CXApp Inc.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
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.
Sep 30, 2026 · Filed Nov 5, 2026
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 2026-06-30; filed 2026-08-14.
0001829126-26-008907
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001829126-26-012042
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 97 previous paragraphs and 113 current paragraphs.
56 unchanged; 26 reworded; 28 added; 15 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 37 previous and 38 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
On August 14, 2026, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to effect a 1-for-50 reverse stock split (the “Reverse Stock Split”) of shares of common stock, $0.0001 par value (the “common stock”), which became effective at 12:01 a.m. Eastern Time on August 18, 2026. Pursuant to the Reverse Stock Split, every fifty (50) shares of issued and outstanding shares of common stock were combined into one (1) share of common stock. All share and per share amounts presented herein have been retroactively adjusted to reflect the Reverse Stock Split. There was no change to the shares authorized or in the par value per share of common stock of $0.0001.
Current report
The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split resulted in the rounding up of fractional shares. The Company did not issue fractional shares in connection with the Reverse Stock Split. Any fractional share of common stock that would otherwise have resulted from the Reverse Stock Split was rounded up to the nearest whole share. The number of shares of common stock issuable under our equity incentive plans and exercisable under the outstanding warrants were also proportionately adjusted.
Current report
Issuances in Connection with Convertible Debt
Current report
Between September 30, 2026 and November 5, 2026, the Company issued an aggregate of 152,599 shares of Class A common stock to Avondale Capital, LLC pursuant to purchase notices under Pre-Paid Purchase #4, dated December 30, 2025. The shares were issued at prices ranging from $1.74365 to $2.25316 per share.
Current report
On October 21, 2026, the Company received net cash proceeds of $1,000 thousand from the third tranche of the Pre-Paid Purchase Agreement with Avondale (Pre-Paid Purchase #3), issued pursuant to the SPA entered into on March 27, 2026. The third tranche was structured with a principal amount of $1,050 thousand, less a $50 thousand OID, resulting in the net cash proceeds mentioned above.
Current report
Standstill Agreement
Current report
On October 21, 2026, the Company entered into a standstill agreement with Avondale Capital, LLC. Under the agreement, for a period of 90 days, Avondale Capital, LLC agreed not to make purchases under any outstanding Pre-Paid Purchase on any trading day unless the Company’s Class A common stock traded at a price of at least 110% of the “Minimum Price,” as defined in Nasdaq Listing Rule 5635(d), and the trading volume of the Company’s Class A common stock was at least $250 thousand on that trading day.
Current report
The standstill period will terminate immediately upon a breach by the Company of the standstill agreement or the related transaction documents. Upon the termination or expiration of the standstill period, Avondale Capital, LLC may resume purchases in accordance with the applicable Pre-Paid Purchases, which could result in the issuance of additional shares of Class A common stock. The standstill agreement did not waive any existing event of default, and the outstanding Pre-Paid Purchases otherwise remain in effect.
Current report
Share Repurchase Program
Current report
On October 21, 2026, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase shares of its outstanding Class A common stock for an aggregate purchase price of up to $1,000 thousand. Repurchases may be made from time to time through open-market purchases, privately negotiated transactions or other lawful means. The timing, amount, price and manner of any repurchases will be determined by management based on market conditions, the Company’s financial position, liquidity and capital requirements, applicable legal requirements and limitations contained in the Company’s financing arrangements.
Current report
The share repurchase program has no expiration date and will remain in effect until the authorized amount has been utilized or the program is modified, suspended or terminated by the Board of Directors. The program does not obligate the Company to repurchase any particular number of shares and may be modified, suspended or discontinued at any time.
Current report
Reverse stock-split
Current report
On August 14, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to effect a 1-for-50 reverse stock split (the “Reverse Stock Split”) of the Company’s shares of common stock, $0.0001 par value (the “common stock”), which became effective at 12:01 a.m. Eastern Time on August 18, 2026. Pursuant to the Reverse Stock Split, every Fifty (50) shares of issued and outstanding shares of common stock were combined into One (1) share of common stock. Accordingly, unless indicated otherwise, all the current period and historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents for the periods presented in this Quarterly Report on Form 10-Q have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split. There was no change to the shares authorized or in the par value per share of common stock of $0.0001.
Current report
Other income/expenses was an income of $728 thousand for the three months ended September 30, 2026 and an income of $668 thousand for the three months ended September 30, 2025. The $60 thousand increase reflects of $166 thousand favorable change in interest expense, net and a $102 thousand decrease in other expense, partially offset by a $208 thousand decrease in the gain from changes in the fair value of convertible debt and warrant liabilities.
