CXApp Inc.
For the period ended Mar 31, 2025. Filed May 20, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 20, 2025
CXAI$1.36+14.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001829126-24-007426
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-20.
0001829126-25-003841
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 81 current paragraphs.
37 unchanged; 15 reworded; 28 added; 19 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 19 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
Executive Overview
Current report
At CXApp, we are at the forefront of transforming the modern workplace through AI-powered solutions that enhance employee experience, operational efficiency, and workplace intelligence. As a leader in this evolving market, our strategic focus is to drive sustainable growth, scale our enterprise customer base, and deliver innovative solutions that leverage data and artificial intelligence to optimize workplace experiences.
Current report
In fiscal year 2025, we prioritized three strategic pillars:
Current report
Looking forward, our leadership team remains committed to balancing innovation with financial discipline, ensuring that CXApp is positioned for long-term profitability and strategic growth. By leveraging our AI-driven platform and expanding our enterprise footprint, we aim to deliver scalable, data-driven solutions that address the evolving needs of hybrid workplaces.
Current report
Financial Performance Summary
Current report
Revenue Growth and Customer Expansion
Current report
Operational Efficiencies and Cost Management
Current report
Cash Flow and Liquidity Position
Current report
For the three months ended March 31, 2025, cash and cash equivalents was $3,893 thousand with access to an additional $3,990 thousand from a Securities Purchase Agreement the Company entered into on March 26, 2025.
Current report
Strategic Growth Initiatives
Current report
Competitive Positioning and Market Outlook
Current report
Conclusion
Current report
As we advance our strategic roadmap, CXApp remains focused on executing with discipline and precision. Our AI-first approach, financial discipline, and emphasis on customer-centric innovation are key drivers of our long-term vision to redefine employee experiences in the hybrid workplace. By leveraging our strong foundation and expanding our enterprise footprint, we are well-positioned to deliver sustained growth and value for our stakeholders.
Current report
Recent Events
Current report
As of January 17, 2025, the Company paid down the entire December 2023 Note. On April 8, 2025, the Company received proceeds from the Avondale convertible Pre-Paid Purchase #1.
Current report
Other income/expense was a $2,129 thousand income, $1,790 thousand expenses for the three months ended March 31, 2025 and March 31, 2024 respectively. This increase in other income was primarily attributable to changes in fair value of derivative warrant liabilities of $2,196 thousand during the three months ended March 31, 2025.
Current report
Our significant accounting policies are discussed in Note 2 of the consolidated financial statements that are included elsewhere in this filing. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. There have been no changes to estimates during the periods presented in the filing. Historically changes in management estimates have not been material.
Current report
Revenue Recognition
Current report
The Company recognizes revenue, in accordance with ASC 606, when control of the promised products or services is transferred 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, 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.
Current report
License Subscription Revenue Recognition (Software As A Service)
Current report
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.
Current report
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.
Current report
Professional Services Revenue Recognition
Current report
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.
Current report
Hardware Revenue Recognition
Current report
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.
Current report
There were no cash flows provided by or used in financing activities during three months ended March 31, 2025 or March 31, 2024.
Current report
Critical Accounting Policies and Estimates
Removed paragraphs (19)
Previous report
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 and an AI-based analytics platform, targeting the emerging hybrid workplace market to provide enhanced experiences across people, places, and things.
Previous report
CXApp creates a connected workplace by reducing app overload, data fragmentation, and complex workflows and streamlines all capabilities through our application platform. 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.
Previous report
Prior to the closing of the Business Combination, CXApp and subsidiaries were wholly-owned subsidiary of Inpixon (“Inpixon”) and the Company’s financial statements consist of CXApp US, CXApp Canada, and CXApp Philippines (collectively the “Company,” “we,” “us” or “our”), show the historical condensed consolidated financial position, results of operations, changes in stockholders’ equity and cash flows of the Company and should be read in conjunction with the accompanying notes thereto. The Company’s condensed consolidated financial statements do not necessarily reflect what the results of operations, financial position, or cash flows would have been had the Company been a separate entity nor are they indicative of future results of the Company.
