets Cash and cash equivalents $ 11,101 $ 4,880 Accounts receivable 789 1,686 Unbilled and other receivables 178 89 Prepaid expenses and other current assets 765 425 Total current assets 12,833 7,080 Property and equipment, net 39 64 Intangible assets, net 12,672 15,404 Operating lease right-of-use asset, net 224 465 Goodwill 6,589 8,737 Other assets 73 53 Total Assets $ 32,430 $ 31,803 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 766 $ 509 Accrued liabilities 2,281 2,383 Deferred revenue 1,465 2,683 Warrant liability 1,051 5,048 Operating lease obligation, current 195 350 Promissory note, net - 603 Total current liabilities 5,758 11,576 Operating lease obligation, noncurrent 31 123 Convertible debt 12,659 4,512 Total Liabilities $ 18,448 $ 16,211 Commitments and Contingencies Stockholders’ Equity Class A Common Stock, $ 0.0001 par value; 200,000,000 shares authorized; 33,773,696 shares issued and outstanding as of December 31, 2025 and 19,248,390 shares issued and outstanding as of December 31, 2024 $ 3 $ 2 Additional paid-in capital 104,691 92,583 Accumulated deficit ( 90,682 ) ( 77,209 ) Accumulated other comprehensive income (loss) ( 30 ) 216 Total Stockholders’ Equity $ 13,982 $ 15,592 Total Liabilities and Stockholders’ Equity $ 32,430 $ 31,803 The accompanying notes are an integral part of these consolidated financial statements. F- 5 CXAPP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) Year Ended December 31, 2025 Year ended December 31, 2024 Revenues $ 4,583 $ 7,142 Cost of Revenues 578 1,285 Gross Profit 4,005 5,857 Operating Expenses Research and development 6,636 6,380 Sales and marketing 2,093 3,249 General and administrative 7,973 7,237 Amortization of intangible assets 2,732 2,732 Impairment of goodwill 2,148 - Total Operating Expenses 21,582 19,598 Loss from Operations ( 17,577 ) ( 13,741 ) Other Income (Expense) Interest expense, net ( 701 ) ( 1,756 ) Change in fair value of derivative liability 4,548 ( 3,152 ) Loss on debt extinguishment ( 48 ) ( 1,052 ) Other income (expense), net 259 ( 342 ) Total Other Income (Expense) 4,058 ( 6,302 ) Loss, before tax ( 13,519 ) ( 20,043 ) Deferred income tax benefit 46 635 Net Loss $ ( 13,473 ) $ ( 19,408 ) Unrealized foreign exchange gain (loss) from cumulative translation adjustments ( 246 ) 301 Comprehensive Loss $ ( 13,719 ) $ ( 19,107 ) Basic and diluted weighted average shares outstanding, Class A common stock 23,414,190 15,907,946 Basic and diluted net loss per share, Class A common stock $ ( 0.58 ) $ ( 1.20 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 CXAPP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share data) Class A Common Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Income Total Stockholders’ Shares Amount Capital Deficit (Loss) Equity Balance at December 31, 2023 15,254,389 $ 2 $ 83,282 $ ( 57,801 ) $ ( 85 ) $ 25,398 Net loss - - - ( 19,408 ) - ( 19,408 ) Stock-based compensation - - 2,831 - - 2,831 Net exercise of options 12,570 - - - - - Common shares issued for extinguishment of debt 3,695,211 - 6,579 - - 6,579 Common shares issued for vested restricted stock units 246,220 - - - - - Taxes withheld on stock-based compensation - - ( 171 ) - - ( 171 ) Common shares issued as commitment shares 40,000 - 62 - - 62 Cumulative translation adjustment - - - - 301 301 Balance at December 31, 2024 19,248,390 2 92,583 ( 77,209 ) 216 15,592 Net loss - - - ( 13,473 ) - ( 13,473 ) Stock-based compensation - - 2,784 - - 2,784 Common shares issued for extinguishment of debt 13,383,191 1 8,754 - - 8,755 Common shares issued in the at-the-market offering 782,102 - 648 - - 648 Common shares issued as commitment shares 80,000 - 89 - - 89 Common shares issued for vested restricted stock units 280,013 - - - - - Taxes withheld on stock-based compensation - - ( 167 ) - - ( 167 ) Cumulative translation adjustment - - - - ( 246 ) ( 246 ) Balance at December 31, 2025 33,773,696 $ 3 $ 104,691 $ ( 90,682 ) $ ( 30 ) $ 13,982 The accompanying notes are an integral part of these consolidated financial statements. F- 7 CXAPP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2025 2024 Operating activities Net loss $ ( 13,473 ) $ ( 19,408 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 45 79 Amortization of intangible assets 2,732 2,732 Amortization of right of use asset 386 391 Amortization of debt discount and deferred financing cost - 862 Accrued interest expense on promissory note and convertible debt 881 817 Accrued monitoring fee on promissory note - 273 Deferred income taxes ( 46 ) ( 635 ) Stock-based compensation expense 2,784 2,831 (Gain) loss on foreign currency transactions ( 245 ) 316 Loss on debt extinguishment 48 1,052 Change in fair value of derivative liability ( 4,548 ) 3,152 (Gain) loss on contract to issue common stock 20 ( 68 ) Loss on asset disposal 4 - Impairment of goodwill 2,148 - Gain on debt settlement ( 7 ) - Change in operating assets and liabilities: Accounts receivable and other receivables 825 372 Prepaid expenses and other current assets ( 343 ) 162 Other assets ( 19 ) 23 Accounts payable 264 ( 453 ) Accrued liabilities ( 225 ) 771 Operating lease liabilities ( 392 ) ( 407 ) Deferred revenue ( 1,220 ) ( 187 ) Net cash used in operating activities ( 10,381 ) ( 7,325 ) Investing activities Purchases of property and equipment ( 23 ) ( 30 ) Net cash used in investing activities ( 23 ) ( 30 ) Financing activities Proceeds from issuance of convertible debt, net of issuance costs 15,990 6,480 Proceeds from at-the-market offering, net of issuance cost 648 - Repayment of promissory note - ( 500 ) Net cash provided by financing activities 16,638 5,980 Effect of exchange rate changes on cash and cash equivalents ( 13 ) ( 20 ) Net increase (decrease) in cash and cash equivalents 6,221 ( 1,395 ) Cash and cash equivalents, beginning of Year 4,880 6,275 Cash and cash equivalents, end of year $ 11,101 $ 4,880 Supplemental disclosures of cash flow information Cash paid for taxes $ - $ 29 Cash paid for interest $ - $ 56 Supplemental schedule of noncash investing and financing activities Financing of Directors and Officers Insurance $ 240 $ 225 Common shares issued for debt extinguishment $ 8,755 $ 6,579 Common shares issued as commitment shares $ 89 $ 62 Right of use asset obtained in exchange for lease liability $ 144 $ 393 The accompanying notes are an integral part of these consolidated financial statements. F- 8 CXAPP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. NOTE 2 – Summary of Significant Accounting Policies Liquidity As of December 31, 2025, the Company had cash and cash equivalents of approximately $ 11,101 thousand. For the year ended December 31, 2025, the Company incurred net losses of approximately $ 13,473 thousand and used approximately $ 10,381 thousand of cash for operating activities. The Company’s recurring losses and negative operating cash flows raise substantial doubt about its ability to continue as a going concern. Management has implemented plans to address these conditions, including reductions in discretionary spending, optimization of vendor payment terms, enhanced expense governance, and focused collection efforts to accelerate customer payments. The Company will also utilize external financing sources, including existing credit facilities and its at-the-market equity program, where accessible under prevailing market and contractual conditions. Management’s assessment considers that the availability of certain financing sources is subject to market conditions including stock price, trading volume, and registration effectiveness. Additionally, liquidity depends on future cash collections from customers and the timing of operating cash requirements. Based on these mitigation actions, existing liquidity, and expected business activity, management believes that these plans, which are within the Company’s control and are expected to be effectively implemented, alleviate the substantial doubt and concluded that the Company will be able to meet its obligations as they come due for at least twelve months following the issuance of these financial statements. On March 26, 2025, the Company entered into a Securities Purchase Agreement (“SPA”) with Avondale Capital, LLC, under which the Company may issue and sell one or more Pre-Paid Purchase Agreements for up to an aggregate of $20,000 thousand in exchange for shares of its common stock. The initial Pre-Paid Purchase, in the principal amount of $ 4,200 thousand, closed on April 8, 2025, the Company received net proceeds of approximately $ 3,990 thousand. A second tranche was received on August 7, 2025, with a principal amount of $ 3,150 thousand and net proceeds of approximately $ 3,000 thousand. The third tranche of the SPA was issued on October 17, 2025 with the principal amount of $ 5,250 thousand, of which, the Company received net proceeds of $ 5,000 thousand. The fourth tranche of the SPA was issued on December 30, 2025 with the principal amount of $ 4,200 thousand, of which, the Company received net proceeds of $ 4,000 thousand. As of December 31, 2025, approximately $ 3,200 thousand remained available under this agreement. Additionally, under the SPA with Streeterville Capital, LLC, entered into on May 22, 2024, the Company had access to up to $10,000 thousand in funding. As of December 31, 2025, the Company had $ 3,520 thousand in remaining available funding under this agreement. F- 9 On August 11, 2025, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”), authorizing the future offering and sale of up to $150,000 thousand of various securities. Concurrently, the Company filed a prospectus supplement allowing for the issuance of up to $7,959 thousand of common stock under this registration statement. This amount is included within the total aggregate offering authorized. The Company commenced sales of its common stock pursuant to the shelf registration. These sales were facilitated through a third-party arrangement with Maxim Group LLC, acting as the Company’s agent under an equity distribution agreement under its At-The-Market (“ATM”) offering program. During the year ended December 31, 2025, the Company received $ 648 thousand and issued 782,102 shares of class A Common Stock, which are intended to be used for general working capital and other general corporate purposes. 