Company: CXAI
Filing Date: 2025-03-07
Form Type: 424B3
Source: 0001829126-25-001566
Chunk: 19

Company: CXApp Inc.
Filing Date: 2025-03-07
Form: 424B3
Chunk 19
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 deliverables.
The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts
is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed
as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice
because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to
date. For fixed fee contracts provided by in-house personnel, the Company recognizes revenue evenly over the service period using a time-based
measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year
or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance
obligations. Anticipated losses are recognized as soon as they become known.

For the three and nine months ended September
30, 2024 (Successor), for the three months ended September 30, 2023 (Successor), for the period from March 15, 2023 to September 30, 2023
(Successor), and the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company did not incur any such losses. These amounts
are based on known and estimated factors.

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