Previous report
The condensed consolidated operating results of the Company have been specifically identified based on the Company’s existing divisional organization. The majority of the assets and liabilities of the Company have been identified based on the existing divisional structure. The historical costs and expenses reflected in the Company’s financial statements include an allocation for certain corporate and shared service functions. Management believes the assumptions underlying our condensed consolidated financial statements are reasonable. Nevertheless, our condensed consolidated financial statements may not include all of the actual expenses that would have been incurred and may not reflect our results of operations, financial position and cash flows had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We also may incur additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical results of operations, financial position and cash flows.
Previous report
Revenues for the three months ended September 30, 2024, increased to $1,897 thousand, reflecting a 7% quarter-over-quarter growth, driven by the successful onboarding of new enterprise clients and deeper integration of our platform solutions with existing customers. This sustained revenue increase highlights the growing demand for our hybrid workplace solutions, particularly with our strategic partnerships, such as our collaboration with Google Cloud Marketplace, which we anticipate will significantly accelerate adoption and customer retention. Looking ahead, we expect this momentum to continue as we expand our presence in key markets and leverage our unique AI-based workplace experience technologies.
Previous report
Other income/expense was $1,825 thousand expense, and $5,253 thousand income for the three months ended September 30, 2024 (Successor) and the three months ended September 30, 2023 (Successor), respectively. This decrease of $7,078 thousand in other expense for the same comparative periods was attributable to the decrease in changes in fair value of derivative warrant liabilities of approximately $6,272 thousand, loss on debt extinguishment of approximately $535 thousand and increase in interest expense of approximately $369 thousand and increase in other income of approximately $98 thousand.
Previous report
Comparison of the results of operations for the nine months ended September 30, 2024 (Successor), period ended September 30, 2023 (Successor), and period ended March 14, 2023 (Predecessor)
Previous report
Revenues
Previous report
Our subscription-based revenue was 87% of the total revenue for the nine months ended September 30, 2024 (Successor), 79% for the period ended September 30, 2023 (Successor), and 74% for the period ended March 14, 2023 (Predecessor), which is an 8% increase in the revenue mix.
Previous report
Gross Margin
Previous report
Operating Expenses
Previous report
Operating expenses consist primarily of research and development costs, sales and marketing costs, and general and administrative costs. These operating expenses were $14,992 thousand for the nine months ended September 30, 2024 (Successor), compared to $11,501 thousand and $5,518 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively.
Previous report
The decrease in operating expenses of $2,027 thousand for the same comparative period was attributable to decrease in acquisition cost of approximately $194 thousand, general and administrative expenses of $840 thousand due to non-renewal of contract with contractors and reduction of D&O insurance premium, sales and marketing expenses of $706 thousand due to change in commission plan and employee restructuring effective in January 2024, research and development of approximately $20 thousand and amortization of intangibles of $267 thousand.
Previous report
Other Income/(Expense)
Previous report
Other income/expense was $5,380 thousand expense for the nine months ended September 30, 2024 (Successor), and $5,090 thousand expense and $1 thousand income for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. This increase in other expense of $291 thousand for the same comparative period was attributable to decrease in changes in fair value of derivative warrant liabilities of $1,559 thousand and the increase in interest expense of approximately $1,320 thousand was primarily attributable to the one-time monitoring fee relating to the Promissory Note issued on December 15, 2023 and convertible debt, loss on debt extinguishment of $535 thousand and decrease in foreign exchange loss of approximately $5 thousand.
Previous report
Provision for Income Taxes
Previous report
As of November 12, 2024, the Company owed approximately $2,731 thousand in principal and accrued interest payable of $20 thousand payable within the next three months related to the December 2023 Note. The interest rate is 10%. See Note 9 of the Notes to Unaudited Condensed Consolidated Financial Statements.
Previous report
The Management believes that the current liquidity position, including the cash raised under the promissory note of $3,000 thousand payable by December 2024, and the Securities Purchase Agreement (the “SPA”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001, has the ability to mitigate any going concern indicators for a period of at least one year from the date these financial statements are issued.
