Company: CXAI
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001829126-25-003841
Chunk: 14

Company: CXApp Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 and are specifically chargeable to the customer under the terms of the contract.

Professional
services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases,
or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked.
Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other
specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize
revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer
of the performance completed to date. For fixed fee contracts provided by in house personnel, the Company recognizes revenue evenly over
the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts
have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose
information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the three
months ended March 31, 2025 and March 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 preced