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 of credit losses; ● the valuation of convertible debt; ● the valuation of allowance for deferred tax assets; and ● impairment of long-lived assets and goodwill. Basis of Presentation The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”). Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, and trade receivables. The Company’s cash is placed with high-credit-quality financial institutions, which periodically exceed federally insured limits. The Company’s cash equivalents are certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. The Company has not realized any losses relating to its cash, cash equivalents, and trade receivables. However, a material loss resulting from the failure of one or more financial institutions, or from a significant default in accounts receivable, could have a substantial adverse effect on the Company’s liquidity, financial position, and operating results. Given the concentration of these financial instruments, any unexpected credit event could impair the Company’s ability to meet its short-term obligations and fund ongoing operations. F- 10 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 December 31, 2025, the Company had cash equivalents of approximately $ 10,687 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, 2024, the Company had cash equivalents of approximately $ 4,353 thousand of certificates of deposit. Accounts Receivable 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 receivable are not overstated due to uncollectability. Allowance for credit losses is 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 allowance for credit losses 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 has no allowance for credit losses as of December 31, 2025 and December 31, 2024. The opening balance of accounts receivable as of January 1, 2025 was $ 1,686 thousand. Changes during the year primarily reflected amounts billed to customers and cash collected, resulting in an ending balance of $ 789 thousand as of December 31, 2025. Other receivables as presented within “unbilled and other receivables” includes mainly unbilled receivables and sales tax recoverable from tax authorities. These are recognized when the underlying transaction occurs and reviewed periodically for collectability. As of December 31, 2025 and December 31, 2024, sales tax receivables were $ 54 thousand and $ 67 thousand, respectively. 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 to 10 years. Leasehold improvements are amortized over the lesser of the useful life of the asset or the initial lease term. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed of, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized. Depreciation expense related to property and equipment is not included as part of cost of revenues, but as part of operating expenses. Intangible Assets, net Intangible assets primarily consist of developed technology, customer lists/relationships, non-compete agreements, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 to 10 years, which approximates customer attrition rate and technology obsolescence. The Company assesses the carrying value of its intangible assets for impairment annually, or more frequently if an event or other circumstances indicates that the Company may not be able to recover the carrying amount of the assets. Based on its assessments, the Company did no t incur any impairment charges for the years ended December 31, 2025 and December 31, 2024. F- 11 Goodwill The Company tests goodwill for impairment at least annually, or more frequently if events or circumstances indicate that the carrying amount of the reporting unit may not be recoverable. The Company has determined that it operates as a single reporting unit due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may first 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 the reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative impairment test by comparing the estimated fair value of the reporting unit with its carrying amount. The Company estimates the fair value of the reporting unit using a combination of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include assumptions such as projected revenues, expenses, and related cash flows based on long-term growth rates and demand trends; expected future investments to support operations; and estimated discount rates. For the market approach, the Company relies on analyses based primarily on market comparables, including the guideline public company method, guideline transaction method, and market price method. The Company completed both qualitative and quantitative goodwill impairment assessments as of December 31, 2025, and concluded that the carrying amount of goodwill exceeded its estimated fair value. Accordingly, the Company recognized a goodwill impairment charge of $ 2,148 thousand for the year ended December 31, 2025. Based on the annual goodwill impairment evaluation performed as of November 30, 2024, the Company determined that goodwill was not impaired and therefore recorded no goodwill impairment for the year ended December 31, 2024. The impairment assessment was based on management’s evaluation of historical operating results, third-party valuation analyses, industry projections, relevant micro- and macroeconomic conditions, and the Company’s expectations regarding future cash flows. The impairment charge is recorded within operating expenses in the consolidated statements of operations. 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 statements 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. F- 12 Comprehensive Income (Loss) and Foreign Currency Translation The Company reports comprehensive income (loss) and its components in its consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under U.S. 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 other income (expense) in the 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 translation loss was approximately $ 246 thousand for the year ended December 31, 2025 and gain of $ 301 thousand for the year ended December 31, 2024. Convertible Debt The Company issued convertible debt in the form of Pre-Paid Purchases during December 2024, March 2025 (Settled in April 2025), August 2025, October 2025 and December 2025 and evaluated such instruments to determine whether they contain features that qualify as embedded derivatives in accordance with ASC 815 “Derivatives and Hedging” (“ASC 815”). Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance of the convertible debt, the Company elected the fair value option under ASC 825 “Financial Instruments” (“ASC 825”). Under the fair value option election, the convertible debt is initially measured at its issuance date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis. The estimated fair value adjustment is presented within change in fair value of derivative liability in the Consolidated Statements of Operations and Comprehensive loss. The Company classifies its convertible debt that are being valued under the fair value option election as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact settlement of the arrangement. The Company recognized a gain on the changes in the estimated fair value of the convertible debt of approximately $ 551 thousand and $ 213 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. Debt Issuance Cost Under the fair value option election, costs directly associated with the borrowing are expensed as incurred. Note Conversion Convertible notes that are exchanged for equity pursuant to their original contractual terms are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. Upon conversion, the carrying amount of the convertible debt is reclassified to equity. No gain or loss is recognized in earnings, as the conversion is executed under the original terms of the instrument. If the debt is settled under modified terms, the transaction is accounted for in accordance with ASC 470-50, “Debt - Modifications and Extinguishments” (“ASC 470-50”). In such cases, a gain or loss is recognized equal to the difference between the reacquisition price and the net carrying amount of the extinguished debt. Debt Extinguishment The note exchanges are accounted for under ASC 470-50 on Modifications and Extinguishments. This standard requires the recognition of a gain or loss on the difference between the reacquisition price and the net carrying amount of the extinguished debt. F- 13 Revenue Recognition The Company recognizes revenue, in accordance with ASC 606 “Revenue from Contracts with Customers” (“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, and sale of hardware. 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 standard introduces a five-step model for revenue recognition that replaces the four criteria for revenue recognition under previous U.S. 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. F- 14 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 years ended December 31, 2025 and December 31, 2024, the Company did not incur any such losses. These amounts are based on known and estimated factors. Hardware Revenue Recognition For sales of hardware, the Company’s performance obligation is fulfilled when the products are shipped to the customer, transferring title and ownership risks. Deliveries occur via drop-shipment by a third-party vendor and the Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse. The Company negotiates sale prices, pays suppliers directly, manages credit risk, and ensures product acceptability, acting as the principal in the transaction and recording revenue on a gross basis. Customers typically pay within 30 to 60 days of invoice receipt. The Company has elected the practical expedient to expense the costs of obtaining a contract when they are incurred because the amortization period of the asset that otherwise would have been recognized is less than a year. 