Current report
Provision for Income Taxes
Current report
For the three months ended September 30, 2026, the Company recorded an income tax expense of $716 thousand compared with no income tax expenses or benefit for the three months ended September 30, 2025. The 2026 income tax expense consisted of deferred income tax expense.
Current report
Revenues
Current report
The Company derives revenue from subscription software as a service (SaaS), design, deployment and implementation services for its enterprise apps business and also through managed advertising and growth marketing advisory following the acquisition of EngineRoom. Revenue increased by $2,088 thousand, or 58.6%, to $5,649 thousand for the nine months ended September 30, 2026, compared with $3,561 thousand for the nine months ended September 30, 2025. The increase primarily reflected $2,773 thousand of revenue contributed by the newly acquired subsidiary, EngineRoom, on June 3, 2026, which added new revenue streams consisting of $2,352 thousand of subscription and managed advertising and $421 thousand of growth marketing advisory services. This increase was partially offset by a $731 thousand decrease in software, license and maintenance revenue and a $16 thousand decrease in hardware revenue. Professional services revenue increased by $62 thousand.
Current report
Gross Margin
Current report
Cost of revenues increased by $1,725 thousand to $2,169 thousand for the nine months ended September 30, 2026, compared with $444 thousand for the nine months ended September 30, 2025. Gross profit increased by $363 thousand to $3,480 thousand, compared with $3,117 thousand in the prior-year period. Gross margin decreased to 61.6% from 87.5%, primarily reflects a shift in service mix following the EngineRoom acquisition toward services with higher direct delivery and fulfillment costs.
Current report
Operating Expenses
Current report
Total operating expenses increased by $89 thousand to $14,887 thousand for the nine months ended September 30, 2026, compared with $14,798 thousand for the nine months ended September 30, 2025. Research and development expense decreased by $893 thousand, and sales and marketing expense decreased by $107 thousand. These decreases were offset by a $897 thousand increase in general and administrative expense and a $192 thousand increase in amortization of intangible assets. The increase in general and administrative expense included acquisition-related costs and other costs associated with the EngineRoom acquisition, while the increase in amortization relates to intangible assets acquired in EngineRoom acquisition.
Current report
Other Income/Expense
Current report
Other expense, net, was $4,301 thousand for the nine months ended September 30, 2026, compared with other income, net, of $3,770 thousand for the nine months ended September 30, 2025, an unfavorable change of $8,071 thousand. The change was primarily attributable to an unfavorable $8,111 thousand change in the fair value of convertible debt and warrant liabilities, from a gain of $3,963 thousand in 2025 to a loss of $4,148 thousand in 2026. The change was partially offset by a $215 thousand reduction in interest expense and the absence of the $48 thousand loss on debt extinguishment recognized in 2025. Other income of $162 thousand in 2025 changed to other expense of $61 thousand in 2026, an unfavorable change of $223 thousand.
Current report
Income taxes
Current report
The Company recorded an income tax expense of $67 thousand for the nine months ended September 30, 2026, compared with an income tax expense of $1 thousand for the nine months ended September 30, 2025. The income tax expense consisted of current and deferred income tax expense.
Current report
Operating Activities for the nine months ended September 30, 2026 and September 30, 2025
Current report
The acquisition of EngineRoom on June 3, 2026 introduced additional critical accounting estimates and judgments relating to the preliminary purchase-price allocation, including the valuation and useful lives of acquired intangible assets, deferred income taxes and provisional goodwill, as well as the determination of whether revenue from certain media and advertising arrangements should be presented on a gross or net basis. These estimates remain subject to refinement during the measurement period. Except for these matters, there were no significant changes during the nine months ended September 30, 2026 to the critical accounting estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Removed paragraphs (15)
Previous report
Convertible Debt Conversion
Previous report
On May 26, 2026, the Company issued an unsecured Pre-Paid Purchase to Avondale Capital, LLC with an original principal amount of $5,250 thousand. The Company received net proceeds of approximately $5,000 thousand after an original issue discount of $250 thousand.
Previous report
Following the quarter ended June 30, 2026, the Company converted a portion of its outstanding 2025 Avondale Prepaid Purchase #4 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.
Previous report
As the transactions occurred after the reporting date, they are classified as non-recognized subsequent events. In total, the Company issued approximately 7,673,664 shares of Class A common stock in connection with these conversions.
