Company: CXAI
Filing Date: 2025-04-07
Form Type: 10-K
Source: 0001829126-25-002438
Chunk: 235

Company: CXApp Inc.
Filing Date: 2025-04-07
Form: 10-K
Item: Item 1A
Chunk 235
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To address these material weaknesses, the Company has developed and implemented the following remediation initiatives:

    ●
    Tax Provision Process:

    ○
    Partnered with third-party tax advisors to assist with state and local income tax reporting and nexus evaluations.

    ●
    Legal Expense Accrual Process:

    ○
    Introduced real-time legal invoice tracking with automated accrual calculations.

    ○
    Added multi-level review of significant legal expenses during period-end close.

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    ●
    Financial Instrument Accounting:

    ○
    Appointed the CFO to oversee technical accounting for complex and judgmental transactions.

    ○
    Engaged technical accounting support and engaged third-party valuation specialists for equity-linked instruments.

    ●
    Cross-functional Improvements:

    ○
    Enhanced month-end close workflows, including standardized documentation, checklists, and approval protocols.

    ○
    Engaged external advisors semiannually to review valuation, tax, equity-linked instruments, and disclosures.

Management, under the oversight of the Audit Committee, is monitoring the effectiveness of these remediation efforts. We expect to complete testing of the remediated controls during fiscal year 2025.

Management’s Report on Internal Control Over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP.

Internal control over financial reporting includes those policies and procedures that:

    1.
    Pertain to the maintenance of records that accurately and fairly reflect transactions and dispositions of company assets.

    2.
    Provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with GAAP, and receipts and expenditures are made only in accordance with management and director authorizations; and

    3.
    Provide reasonable assurance regarding prevention or timely detection of unauthorized use or disposition of assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, using the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management concluded that internal control over financial reporting was not effective as of December 31,