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. Changes in contract balances were as follows: Schedule of contract balance (in thousands) Accounts Receivable, net Deferred Revenue Balance at January 1, 2024 $ 1,956 $ 2,878 Balance at December 31, 2024 $ 1,686 $ 2,683 Balance at December 31, 2025 $ 789 $ 1,465 F- 15 The Company had deferred revenue of approximately $ 1,465 thousand and $ 2,683 thousand as of December 31, 2025 and December 31, 2024, respectively, related to customer invoices rendered in advance for software licenses and professional services provided by the Company's technical staff. The Company expects to satisfy its remaining performance obligations for the deferred revenue associated with professional services, and recognize the deferred revenue related to licenses generally over the remaining contract term which is generally twelve months following the commencement of the license. The Company recognized revenue in the reporting period of $ 2,558 thousand and $ 2,606 thousand for the years ended December 31, 2025 and 2024, respectively, that was included in the deferred revenue balance at the beginning of each period. 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. F- 16 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. 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 grant date fair value for restricted stock units is valued using the closing price of the Company’s common stock on the date of grant. 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 evaluation of the warrant terms and the applicable guidance in 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, whether they meet the definition of a liability under ASC 480, and whether they meet all requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock. This evaluation, which requires the use of professional judgment, is performed at issuance and at each subsequent reporting date while the warrants remain outstanding. F- 17 The Company currently has two classes of warrants outstanding, the Private Placement Warrants and the Public Warrants, both of which are classified as liabilities. Warrants that do not meet all of the criteria for equity classification are recorded as warrant liabilities at their initial fair value on the issuance date and are remeasured to fair value at each balance sheet date. Changes in fair value are recognized in the consolidated statements of operations as a non-cash gain or loss. The Company uses the quoted market price of the Public Warrants as the fair value for both warrant classes at each reporting date, and therefore classifies the warrant liabilities as Level 3 within the fair value hierarchy due to the absence of observable market inputs specific to the Private Placement Warrants. For the years ended December 31, 2025 and 2024, the Company recognized a non-cash gain of approximately $ 3,997 thousand and a non-cash loss of approximately $ 3,365 thousand, respectively, related to changes in the estimated fair value of its warrant liabilities. 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 years ended December 31, 2025 and December 31, 2024, basic and dilutive net 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 loss per common shares would have been anti-dilutive. 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 years ended December 31, 2025 and December 31, 2024. Schedule of anti-dilutive shares (in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 Stock options 2,150 1,627 Restricted stock units 1,062 558 Warrants 21,032 21,032 Total 24,244 23,217 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 year ended December 31, 2025, the Company recognized an unrealized gain in the consolidated statements of operations and comprehensive loss of $ 3,997 thousand. For the year ended December 31, 2024, the Company recognized an unrealized loss in the consolidated statements of operations and comprehensive loss of $ 3,365 thousand, which are presented as changes in fair value of derivative liability. F- 18 The following table presents information about the Company’s financial liabilities that were measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Schedule of financial liabilities measured at fair value As of December 31, 2025 Quoted price in Active Market (Level 1) Significant other observable input (Level 2) Significant other unobservable input (Level 3) Warrants $ 1,051 $ 1,051 $ - $ - Convertible Note -Avondale Prepaid Purchase #1 1,231 - - 1,231 -Avondale Prepaid Purchase #2 2,749 - - 2,749 -Avondale Prepaid Purchase #3 4,683 - - 4,683 -Avondale Prepaid Purchase #4 3,996 - - 3,996 As of December 31, 2024 Quoted price in Active Market (Level 1) Significant other observable input (Level 2) Significant other unobservable input (Level 3) Warrants $ 5,048 $ 5,048 $ - $ - Convertible Note -Streeterville Prepaid Purchase #1 543 - - 543 -Streeterville Prepaid Purchase #2 1,028 - - 1,028 -Streeterville Prepaid Purchase #3 2,941 - - 2,941 The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the 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 liability: Schedule of changes in fair value of the liabilities Warrant liability - January 1, 2025 $ 5,048 Change in FV of derivative instruments ( 3,997 ) Warrant liability – December 31, 2025 $ 1,051 Warrant liability - January 1, 2024 $ 1,683 Change in FV of derivative instruments 3,365 Warrant liability – December 31, 2024 $ 5,048 The Company accounts for convertible debt under the fair value option election using Level 3 inputs. For the year ended December 31, 2025 and December 31, 2024, the Company recognized an unrealized gain in the Consolidated Statements of Operations and Comprehensive Loss of $ 551 thousand and $ 213 thousand, respectively, which are presented as change in fair value of derivative liability. See additional details within Note 11, Convertible debt . F- 19 The significant inputs in the valuations models for each of the three issuances were as follows: Avondale Pre-Paid Purchase #1 Schedule of valuation models Inputs December 31, 2025 Valuation method Scenario based analysis Stock price $ 0.33 Equity dividend yield 0.00 % Expected term (years) 2.32 Volatility 116.4 % Discount rate 3.59 % Risk free rate 3.57 % Avondale Pre-Paid Purchase #2 Inputs December 31, 2025 Valuation method Scenario based analysis Stock price $ 0.33 Equity dividend yield 0.00 % Expected term (years) 2.23 Volatility 116.4 % Discount rate 3.59 % Risk free rate 3.46 % Avondale Pre-Paid Purchase #3 Inputs December 31, 2025 Valuation method Scenario based analysis Stock price $ 0.33 Equity dividend yield 0.00 % Expected term (years) 2.23 Volatility 116.4 % Discount rate 3.59 % Risk free rate 3.46 % F- 20 Avondale Pre-Paid Purchase #4 Inputs December 31, 2025 Valuation method Scenario based analysis Stock price $ 0.33 Equity dividend yield 0.00 % Expected term (years) 2.23 Volatility 116.4 % Discount rate 3.59 % Risk free rate 3.46 % Streeterville Pre-Paid Purchase #1 Inputs December 31, 2024 Valuation method Scenario based analysis Stock price $ 1.82 Equity dividend yield 0.00 % Expected term (years) 2.42 Volatility 100.8 % Discount rate 11.8 % Risk free rate 4.22 % Streeterville Pre-Paid Purchase #2 Inputs December 31, 2024 Valuation method Scenario based analysis Stock price $ 1.82 Equity dividend yield 0.00 % Expected term (years) 2.42 Volatility 100.8 % Discount rate 11.8 % Risk free rate 4.22 % Streeterville Pre-Paid Purchase #3 Inputs December 31, 2024 Valuation method Scenario based analysis Stock price $ 1.82 Equity dividend yield 0.00 % Expected term (years) 2.42 Volatility 100.8 % Discount rate 11.8 % Risk free rate 4.22 % F- 21 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 the financial statements is equal to its carrying value due to their short-term nature. 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 impairment charges on long-lived assets for the years ended December 31, 2025 and December 31, 2024. Recently Adopted Accounting Pronouncement The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, as of January 1, 2025, on a prospective basis (with optional retrospective application for certain elements). This ASU requires enhanced disaggregation in the rate reconciliation, income taxes paid by jurisdiction, and related pretax income/tax expense information. Adoption resulted in expanded disclosures in Note 13 – Income Taxes but had no impact on the Company’s financial position, results of operations, or cash flows. 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 adopted this guidance as of January 1, 2025, on a prospective basis and the adoption did not have a material impact on our consolidation financial statements. F- 22 Recently Issued Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03 “Disaggregation of Income Statement Expenses”. The amendment requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures. In November 2024, the FASB issued ASU No. 2024-04 “Debt - Debt with Conversion and Other Options (Subtopic 470-20)”. The amendment requires companies to apply a preexisting contract approach. Under this approach, a settlement qualifies for induced conversion accounting if the inducement offer preserves the form of consideration and results in an amount of consideration that is no less than that issuable pursuant to the preexisting conversion privileges. The ASU is effective for all entities in annual and interim reporting periods in fiscal years beginning after December 15, 2025. Early adoption permitted for entities that have adopted the amendments in ASU 2020-06. The amendments may be applied either (1) prospectively to any settlements of convertible debt instruments that occur after the effective date of this ASU or (2) retrospectively to all prior periods that occurred after the adoption of the amendments in ASU 2020-06. We are currently evaluating the impact of this standard on our consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient allows companies to assume the current conditions as of the balance sheet date do not change for the remaining life of the asset when measuring credit losses. The amendments in ASU 2025-05 are effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the Company’s consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs, and enhances disclosure requirements. The amendments in ASU 2025-06 are effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the