Previous report
Business Combination
Previous report
On June 3, 2026, the Company, through its wholly owned subsidiary CXAI Australia Pty Ltd, acquired 100% of the outstanding equity interests of Virtus Digital Marketing Pty Ltd, doing business as EngineRoom. EngineRoom provides managed advertising and growth marketing advisory services. EngineRoom’s results of operations have been included in the Company’s condensed consolidated financial statements from June 3, 2026. See Note 12, Business Combination, for additional information.
Previous report
Other income/expenses was an expense of $5,152 thousand for the three months ended June 30, 2026 and an income of $973 for the three months ended June 30, 2025. This change was primarily attributable to changes in fair value of derivative liabilities and warrant of $5,885 thousand and increase in interest expenses of $5 thousand and other expenses of $235 thousand during the three months ended June 30, 2026.
Previous report
Revenue from performance marketing, search-engine optimization, customer engagement, network-development, advisory and website-development services. Revenue recognition is determined based on the performance obligations and transfer pattern established in the applicable customer contracts.
Previous report
Professional Services Revenue Recognition
Previous report
The Company provides integration and software customization professional services to its customers.
Previous 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 condensed consolidated statement of operations and comprehensive loss 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.
Previous report
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.
Previous report
For the six months ended June 30, 2026 and June 30, 2025, the Company did not incur any such losses. These amounts are based on known and estimated factors.
Previous report
Operating Activities for the six months ended June** 30, 2026 and June **30, 2025
Previous report
The Company believes there have been no significant changes during the six months ended June 30, 2026 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, 2025 that was filed with the SEC on March 30, 2026.
Reworded paragraphs (26)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December* 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026. References in this Quarterly Report to “CXApp,” the “Company,” “we,” “us” and “our” refer to CXApp Inc. and its consolidated subsidiaries. This discussion describes the principal factors affecting our results of operations and financial condition for the three and six months ended June *30, 2026 and 2025.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026. References in this Quarterly Report to “CXApp,” the “Company,” “we,” “us” and “our” refer to CXApp Inc. and its consolidated subsidiaries. This discussion describes the principal factors affecting our results of operations and financial condition for the three and nine months ended September 30, 2026 and 2025.
Previous wording
During the six months ended June 30, 2026, we focused on three strategic priorities:
Current wording
During the nine months ended September 30, 2026, we focused on three strategic priorities:
Previous wording
As of June 30, 2026, cash and cash equivalents were $11,675 thousand, compared with $11,101 thousand as of December 31, 2025.
Current wording
As of September 30, 2026, cash and cash equivalents were $8,986 thousand, compared with $11,101 thousand as of December 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 $1,694 thousand for the three months ended June 30, 2026, compared to $1,223 thousand for the three months ended June 30, 2025. The increase in revenue of $471 thousand, for the comparative quarters ended June 30, 2026 and June 30, 2025 was primarily contributed by the newly acquired subsidiary, EngineRoom, which added new revenue streams through managed advertising and growth marketing advisory services. EngineRoom operates across multiple service lines, including paid performance marketing, search engine optimization (SEO), social marketing, network development, website development, customer engagement, and advisory services. The Company noted an decrease in the revenue from licenses during this period however, it was compensated by increase in Professional Services revenue.
Current wording
The Company derives revenue from subscription software as a service (SaaS), design, deployment and implementation services for its enterprise apps business and also through managed advertising and growth marketing advisory following the acquisition of EngineRoom. Revenue increased by $1,891 thousand, or 169.7%, to $3,005 thousand for the three months ended September 30, 2026, compared with $1,114 thousand for the three months ended September 30, 2025. The increase primarily reflected $2,084 thousand of revenue contributed by the newly acquired subsidiary, EngineRoom, added new revenue streams consisting of $1,753 thousand of subscription and managed advertising and $331 thousand of growth marketing advisory services. This increase was partially offset by a $209 thousand decrease in software, license and maintenance revenue and a $2 thousand decrease in hardware revenue. Professional services revenue increased by $18 thousand. EngineRoom’s results have been included in the Company’s consolidated results since its acquisition on June 3, 2026. EngineRoom operates across multiple service lines, including paid performance marketing, search engine optimization (SEO), social marketing, network development, website development, customer engagement, and advisory services. The Company noted a decrease in the revenue from licenses during this period however, it was compensated by increase in Professional Services revenue and revenue generated from EngineRoom.