Previous report
Net cash flows provided by financing activities during the nine months ended September 30, 2024 (Successor) was approximately $3,480 thousand compared to net cash flows provided by financing activities for the period from March 15, 2023 to September 30, 2023 (Successor) and during the period from January 1, 2023 to March 14, 2023 (Predecessor) of approximately $4,674 thousand and $8,892 thousand, respectively. On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchase has the original principal amount of $3,675 thousand. For the nine months ended, the Company received net proceeds of $3,480 thousand, reflecting original issue discount of $175 thousand and Lender’s transaction cost of $20 thousand. During the period from March 15, 2023 to September 30, 2023 (Successor), the Company paid $328 thousand in cash outflows from a repayment of a related party promissory note, Company received $5,002 thousand in cash inflows from warrant exercises. During the period from January 1, 2023 to March 14, 2023 (Predecessor), the Company received $9,089 thousand in incoming cash flows from parent, and paid $197 thousand in cash outflows from a payment of an acquisition liability.
Reworded paragraphs (15)
Previous wording
You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q, with the audited condensed consolidated financial statements included in our Annual Report on 10-K filed with the Securities and Exchange Commission (“SEC”) on May 24, 2024 (the “Annual Report”). References in this report (the “Quarterly Report”) to “we”, “us” or the “Company” refer to CXApp Inc. References to our “management” or our “management team” refer to our officers and directors. The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition for the period ended September 30, 2024.
Current wording
You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q, with the audited condensed consolidated financial statements included in our Annual Report on 10-K filed with the Securities and Exchange Commission (“SEC”) on April 7, 2025 (the “Annual Report”). References in this report (the “Quarterly Report”) to “we”, “us” or the “Company” refer to CXApp Inc. References to our “management” or our “management team” refer to our officers and directors. The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition for the three months ended March 31, 2025.
Previous wording
The Company derives revenue from subscription software as a service (SaaS), design, deployment and implementation services for its enterprise apps business. Revenue was $5,481 thousand for the nine months ended September 30, 2024 (Successor), compared to $4,027 thousand and $1,620 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. The decrease in revenue of $166 thousand, for the comparative periods ended September 30, 2024 and September 30, 2023, was due to a decline in Professional Services revenue. Professional services are related to integration works and other services that may be requested by the customer and as such the decline in revenue is attributable to the professional services revenue because the Company has moved to a full SaaS model versus one-time professional fees.
Current wording
The Company derives revenue from subscription software as a service (SaaS), design, deployment and implementation services for its enterprise apps business. Revenue was $1,224 thousand for the three months ended March 31, 2025, compared to $1,818 thousand for the three months ended March 31, 2024. The decrease in revenue of $594 thousand, for the comparative quarters ended March 31, 2025 and March 31, 2024 was due to a decline in Professional Services revenue. Professional services are related to integration works and other services that may be requested by the customer and as such the decline in revenue is attributable to the professional services revenue because the Company has moved to a full SaaS model versus one-time professional fees.
Previous wording
Our subscription-based revenue was 87% of the total revenue for the three months ended September 30, 2024 (Successor) and 80% for the three months ended September 30, 2023 (Successor), which is a 7% increase in the revenue mix because the Company has moved to a full SaaS model versus one-time professional fees.
Current wording
Our subscription-based revenue represented 99% of the total revenue for the three months ended March 31, 2025 and 87% for the three months ended March 31, 2024 which is a 12% increase in the revenue mix.
Previous wording
Cost of revenues includes the direct costs to deliver the services including labor and overhead. Cost of revenues was $1,052 thousand for the nine months ended September 30, 2024 (Successor), compared to $925 thousand and $483 thousand for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor), respectively. The gross profit margin was 81% for the nine months ended September 30, 2024 (Successor), compared to 77% and 70% for the period ended September 30, 2023 (Successor) and the period ended March 14, 2023 (Predecessor). This decrease in cost of revenues of approximately $356 thousand, or approximately 25%, for the comparative periods ended September 30, 2024 and September 30, 2023, was attributable to the decrease in professional services revenue related costs.