Company’s consolidated financial statements. NOTE 3 – 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, professional services for work performed in conjunction with its systems, and sale of hardware. F- 23 Revenues consisted of the following (in thousands): Schedule of disaggregation of revenue Year Ended December 31, 2025 Year Ended December 31, 2024 Subscription revenue Software, License & Maintenance Contracts $ 4,480 $ 6,202 Total subscription revenue $ 4,480 $ 6,202 Non-subscription revenue Professional services $ 73 $ 798 Hardware 30 142 Total non-subscription revenue $ 103 $ 940 Total Revenue $ 4,583 $ 7,142 Year ended December 31, 2025 Year Ended December 31, 2024 Revenue recognized over time (1)(2) $ 4,553 $ 7,000 Revenue recognized at point in time (3) 30 142 $ 4,583 $ 7,142 (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. (3) Hardware revenue is recognized at a point in time when the control over the goods transfers to the customer - upon delivery to the customers. NOTE 4 – Property and Equipment, net Property and equipment consisted of the following (in thousands): Schedule of property and equipment December 31, 2025 December 31, 2024 Computer and office equipment $ 207 $ 177 Furniture and fixtures 13 11 Leasehold improvements 5 4 Total 225 192 Less: accumulated depreciation and amortization ( 186 ) ( 128 ) Total Property and Equipment, Net $ 39 $ 64 Depreciation and amortization expense was approximately $ 45 thousand and $ 79 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. F- 24 NOTE 5 – Goodwill and Intangible Assets, net Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company operates as one reporting unit for purposes of assessing goodwill. The carrying amount of goodwill was $ 8,737 thousand as of both December 31, 2025 and December 31, 2024. During the fourth quarter of 2025, the Company identified indicators of potential impairment, including a decline in the Company’s market capitalization, macroeconomic conditions, decline in share price and continued operating losses. These indicators required the Company to perform a quantitative goodwill impairment test as of December 31, 2025. The Company estimated the fair value of the reporting unit using a weighted average of an income approach and market approach. Under the income approach, the Company prepared a discounted cash flow model (DCF) that incorporated updated revenue growth expectations, projected operating margins, long‑term cash flow forecasts, and a discount rate of approximately 40% reflecting the Company’s risk profile and market conditions. This approach was assigned lower weighting due to limited comparability and volatility in market‑based multiples. After weighting the approaches, the Company determined that the estimated equity fair value of the reporting unit was approximately $13,964 thousand compared to a carrying amount of $16,112 thousand, resulting in a shortfall of $2,148 thousand. As a result, the Company recorded a goodwill impairment charge of $ 2,148 thousand for the year ended December 31, 2025. No goodwill impairment was recognized for the year ended December 31, 2024. Following recognition of the impairment charge, goodwill totaled $ 6,589 thousand as of December 31, 2025 and $ 8,737 thousand as of December 31, 2024. The Company evaluated and determined that changes in certain valuation inputs could have materially affected the impairment outcome. A one to two percentage point increase in the discount rate or a reduction of approximately five to ten percent in projected cash flows would have resulted in additional impairment as of the testing date. Future changes in macroeconomic conditions, discount rate assumptions or forecasted cash flows could result in further impairment of goodwill. Intangible assets consisted of the following (in thousands): Schedule of intangible assets December 31, 2025 December 31, 2024 Weighted Average Remaining Useful Life (Years) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Trade Name/Trademarks 4.17 $ 3,294 $ ( 1,314 ) $ 1,980 $ 3,294 $ ( 843 ) $ 2,451 Customer Relationships 2.17 5,604 ( 3,129 ) 2,475 5,604 ( 2,008 ) 3,596 Developed Technology 7.17 8,697 ( 2,428 ) 6,269 8,697 ( 1,558 ) 7,139 Patents and Intellectual Property 7.17 2,703 ( 755 ) 1,948 2,703 ( 485 ) 2,218 Totals $ 20,298 $ ( 7,626 ) $ 12,672 $ 20,298 $ ( 4,894 ) $ 15,404 Future amortization expense on intangible assets as of December 31, 2025, is anticipated to be as follows (in thousands): Schedule of future amortization expense For the Years Ending December 31, Amount 2026 $ 2,731 2027 2,731 2028 1,844 2029 1,611 2030 1,238 2031 and thereafter 2,517 Total $ 12,672 F- 25 NOTE 6 – Deferred Revenue Deferred revenue consisted of the following (in thousands): Schedule of deferred revenue License Agreement Professional Service Agreements Hardware Total Deferred Revenue - January 1, 2025 $ 2,604 $ 61 $ 18 $ 2,683 Revenue recognized ( 4,480 ) ( 73 ) ( 30 ) ( 4,583 ) Revenue deferred 3,234 63 12 3,310 Advance from Customer 56 - - 56 Deferred Revenue - December 31, 2025 $ 1,414 $ 51 $ - $ 1,465 License Agreement Professional Service Agreements Hardware Total Deferred Revenue - January 1, 2024 $ 2,404 $ 474 $ - $ 2,878 Revenue recognized ( 6,202 ) ( 798 ) ( 142 ) ( 7,142 ) Revenue deferred 6,402 385 160 6,947 Deferred Revenue - December 31, 2024 $ 2,604 $ 61 $ 18 $ 2,683 The fair value of the deferred revenue approximates the services to be rendered. NOTE 7 – Accrued Liabilities Accrued liabilities consisted of the following (in thousands): Schedule of accrued Liabilities December 31, 2025 December 31, 2024 Accrued expenses and reimbursements $ 1,502 $ 1,690 Accrued compensation and benefits 469 382 Accrued bonus and commissions 115 134 Accrued sales and other indirect taxes payable 158 95 Accrued insurance premium and interest 24 23 Accrued transaction costs 13 13 Income Tax Payables - 46 Accrued liabilities $ 2,281 $ 2,383 Financing of Directors & Officers Insurance The Company entered into a Directors & Officers (“D&O”) insurance agreement with Oakwood D&O Insurance, effective on March 15, 2025. The agreement states that the Company will pay a total of $310 thousand in premiums at an annual percentage rate of 9.25%. The first of ten monthly separate installment payments begin on April 14, 2025. The Company paid a down payment on the policy of $ 70 thousand. As of December 31, 2025 and December 31, 2024, the Company owes $ 24 thousand and $ 23 thousand on the D&O insurance policy, respectively. F- 26 NOTE 8 – Promissory Note Promissory note consisted of the following (in thousands): Schedule of promissory note December 31, 2025 December 31, 2024 Principal amount at beginning $ 603 $ 3,885 Add: Interest 2 372 Accrued monitoring fee - 273 605 4,530 Less: Extinguishment 605 3,927 Principal amount at end $ - $ 603 On December 15, 2023, the Company 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 thousand, which is payable on or before the date that is 12 months from the issuance date. The initial principal amount included an original issue discount of $ 870 thousand and $ 15 thousand that we agreed to pay to the Lender to cover the Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs. The net proceeds of the Note are $ 3,000 thousand. Interest on the Note accrued at a rate of 10 % per annum and is payable on the maturity date. A monitoring fee of 10% of the outstanding balance was to 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 had 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 included 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. Note Exchanges During the period from July 15, 2024, to December 26, 2024, the Company exchanged $ 3,428 thousand of the outstanding balance of the Note for approximately 2,012,107 shares of the Company’s Class A Common Stock at exchange prices between $ 1.47 and $ 2.23 per share. The Company analyzed the exchange of principal under the note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded an approximately $ 1,052 thousand loss on the exchange of debt for equity as a separate item in the other income (expense) section of the consolidated statements of operations for the year ended December 31, 2024. As of January 17, 2025, the Company paid down the entire December 2023 Note. Interest expense for the note recognized on the consolidated statement of operations and comprehensive loss were approximately $ 2 thousand and $ 1,069 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. F- 27 NOTE 9 – Warrants Public Warrants As of December 31, 2025 and December 31, 2024, there were 10,751,862 Public Warrants outstanding. Each whole warrant entitles the holder thereof to purchase one share of the Company’s Class A Common Stock at a price of $ 11.50 per share, subject to adjustments described in the Company’s registration statement on Form S-1 (Registration No. 333-249177) filed in connection with its initial public offering. 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. Private Warrants As of December 31, 2025 and December 31, 2024, there were 10,280,000 Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until April 14, 2023, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. For the years ended December 31, 2025 and December 31, 2024, there were no exercises or exchanges made in relation with the Company’s Warrants. NOTE 10 – Stock Option Plan and Stock-Based Compensation 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 5,676,000 shares of CXApp Class A Common Stock available for issuance under the Incentive Plan, which is equal to 15% of the aggregate number of shares of CXApp common stock issued and outstanding immediately after the closing of the Business Combination (giving effect to the redemptions). Employee Stock Options 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. On February 6, 2024, a total of 665,000 stock options to purchase the Company’s common stock were granted to employees and consultants of the Company. These options vest over a 4 -year period. The options have a life of 10 years and an exercise price of $ 1.20 per option. The stock options were valued using the Black-Scholes option valuation model and the weighted average fair value of the awards granted during the period was determined to be $ 0.78 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $ 1.21 per share. F- 28 In June 2024, the Company received a notice for a net exercise of 70,350 options to purchase shares of common stock resulting in the issuance of 12,570 shares of the Company’s Class A Common Stock with par value $0.0001 per share. In accordance with the terms of the Incentive Plan, 51,012 shares were withheld by the Company to cover the exercise price, and 6,768 shares were withheld in satisfaction of the taxes required to be paid in connection with the exercise. On August 26, 2024, the Board approved the award of 230,000 options to purchase common stock pursuant to the 2023 Equity Incentive Plan to Joy Mbanugo, the Chief Financial Officer of the Company. The option has an exercise price of $ 2.40 per share. The options expire on August 26, 2034. The stock options were valued using the Black-Scholes option valuation model and the fair value of the awards granted was determined to be $ 1.49 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes option valuation model was $ 2.40 per share. On April 4, 2025, the Board approved the award of 350,000 options to purchase common stock pursuant to the 2023 Equity Incentive plan to Khurram Sheikh, the Chief Executive Officer of the company and Joy Mbanugo, the Chief Financial Officer of the company. The options have an exercise price of $ 1.00 per share and expire on May 23, 2035. The stock options were valued using the Black-Scholes option valuation model and the fair value of the awards granted was determined to be $ 0.56 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes options valuation model was $ 1.00 per share. See below for a summary of the stock options granted under the Incentive Plan: Schedule of stock options activity Number of Options Weighted- average exercise price Weighted average remaining contractual term (years) Weighted- Average Fair Value at Grant Date Aggregate Intrinsic Value (In thousands) Options outstanding at January 1, 2025 1,799,550 $ 1.52 8.74 $ 0.93 Granted 350,000 $ 1.00 9.40 $ 0.56 Exercised - $ - - $ - $ - Forfeited - $ - - $ - Options outstanding at December 31, 2025 2,149,550 $ 1.44 8.01 $ 0.87 Options exercisable at December 31, 2025 1,087,837 $ 1.59 Number of Options Weighted- average exercise price Weighted average remaining contractual term (years) Weighted- Average Fair Value at Grant Date Aggregate Intrinsic Value (In thousands) Options outstanding at January 1, 2024 984,900 $ 1.53 9.25 $ 0.90 Granted 895,000 $ 1.51 9.25 $ 0.96 Exercised ( 70,350 ) $ 1.53 $ 0.90 $ 108 Forfeited ( 10,000 ) $ 1.20 Options outstanding at December 31, 2024 1,799,550 $ 1.52 8.74 $ 0.93 Options exercisable at December 31, 2024 422,100 $ 1.53 F- 29 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 expense Year Ended December 31, 2025 Year ended December 31, 2024 Research and development $ 37 $ 18 Sales and marketing 62 81 General and administrative 413 454 Total non-cash stock compensation $ 512 $ 553 The remaining unrecognized stock compensation expense totaled approximately $ 574 thousand as of December 31, 2025. This amount will be recognized as an expense over the weighted average remaining term of 2.04 years. 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 during the years ended December 31, 2025 and December 31, 2024 were as follows: Schedule of assumptions used 2025 2024 Risk-free interest rate 4.08 % 3.66 % – 4.03 % Expected life of option grants 6 Years 6 – 6.25 years Expected volatility of underlying stock 54.62 % 65.17 % – 65.97 % Restricted Stock Units The grant date fair value for Restricted Stock Units (RSU) are valued using the closing price of the Company’s common stock on the date of grant. On January 2024, a total of 47,000 restricted stock units of the Company’s common stock were granted to employees of the Company under the Incentive Plan at various dates. On August 29, 2024, a total of 473,935 restricted stock units of the Company’s common stock were granted to directors of the Company under the 2023 Equity Incentive Plan. On May 23, 2025, a total of 1,000,000 restricted stock units of the Company’s common stock were granted to directors of the Company under the 2023 Equity Incentive Plan. The fair value of the common stock as of the various grant dates was determined to be $ 1.00 to $ 11.80 per restricted stock unit, for a weighted average fair value of $ 3.6 per restricted stock unit for the year ended December 31, 2025. There was no other activity related to restricted stock units for the year ended December 31, 2025. F- 30 The following summarizes our RSUs transaction activity for the years ended December 31, 2025 and December 31, 2024: Schedule of RSUs transaction Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2025 688,935 $ 3.70 Granted 1,000,000 $ 1.00 Vested ( 627,435 ) $ 3.55 Forfeited - Outstanding at December 31, 2025 1,061,500 Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2024 486,165 $ 7.80 Granted 520,935 $ 2.04 Vested ( 318,165 ) $ 7.33 Forfeited - Outstanding at December 31, 2024 688,935 The total fair value of RSUs vested during the years ended December 31, 2025 and December 31, 2024, was $ 2,226 thousand and $ 2,331 thousand, respectively. Non-cash stock-based compensation expenses related to restricted stock units recorded in the financial statements is summarized below: Schedule of non-cash stock-based compensation expenses related to restricted stock units Year ended December 31, 2025 Year ended December 31, 2024 Research and development $ 394 $ 605 Sales and marketing 199 310 General and administrative 1,662 1,363 Total non-cash stock compensation $ 2,255 $ 2,278 As of December 31, 2025, and December 31, 2024, the Company has approximately $ 528 thousand and $ 1,016 thousands of unrecognized restricted stock unit compensation to be expensed over a weighted average period of 0.47 year and 0.91 years, respectively. F- 31 NOTE 11 – Convertible Debt Securities Purchase Agreement with Avondale Capital, LLC On March 26, 2025, the Company entered into a Securities Purchase Agreement (“SPA”) with Avondale Capital, LLC (“Avondale”), pursuant to which the Company may issue and sell up to $20,000 thousand of Pre-Paid Purchase agreements (“Pre-Paid Purchases”) in tranches over time. The initial Pre-Paid Purchase (“Pre-Paid Purchase #1”) included a $ 4,200 thousand Pre-Paid Purchase, structured with a $ 200 thousand original issue discount (“OID”) and $ 10 thousand in transaction-related fees, resulting in net proceeds of $ 3,990 thousand, received on April 8, 2025. In connection with the initial closing, the Company was required to issue 80,000 commitment shares to Avondale. On March 26, 2025, the Company recorded a liability of $ 69 thousand for the shares to be issued under the contract to issue common stock. On May 8, 2025, the Company issued the Class A Common Stock and recognized a loss of $ 20 thousand upon issuance. The Avondale convertible Pre-Paid Purchase #1 accrues interest on the outstanding balance at 5% per annum. Avondale may redeem all or any part of the outstanding balance of the Avondale convertible Pre-Paid Purchase #1 at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.106 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.1843, subject to certain adjustments and ownership limitations specified in the Avondale convertible Pre-Paid Purchase #1. For the year ended December 31, 2025, the Company recognized an unrealized loss on change in fair value of Pre-Paid Purchase #1 of $ 2,969 thousand. On August 7, 2025, the Company issued an unsecured convertible Pre-Paid Purchase #2 to Avondale, pursuant to the SPA. The convertible Pre-Paid Purchase #2 has the original principal amount of $ 3,150 thousand and Avondale gave consideration of 3,000 thousand, reflecting original issue discount of $ 150 thousand. On August 7, 2025, the Company received the net proceeds from Avondale. The Avondale convertible Pre-Paid Purchase #2 accrues interest on the outstanding balance at 5% per annum. Avondale may redeem all or any part of the outstanding balance of the Avondale convertible Pre-Paid Purchase #2 at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.0957 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.1826, subject to certain adjustments and ownership limitations specified in the Avondale convertible Pre-Paid Purchase #2. For the year ended December 31, 2025, the Company recognized an unrealized gain on change in fair value of Pre-Paid Purchase #2 of $ 401 thousand. On October 17, 2025, the Company issued an unsecured convertible Pre-Paid Purchase #3 to the Lender, pursuant to the SPA. The convertible Pre-Paid Purchase #3 has the original principal amount of $ 5,250 thousand and Lender gave consideration of $ 5,000 thousand, reflecting original issue discount of $ 250 thousand. On October 17, 2025, the Company received the net proceeds from the Lender. The convertible Pre-Paid Purchase #3 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #3, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $0.9142 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.1524, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase. As of December 31, 2025, Pre-Paid Purchase #3 is recorded at fair value of $ 4,682 and is within convertible debt on the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company recognized an unrealized gain on change in fair value of Pre-Paid Purchase #3 of $ 568 thousand. F- 32 On December 30, 2025, the Company issued an unsecured convertible Pre-Paid Purchase #4 to the Lender, pursuant to the SPA. The convertible Pre-Paid Purchase #4 has the original principal amount of $ 4,200 thousand and Lender gave consideration of $ 4,000 thousand, reflecting original issue discount of $ 200 thousand. On December 31, 2025, the Company received the net proceeds from the Lender. The convertible Pre-Paid Purchase #4 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #4, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $0.3677 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.0613, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase. As of December 31, 2025, Pre-Paid