Current wording
Cost of revenues includes the direct costs to deliver the services including labor and overhead. Cost of revenues were $150 thousand for the three months ended March 31, 2025 compared to $372 thousand for the three months ended March 31, 2024. The gross profit margin was 88% for the three months ended March 31, 2025 compared to 82% for the three months ended March 31, 2024. This decrease in cost of revenues of approximately $177 thousand, or approximately 54%, for the comparative periods ended March 31, 2025 and March 31, 2024, was attributable to the decrease in professional services revenue related costs.
Previous wording
Operating expenses consist primarily of research and development costs, sales and marketing costs, and general and administrative costs. These operating expenses were $4,851 thousand for the three months ended September 30, 2024 (Successor), compared to $5,641 thousand for the three months ended September 30, 2023 (Successor). The decrease in operating expenses of $790 thousand for the same comparative period was attributable to decrease in sales and marketing expenses of $446 thousand, other general and administrative expenses of $329 thousand, research and development expenses of $121 thousand, professional fees through issuance of the Company’s Class A Common Stock amounting to $106 thousand, acquisition related costs of $30 thousand, amortization of intangibles of $14 thousand, and increase in stock-based compensation expense of $256 thousand.
Current wording
Operating expenses consist primarily of research and development costs, sales and marketing costs, and general and administrative costs. These operating expenses were $4,819 thousand for the three months ended March 31, 2025 compared to $5,078 thousand for the three months ended March 31, 2024. The decrease in operating expenses of $259 thousand for the same comparative quarter was attributable to an increase in general and administrative expenses of $384 thousand and a decrease in other operating expenses of approximately $643 thousand.
Previous wording
There was an income tax benefit of approximately $147 thousand for the three months ended September 30, 2024 (Successor), compared to $417 thousand tax benefit for the three months ended September 30, 2023 (Successor). The income tax benefit for the three months ended September 30, 2024 (Successor) is primarily a result of the release of valuation allowance attributable to acquired intangible assets from the Business Combination recorded in the first quarter of 2023.
Current wording
There was no income tax benefit for the three months ended March 31, 2025 compared to $207 thousand for the three months ended March 31, 2024. The income tax benefit for the three months ended March 31, 2024 is primarily a result of the release of valuation allowance attributable to acquired intangible assets from the Business Combination recorded in the first quarter of 2023.
Previous wording
Net cash used in operating activities during the nine months ended September 30, 2024 (Successor) of $4,629 thousand consists of net loss of $15,430 thousand offset by non-cash adjustments of approximately $9,826 thousand and net cash changes in operating assets and liabilities of approximately $975 thousand. On May 22, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC (“Lender”), pursuant to which the Lender desires to purchase up to $10,000 thousand in shares of the Company’s Common Stock, par value $0.0001. Pursuant to the SPA, the Company issued two unsecured convertible Pre-Paid Purchases to Lender. The convertible Pre-Paid Purchases has the original principal amount of $3,675 thousand. For the period ended September 30, 2024, the Company received net proceeds of $3,480 thousand, reflecting original issue discount of $175 and Lender’s transaction cost of $20 thousand. Given our current cash balances and budgeted cash flow requirements, the Company believes such funds are sufficient to satisfy its working capital needs, capital asset purchases, debt repayments and other liquidity requirements associated with its existing operations for the next 12 months from the issuance date of the financial statements. The Company may continue to pursue strategic transactions and may raise additional capital as needed, using our equity securities and/or cash and debt financings in combinations appropriate for each acquisition.
Current wording
Net cash used in operating activities during the three months ended March 31, 2025 was $979 thousand consists of net loss of $1,616 thousand and operating gain of $637 thousand. On March 26, 2025, the company entered into a SPA with 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 tranche 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. The Company believes such funds are sufficient to satisfy its working capital needs, capital asset purchases, debt repayments and other liquidity requirements associated with its existing operations for the next 12 months from the issuance date of the financial statements. The Company may continue to pursue strategic transactions and may raise additional capital as needed, using our equity securities and/or cash and debt financings in combinations appropriate for each acquisition.