Purchase #4 is recorded at fair value of $ 3,996 thousand and is within convertible debt on the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company recognized an unrealized gain on change in fair value of Pre-Paid Purchase #4 of $ 203 thousand. Securities Purchase Agreement with Streeterville Capital, LLC On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Lender desires to purchase up to $10,000,000 shares of the Company’s Common Stock and the Company issued an unsecured convertible Pre-Paid Purchase #1 to Streeterville Capital, LLC (“Lender”). The SPA required 40,000 common shares of the Company’s Class A Common Stock to be issued as of closing date (May 22, 2024). The Company recorded a liability of $ 130,400 on May 22, 2024, for the shares to be issued within contract to issue common stock. The Company issued the Class A Common Stock on October 10, 2024, and recorded a gain of $ 68 thousand on settlement of the contract to issue common stock. The convertible Pre-Paid Purchase #1 has the original principal amount of $ 2,625 thousand and Lender gave consideration of $ 2,480 thousand, reflecting original issue discount of $ 125 thousand and Lender’s transaction cost of $ 20 thousand. On June 3, 2024, the Company received the net proceeds from the Lender. The convertible Pre-Paid Purchase #1 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #1, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $3.996 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.666, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase. The Pre-Paid Purchase #1 was recorded at its initial fair value of $ 2,562 thousand and the Company recognized an unrealized gain on change in fair value of convertible debt of $ 63 thousand. During the year 2025, the Company converted the entire outstanding balance of Pre- Paid Purchase #1 into equity. As of December 31, 2025 and December 31, 2024, Pre-Paid Purchase #1 is recorded at fair value of $ 0 and $ 543 thousand and is within convertible debt on the accompanying consolidated balance sheets. For the years ended December 31, 2025 and December 31, 2024, the Company recognized an unrealized loss on change in fair value of Pre-Paid Purchase #1 of $ 543 thousand and $ 18 thousand, respectively. On September 30, 2024, the Company issued an unsecured convertible Pre-Paid Purchase #2 to the Lender, pursuant to the SPA. The convertible Pre-Paid Purchase #2 has the original principal amount of $ 1,050 thousand and Lender gave consideration of $ 1,000 thousand, reflecting original issue discount of $ 50 thousand. On September 30, 2024, the Company received the net proceeds from the Lender. F- 33 The convertible Pre-Paid Purchase #2 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #2, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.992 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.332, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase. The Pre-Paid Purchase #2 was recorded at its initial fair value of $1,045 thousand and the Company recognized an unrealized gain on change in fair value of convertible debt of $5 thousand. During the year 2025, the Company converted the entire outstanding balance of Pre- Paid Purchase #2 into equity. As of December 31, 2025 and December 31, 2024, Pre-Paid Purchase #2 is recorded at fair value of $ 0 and $ 1,028 thousand and is within convertible debt on the accompanying consolidated balance sheets. For the years ended December 31, 2025 and December 31, 2024, the Company recognized an unrealized loss on change in fair value of Pre-Paid Purchase #2 of $ 1,028 thousand and unrealized gain of $ 23 thousand, respectively. On December 9, 2024, the Company issued an unsecured convertible Pre-Paid Purchase #3 to the Lender, pursuant to the SPA. The convertible Pre-Paid Purchase #3 has the original principal amount of $ 3,150 thousand and Lender gave consideration of $ 3,000 thousand, reflecting original issue discount of $ 150 thousand. On December 9, 2024, the Company received the net proceeds from the Lender. The convertible Pre-Paid Purchase #3 accrues interest on the outstanding balance at 5% per annum. The Lender may redeem all or any part of the outstanding balance of the convertible Pre-Paid Purchase #3, at any time following earlier of six months from the purchase price date and the effectiveness of the Initial Registration Statement by providing a written notice, in cash or converting into shares of the Company’s common stock at a price equal to the lower of (a) Fixed Price of $1.987 and (b) Market Price which is 91% multiplied by the lowest daily volume weighted average price (“VWAP”) during the ten (10) consecutive trading days immediately prior to the written notice date, but in any event not lower than the Floor Price of $0.331, subject to certain adjustments and ownership limitations specified in the convertible Pre-Paid Purchase. The Pre-Paid Purchase #3 was recorded at its initial fair value of $ 2,986 thousand. The Company recognized an unrealized gain on change in fair value of Pre-Paid #3 of $ 164 thousand. During the year 2025, the Company converted the entire outstanding balance of Pre- Paid Purchase #3 into equity. As of December 31, 2025 and December 31, 2024, Pre-Paid Purchase #3 is recorded at fair value of $ 0 and $ 2,942 and is within convertible debt on the accompanying consolidated balance sheets. For the years ended December 31, 2025 and December 31, 2024, the Company recognized an unrealized loss on change in fair value of Pre-Paid Purchase #3 of $ 317 thousand and unrealized gain of $ 208 thousand, respectively. The following table presents changes in convertible debt measured at fair value for the years ended December 31, 2025 and December 31, 2024. Schedule of company’s net deferred tax assets Convertible debt Balance as of December 31, 2024 $ 4,512 Additions 16,800 Settlement (1) ( 8,102 ) Fair value measurement adjustments ( 551 ) Balance as of December 31, 2025 $ 12,659 Convertible debt Balance as of December 31, 2023 $ - Additions 6,825 Settlement ( 1 ) ( 2,100 ) Fair value measurement adjustments ( 213 ) Balance as of December 31, 2024 $ 4,512 (1) During the year ended December 31, 2025, the Company has issued 13,071,408 shares of the Company’s Class A Common Stock pursuant to multiple purchase notices related to entire Streeterville convertible debt and Avondale Pre-Paid Purchase #1. The shares issued have a total exchange amount of $8,102 thousand with exchange prices ranging from $0.34 to $1.44. During the year ended December 31, 2024, the Company has issued 1,683,104 shares of the Company’s Class A Common Stock pursuant to multiple purchase notices related to Streeterville Pre-Paid Purchase #1. The shares issued have a total exchange amount of $2,100 thousand with exchange prices ranging from $1.18 to $1.41. F- 34 NOTE 12 – Common Stock Stock-Based Compensation and Equity Awards In June 2024, the Company received a notice for a net exercise of 70,350 options to purchase shares of common stock resulting in the issuance of 12,570 shares of the Company’s Class A Common Stock with par value $0.0001 per share. In accordance with the terms of the Incentive Plan, 51,012 shares were withheld by the Company to cover the exercise price, and 6,768 shares were withheld in satisfaction of the taxes required to be paid in connection with the exercise. On December 31, 2024, the Company issued 246,220 shares of Class A Common Stock, net of 69,445 shares of Class A Common Stock to cover the withholding tax, for the 315,665 vested Restricted Stock Units. On December 31, 2025, the Company issued 280,013 shares of Class A Common Stock, net of 137,848 shares of Class A Common Stock to cover the withholding tax, for the 417,861 vested Restricted Stock Units. Issuances Related to Promissory Notes and Convertible Debt During the years ended December 31, 2025 and December 31, 2024, the Company issued total of 13,383,191 and 3,695,211 shares of Class A Common Stock for paying off the promissory note and the convertible debt. See Note 8, Promissory Note and Note 11, Convertible Debt , in the accompanying notes to the consolidated financial statements for further detail. NOTE 13 – Income Tax The Company’s net deferred tax assets/(liabilities) consisted of the effects of temporary differences attributable to the following: Schedule of company’s net deferred tax assets (In thousands) December 31, 2025 December 31, 2024 Organizational costs/startup expenses $ 1,382 $ 1,432 Deferred revenue 10 23 Section 174 - software development cost 2,409 2,188 Stock based compensation 157 453 Other accruals 118 16 ROU Liability 57 - Other - 2 Net operating loss carryforward 6,591 4,894 Total deferred tax asset 10,724 9,008 Less: Valuation allowance ( 7,649 ) ( 5,498 ) Deferred tax asset, net of valuation allowance $ 3,075 $ 3,510 December 31, 2025 December 31, 2024 Intangibles $ ( 3,013 ) $ ( 3,508 ) Property, plant & equipment ( 6 ) ( 2 ) Other ( 56 ) - Total deferred tax liabilities ( 3,075 ) ( 3,510 ) Net Deferred Tax Asset (Liability) $ - $ - F- 35 The income tax provision consists of the following for the years ended December 31, 2025, and 2024: Schedule of income tax provision December 31, 2025 December 31, 2024 Federal Current $ - $ - Deferred - ( 681 ) State and Local Current ( 46 ) 2 Deferred - 44 Income tax benefit $ ( 46 ) $ ( 635 ) As of December 31, 2025, the Company has U.S. federal and state net operating loss carryovers of approximately $ 16,418 thousand and $ 12,266 thousand respectively. Under the CARES Act, the federal net operating loss carryforwards that originated after 2017 will have an indefinite life and may be used to offset 100% of a future year’s taxable income until 2020. For tax year beginning January 1, 2021, federal net operating losses may be used to offset 80% of a future year’s taxable income. The state net operating losses carryforward for between 15-20 years and begin to expire in 2039. The Company’s federal and state income tax returns prior to December 31, 2021 and 2020, respectively, are closed. The Company’s foreign subsidiary’s tax returns prior to 2018 are also closed. Management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realization of deferred