Previous wording
Liquidity and Capital Resources as of September 30, 2024
Current wording
Liquidity and Capital Resources as of March 31, 2025 Compared with March 31, 2024
Previous wording
As of September 30, 2024 (Successor), the Company has a working capital deficiency of approximately $7,404 thousand and cash of approximately $5,082 thousand. For the period ended September 30, 2024 (Successor), the Company incurred net loss of approximately $15,430 thousand and used approximately $4,629 thousand of cash for operating activities.
Current wording
As of March 31, 2025, the Company has a working capital deficiency of approximately $4,017 thousand and cash of approximately $3,893 thousand. For the three months ended March 31, 2025, the Company incurred net loss of approximately $1,611 thousand and used approximately $979 thousand of cash for operating activities.
Previous wording
Operating Activities for the nine months ended September 30, 2024 (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)
Current wording
Operating Activities for the three months ended March 31, 2025 and March 31, 2024
Previous wording
Cash Flows from Investing Activities for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor)
Current wording
Cash Flows from Investing Activities for the three months ended March 31, 2025 and March 31, 2024
Previous wording
Net cash flows used in investing activities during the nine months ended September 30, 2024 (Successor) was approximately $30 thousand compared to net cash flows provided by and used in investing activities for the period from March 15, 2023 to September 30, 2023 (Successor) and during the period from January 1, 2023 to March 14, 2023 (Predecessor) of approximately $9,956 thousand and $54 thousand, respectively. Cash flows related to investing activities during the nine months ended September 30, 2024 (Successor) include $30 thousand for the purchase of property and equipment. Cash flows related to investing activities during the period from March 15, 2023 to September 30, 2023 (Successor) include $47 thousand for the purchase of property and equipment, and $10,003 thousand for cash acquired in connection with the Business Combination. Cash flows related to investing activities during the period from January 1, 2023 to March 14, 2023 (Predecessor) include $9 thousand for the purchase of property and equipment, and $45 thousand for the investment in capitalized software.
Current wording
Net cash flows used in investing activities during the three months ended March 31, 2025 was approximately $5 thousand compared to net cash flows used in and provided in investing activities for the three months ended March 31, 2024 is $18 thousand. Cash flows related to investing activities during the three months ended March 31, 2025 and March 31, 2024 include $5 thousand and $18 thousand were used for the purchase of property and equipment.
Previous wording
Cash Flows from Financing Activities for the nine months ended September 30, 2024 (Successor), for the period from March 15, 2023 to September 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor)
Current wording
Cash Flows from Financing Activities for the three months ended March 31, 2025 and March 31, 2024
Previous wording
Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our balance sheet. As of September 30, 2024 (Successor), the total obligation for operating leases is approximately $585 thousand, of which approximately $377 thousand is expected to be paid in the next twelve months.
Current wording
Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our balance sheet. As of March 31, 2025, the total obligation for operating leases is approximately $365 thousand, of which approximately $274 thousand is expected to be paid in the next twelve months.
Previous wording
The Management believes there have been no significant changes during the nine months ended September 30, 2024, to the items disclosed as critical accounting estimates in management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on May 24, 2024.
Current wording
The Company believes there have been no significant changes during the three months ended March 31, 2025 to the items disclosed as critical accounting estimates in management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the SEC on April 7, 2025.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Cost of revenues includes the direct costs to deliver the services including labor and overhead. Cost of revenues were $372 thousand for the three months ended September 30, 2024 (Successor), compared to $358 thousand for the three months ended September 30, 2023 (Successor). The gross profit margin was 80% for the three months ended September 30, 2024 (Successor), compared to 80% for the three months ended September 30, 2023 (Successor).
Previous report — wording carried elsewhere
The following table sets forth our results of operations. This data should be read together with our unaudited condensed consolidated financial statements and related notes.
Previous report — wording carried elsewhere
There was an income tax benefit of approximately $513 thousand for the nine months ended September 30, 2024 (Successor), compared to $2,958 thousand tax benefit for the period ended September 30, 2023 (Successor). The income tax benefit for the nine months ended September 30, 2024 (Successor) is primarily a result of the release of valuation allowance attributable to acquired intangible assets from the Business Combination recorded in the first quarter of 2023.