tax assets, management considers, whether it is “more likely than not”, that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Deferred income tax is presented under noncurrent liabilities and in other assets in the consolidated balance sheets as of December 31, 2025, and 2024. In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the projected future taxable income and availability of taxable temporary differences in making this assessment. After consideration of all the information available, management believes that positive evidence does not outweighs the negative evidence and thus it is more likely than not that the benefit from deferred tax asset may not be realized in foreseeable future. In view of this, valuation allowance has been created as at December 31, 2025 and December 31, 2024. The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component of income tax expense. There were no amounts accrued for interest or penalties for the years ended December 31, 2025 and December 31, 2024. Management does not expect any material changes in its unrecognized tax benefits in the next year. F- 36 A reconciliation of the federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2025, and 2024 are as follows: Schedule of reconciliation of the federal income tax rate to the Company’s effective tax rate Year ended December 31, 2025 Year ended December 31, 2024 Statutory federal income tax rate 21.00 % 21.00 % Incentive stock options - % - % Change in fair value of derivative warrant liabilities - % ( 3.52 )% Effects of changes in tax laws or rates enacted in the current period ( 0.20 )% - % Effects of cross-border tax laws ( 4.42 )% - % Permanent difference - % ( 2.04 )% Cancellation of debt income - % - % Rate differential on foreign earnings 4.42 % 0.44 % State taxes, net of federal tax benefit ( 0.01 )% ( 0.24 )% Current federal tax true-up - % ( 1.27 )% Nontaxable or deductible items ( 1.30 )% - % Payable true-up 0.35 % - % Other ( 0.76 )% - % Valuation allowance ( 18.74 )% ( 11.20 )% Income tax benefit 0.34 % 3.17 % The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions as well as in foreign jurisdictions and is subject to examination by the various taxing authorities. The Company recorded an income tax benefit/expense of approximately $ 46 thousand and $ 635 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. The effective tax rate for the years ended December 31, 2025 and December 31, 2024 was 0.34 % and 3.17 % , respectively. The income tax benefit for the year ended December 31, 2025 is a result of the reversal of deferred tax liability attributable to acquired intangible assets from the Business Combination. The company believes that positive evidence does not outweighs the negative evidence and thus it is more likely than not that the benefit from deferred tax asset may not be realized in foreseeable future. In view of this, valuation allowance has been created as of December 31, 2025. Uncertain Tax Positions The Company records tax positions as liabilities and adjusts these liabilities when its judgment changes because of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the recognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2025, and December 31, 2024 the Company has no t recorded any liabilities for uncertain tax positions in its consolidated financial statements. The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2025 and December 31, 2024, no accrued interest or penalties are recorded on the balance sheets, and the Company has not recorded any related expenses. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years currently open under statute range from 2021 to the present in the U.S. and from 2020 to the present in its foreign operations. To the extent the Company has tax attribute carryforwards, the tax years in which those attributes were generated may remain subject to adjustment upon examination by the Internal Revenue Service, state and local tax authorities, and non-U.S. tax authorities—including those in Canada and the Philippines—if and when the attributes are utilized in a future period. F- 37 Following the acquisition, the Company transitioned its Canadian operations from a client-facing business to a cost center. A formal transfer pricing study between the U.S. and Canada has not been performed, and as such, there may be a potential for a Canadian tax liability. However, based on currently available information, management believes that any such liability would not be material to the financial statements as a whole On July 4, 2025, the One Big Beautiful Bill (“OBBB”) was enacted into law. Among its provisions, the reinstatement of full expensing for research and development expenditures is applicable to the Company. While further regulatory guidance is anticipated regarding the treatment of prior periods, the Company expects that the previously recognized deferred tax asset related to Section 174 will be reversed, resulting in an increase in net operating loss carryforwards. The Company is currently evaluating potential other impacts of the passage of OBBB. 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 Philippine subsidiaries. Cash in foreign financial institutions as of December 31, 2025 and December 31, 2024, was $ 51 thousand and $ 166 thousand, respectively. The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash for the Years ended December 31, 2025 and December 31, 2024. However, any loss incurred or lack of access to such funds could have a significant impact on the Company’s financial condition, results of operations, and cash flows. NOTE 15 – Segment Information The Company has determined that it operates as a single operating segment. The Company offers a vertical software-as-a-service (or SaaS) platform for the enterprise. The flagship product, the CXAI Platform (pronounced “Sky”), provides a comprehensive suite of tools designed to empower employees and enable organizations to create smarter workplaces. The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM allocates resources and makes operating decisions based on consolidated net income. The CODM does not assess profitability at a level below the consolidated entity. Net income (loss) is used as the Company’s primary measure of overall financial performance. However, when evaluating operating results on a budget-to-actual basis, management places greater emphasis on cash-based operating expenses, including cost of revenue, professional services, marketing, research and development, and general and administrative expenses. Conversely, the Company does not consider stock-based compensation, amortization of intangible assets, changes in the fair value of warrant liabilities, losses on debt extinguishment, or other non-cash items to be significant factors in its internal analysis of period-over-period operating performance. F- 38 The following table presents selected financial information with respect to the Company’s single operating segment: Schedule of segment Information Year Ended December 31, 2025 Year Ended December 31, 2024 Revenue - Licenses $ 4,480 $ 6,202 Revenue - Professional Services 73 798 Revenue - Hardware 30 142 Less: Cost of revenue 578 1,285 Research and development 6,206 5,744 Sales and marketing 1,832 2,870 General and administrative 5,859 5,489 Impairment of goodwill 2,148 - Interest expense, net 701 1,756 (Gain) loss on derivative liability fair value remeasurement ( 4,548 ) 3,152 Loss on debt extinguishment 48 1,052 Other (income) expense, net ( 259 ) 342 Add: Income tax benefit (expense) 46 635 Total loss without non-cash ( 7,936 ) ( 13,913 ) Less: Other noncash expenses (1) 5,537 5,562 Net loss $ ( 13,473 ) $ ( 19,408 ) (1) Other noncash expenses for the year ended December 31, 2025, includes mostly of $2,784 thousand of stock compensation and related expenses, $2,732 thousand of intangible amortization expense. Other noncash expenses for the year ended December 31, 2024, includes $2,831 thousand of stock compensation expenses, and $2,731 thousand of intangible amortization expense. NOTE 16 – 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 States Canada Philippines Eliminations Total For the Year Ended December 31, 2025 Revenues by geographic area $ 4,485 $ 4,275 $ 695 $ ( 4,872 ) $ 4,583 Operating income (loss) by geographic area $ ( 20,207 ) $ 2,634 $ ( 4 ) $ - $ ( 17,577 ) Net income (loss) by geographic area $ ( 16,328 ) $ 2,866 $ ( 11 ) $ - $ ( 13,473 ) For the Year Ended December 31, 2024 Revenues by geographic area $ 6,729 $ 413 $ 917 $ ( 917 ) $ 7,142 Operating income (loss) by geographic area $ ( 11,732 ) $ ( 2,054 ) $ 45 $ - $ ( 13,741 ) Net income (loss) by geographic area $ ( 17,081 ) $ ( 2,368 ) $ 41 $ - $ ( 19,408 ) As of December 31, 2025 Identifiable assets by geographic area $ 32,094 $ 125 $ 211 $ - $ 32,430 Long lived assets by geographic area $ 12,775 $ 57 $ 103 $ - $ 12,935 Goodwill by geographic area $ 6,589 $ - $ - $ - $ 6,589 As of December 31, 2024 Identifiable assets by geographic area $ 31,087 $ 272 $ 444 $ - $ 31,803 Long lived assets by geographic area $ 15,712 $ 175 $ 46 $ - $ 15,933 Goodwill by geographic area $ 8,737 $ - $ - $ - $ 8,737 F- 39 NOTE 17 – Leases The Company has operating leases for administrative offices in Canada, the Philippines, and the United States. The lease for the Company’s office in Manila, Philippines expired in May 2025. The Company elected not to renew the lease and has since entered into a new lease agreement within Philippines at a lower cost. The Canada lease expires in May 2026, the Philippines lease expires in June 9, 2027, and the United States office lease expires in April 2026. The Company has no other operating or financing leases with terms greater than 12 months. Lease expense for operating leases recorded on the consolidated 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 consolidated statement of operations for the years ended December 31, 2025 and December 31, 2024 was approximately $ 422 thousand, and $ 439 thousand, respectively. 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 December 31, 2025, the weighted average remaining lease term is 0.7 years, and the weighted average discount rate used to determine the operating lease liabilities was 8.0 % . As of December 31, 2024, the weighted average remaining lease term is 1.1 years, and the weighted average discount rate used to determine the operating lease liabilities was 8.0 % . Schedule of operating leases (in thousand) Operating Leases Year 2026 204 Year 2027 32 Total lease payments 236 Less: Imputed interest ( 10 ) Present value of lease liabilities $ 226 NOTE 18 – 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 trade tensions between the United States and China, the conflicts in the Middle East and between Russia and Ukraine, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic, tariffs, and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics) maycontribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflicts in the Middle East (including the conflict between Iran and Israel and the United States’ military actions against Iran) has caused political, economic, and military instability in Israel and surrounding regions. 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 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 consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. F- 40 NOTE 19 – Supplementary Financial Information Quarterly Financial Information (unaudited)—The quarterly results for the years ended December 31, 2025, and 2024 are summarized below (in thousands, except per share amounts): Schedule of supplementary financial information 2025 Fourth Quarter Third Quarter Second Quarter First Quarter Year Ended December 31, 2025 Net Revenue 1,022 1,114 1,223 1,224 4,583 Gross Profit 888 991 1,052 1,074 4,005 Net Loss ( 5,561 ) ( 3,157 ) ( 3,139 ) ( 1,616 ) ( 13,473 ) Basic and diluted weighted average shares outstanding, Class A Common Stock 27,002,655 23,359,850 20,718,170 19,678,147 23,414,190 Basic and diluted net loss per share, Class A Common Stock ( 0.21 ) ( 0.13 ) ( 0.16 ) ( 0.08 ) ( 0.58 ) 2024 Fourth Quarter Third Quarter (restated) Second Quarter (restated) First Quarter Year Ended December 31, 2024 Net Revenue 1,661 1,897 1,766 1,818 7,142 Gross Profit 1,428 1,525 1,413 1,491 5,857 Net Loss ( 3,978 ) ( 5,004 ) ( 5,256 ) ( 5,170 ) ( 19,408 ) Basic and diluted weighted average shares outstanding, Class A Common Stock 17,234,557 15,699,685 15,255,218 15,254,389 15,907,946 Basic and diluted net loss per share, Class A Common Stock ( 0.23 ) ( 0.32 ) ( 0.36 ) ( 0.34 ) ( 1.22 ) NOTE 20 – Subsequent Events The Company evaluated subsequent events and transactions that occurred after December 31, 2025, through the date the consolidated financial statements were issued. Based upon this review, the Company identified the following subsequent events: The Company commenced sales of its common stock pursuant to the shelf registration, facilitated through a third-party arrangement with Maxim Group LLC acting as the Company’s agent under an equity distribution agreement. The Company received net proceeds of $ 2,300 thousand and issued 7,458,991 shares of class A Common Stock, which are intended to be used for general working capital and other corporate purposes. Following the year ended December 31, 2025, the Company converted a portion of its outstanding Avondale Prepaid Purchase #1 and Prepaid Purchase #2 Convertible Notes into Class A common stock. These conversions were part of the Company’s ongoing efforts to reduce debt and strengthen its equity structure. F- 41 As the transactions occurred after the reporting date, they are classified as non-recognized subsequent events. In total, the Company issued approximately 8,600,948 shares of Class A common stock in connection with these conversions. In February 2026, the Company settled a legal matter that originated prior to December 31, 2025 for approximately $ 65,000 . Because the underlying claim existed at year-end, the Company recorded the related accrual in the consolidated financial statements as of December 31, 2025. On February 5, 2026, the Company announced a strategic partnership with TouchSource, a leading provider of digital directories and interactive experiences for commercial real estate, healthcare, and retail properties. Under the partnership, the Company's agentic AI and workplace intelligence platform will serve as the intelligence layer across TouchSource's nationwide digital directory network, which spans more than 11,000 deployments across U.S. commercial office, healthcare, retail, and mixed-use properties. The collaboration will focus on coordinated go-to-market efforts and product strategy, exploring how agentic AI can be embedded into workplace platforms, digital directories, and spatial interfaces to support modern enterprise operations and multi-tenant real estate environments. On March 27, 2026, the Company entered into a Securities Purchase Agreement with Avondale Capital, LLC, pursuant to which the Company may issue and sell one or more Pre-Paid Purchases, in the aggregate purchase amount of up to $40,000,000, for the purchase of the Company’s Common Stock and the Company issued an unsecured convertible Pre-Paid Purchase #1 to the Lender. The convertible Pre-Paid Purchase #1 has the original principal amount of $ 1,050,000 . F- 42 (b) Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report. 2.1 (1) Agreement and Plan of Merger, dated as of September 25, 2022, by and among KINS Technology Group Inc., Inpixon, CXApp Holding Corp. and KINS Merger Sub Inc. 2.2 (1) Separation and Distribution Agreement, dated as of September 25, 2022, by and among KINS Technology Group Inc., Inpixon, CXApp Holding Corp. and Design Reactor, Inc. 2.3 (1) Sponsor Support Agreement, dated as of September 25, 2022, by and among KINS Capital LLC, KINS Technology Group Inc., Inpixon and CXApp Holding Corp. 3.1 Second Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 4, 2025). 3.2 Certificate of Amendment to the Restated Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on March 17, 2023 (incorporated by reference to the Company’s Registration Statement on Form S-3 filed on August 11, 2025). 3.3 Certificate of Validation, filed with the Delaware Secretary of State on August 4, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 4, 2025). 3.4 (3) Amended and Restated Bylaws of the Company, effective as of November 8, 2024. 4.1 Warrant Agreement, dated as of December 14, 2020, by and between KINS and Continental Stock Transfer & Trust Company, as warrant agent (incorporated herein by reference from Exhibit 4.1 on KINS’ Form 8-K, filed December 21, 2020). 4.2 (2) Specimen CXApp Inc. Class A Common Stock Certificate. 4.3 (2) Specimen CXApp Inc. Class C Common Stock Certificate. 4.4 (2) Specimen Warrant Certificate of the Company. 4.5 (5) Description of the Company’s securities. 10.1 (2)(#) Employee Matters Agreement, dated March 14, 2023, by and among KINS, KINS Merger Sub Inc., Inpixon, and Legacy CXApp. 10.2 (2) Tax Matters Agreement, dated March 14, 2023, by and among KINS, Inpixon, and Legacy CXApp. 10.3 (2) Transition Services Agreement, dated March 14, 2023, by and between Inpixon and Legacy CXApp. 10.4 (2)(#) Consulting Agreement, dated March 14, 2023, by and between Design Reactor, Inc. and 3AM, LLC. 10.5 (#) Employment Agreement, dated as of January 9, 2023, by and between Design Reactor, Inc. and Khurram Sheikh. (incorporated by reference to the Company’s Current Report on Form 8-K filed on March 31, 2023). 10.6 (#) Offer Letter, dated as of July 18, 2024, by and between Joy Mbanugo and CXApp Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 20, 2024). 10.7 (2)(#) CXApp Inc. 2023 Equity Incentive Plan. 10.8 (4) Securities Purchase Agreement, dated as of May 22, 2024, by and between CXApp Inc. and Streeterville Capital, LLC. 10.9 (5) Exchange Agreement, dated as of January 6, 2025, by and between CXApp Inc. and Streeterville Capital, LLC. 10.10 (5) Exchange Agreement, dated as of January 17, 2025, by and between CXApp Inc. and Streeterville Capital, LLC. 10.11 (5) Securities Purchase Agreement, dated as of March 26, 2025, by and between CXApp Inc. and Avondale Capital, LLC. 10.12 (6) Pre-Paid Purchase #3, dated as of October 17, 2025, between CXApp Inc. and Avondale Capital, LLC. 10.13 (*) Securities Purchase Agreement, dated as of March 27, 2026, by and between CXApp Inc. and Avondale Capital, LLC. 10.14 (*) Pre-Paid Purchase #1, dated as of March 27, 2026, between CXApp Inc. and Avondale Capital, LLC. 19.1 (5) Insider Trading Policy. 21.1 (*) List of Subsidiaries. 23.1 (*) Consent of WithumSmith+Brown, PC. 74 31.1 (*) Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 (*) Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 (**) Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 (**) Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 (5)(#) Clawback Policy. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Labels Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. ** Furnished herewith. (1) Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 26, 2022. (2) Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 20, 2023. (3) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2024. (4) Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 24, 2024. (5) Incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 7, 2025. (6) Incorporated by reference to the Company’s Current Report on Form 8-K filed on October 23, 2025 # Indicates a management contract or compensatory plan. Item 16. Form 10-K Summary. None. 75 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CXAPP INC. Date: March 30, 2026 /s/ Khurram Sheikh By: Khurram Sheikh Chairman, Chief Executive Officer and Director (Principal Executive Officer) CXAPP INC. Date: March 30, 2026 /s/ Joy Mbanugo By: Joy Mbanugo Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Khurram Sheikh Name: Khurram Sheikh Title: Chairman, Chief Executive Officer and Director Date: March 30, 2026 /s/ Joy Mbanugo Name: Joy Mbanugo Title: Chief Financial Officer Date: March 30, 2026 /s/ Di-Ann Eisnor Name: Di-Ann Eisnor Title: Director Date: March 30, 2026 /s/ Camillo Martino Name: Camillo Martino Title: Director Date: March 30, 2026 /s/ George Mathai Name: George Mathai Title: Director Date: March 30, 2026 /s/ Shanti Priya Name: Shanti Priya Title: Director Date: March 30, 2026 76