Previous wording
Recurring revenue is a management operating metric and is not a measure calculated in accordance with U.S. GAAP. It is not synonymous with Subscription Revenue. Refer following
Current wording
Recurring revenue is a management operating metric and is not a measure calculated in accordance with U.S. GAAP. It is not synonymous with Subscription Revenue. Refer to the following table:
Previous wording
Of the $1,557 thousand and $2,491 thousand for the three and six months, period ended June 30, 2026, of Recurring Revenue includes software platform, managed advertising, growth marketing advisory or other continuing services. The $137 thousand and $153 thousand for the three and six months, period ended June 30, 2026, of Non-recurring revenue consists of one-time projects, hardware and professional services.
Current wording
Of the $2,815 thousand and $5,306 thousand for the three and nine months, period ended September 30, 2026, of Recurring Revenue includes software platform, managed advertising, growth marketing advisory or other continuing services. The $190 thousand and $343 thousand for the three and nine months, period ended September 30, 2026, of Non Recurring Revenue consists of one-time projects, hardware and professional services.
Previous wording
For the three and six months, period ended June 30, 2025, subscription revenue represents Recurring Revenue and non-subscription revenue represents Non-Recurring Revenue as disclosed in the Note 3 – Disaggregation of Revenue.
Current wording
For the three and nine months, period ended September 30, 2025, Subscription Revenue represents Recurring Revenue and Non-Subscription Revenue represents Non-Recurring Revenue as disclosed in the Note 3 – Disaggregation of Revenue.
Previous wording
Cost of revenues includes the direct costs to deliver the services, including employees’ and overhead. Cost of revenues were $623 thousand for the three months ended June 30, 2026 compared to $171 thousand for the three months ended June 30, 2025. The gross profit margin was 63.22% for the three months ended June 30, 2026 compared to 86.02% for the three months ended June 30, 2025. This increase in cost of revenues of approximately $452 thousand, or approximately 264%, for the comparative periods ended June 30, 2026 and June 30, 2025, was attributable to higher service mix that resulted in higher direct costs during the period.
Current wording
Cost of revenues includes the direct costs to deliver the services, including employees’ and overhead. Cost of revenues were $1,386 thousand for the three months ended September 30, 2026 compared to $123 thousand for the three months ended September 30, 2025. The gross profit margin decreased to 53.88% for the three months ended September 30, 2026 from 88.96% for the three months ended September 30, 2025, and increase in cost of revenues of approximately $1,263 thousand, or approximately 1027%, for the comparative periods ended September 30, 2026 and September 30, 2025, primarily reflects a shift in service mix following the EngineRoom acquisition toward services with higher direct delivery and fulfillment costs.
Previous wording
Operating expenses consist primarily of research and development, sales and marketing, and general and administrative expenses. Total operating expenses were $5,190 thousand for the three months ended June 30, 2026, compared to $5,163 thousand for the three months ended June 30, 2025.
Current wording
Operating expenses consist primarily of research and development, sales and marketing, and general and administrative expenses. Total operating expenses were $4,783 thousand for the three months ended September 30, 2026, compared to $4,816 thousand for the three months ended September 30, 2025.
Previous wording
The increase of $27 thousand period over period was primarily the result of acquisition related cost of $208 thousand incurred for acquisition of EngineRoom. Other than that, the research and development decreased by approximately $505 thousand, sales and marketing was decreased by $109 thousand which was offset by increase in general and administrative expenses of approximately $391 thousand and increase in amortization of intangibles by approximately $42 thousand.
Current wording
The decrease of $33 thousand period over period was primarily attributable to the decrease in research and development of approximately $414 thousand which was offset by increase in general administrative expenses of approximately $48 thousand and increase in sales and marketing of approximately $183 thousand and increase in amortization of intangible assets increased by $150 thousand, primarily reflecting amortization associated with intangible assets acquired in the EngineRoom acquisition.
Previous wording
The Company includes a non-GAAP measure that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income, taxes, depreciation and amortization. Adjusted EBITDA is used by our management as the metric in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.
Current wording
The Company includes a non-GAAP measure that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income, taxes, depreciation and amortization. Adjusted EBITDA is used by our management as the metric in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items and non-cash stock-based compensation. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.
Previous wording
We have presented Adjusted EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net income (loss). By including this information, we can provide investors with a more complete understanding of our business. Specifically, we present Adjusted EBITDA as supplemental disclosure because of the following:
Current wording
We have presented Adjusted EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net loss. By including this information, we can provide investors with a more complete understanding of our business. Specifically, we present Adjusted EBITDA as supplemental disclosure because of the following:
Previous wording
Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net income (loss) and the other condensed consolidated statement of operations and comprehensive loss data prepared in accordance with GAAP. Some of these limitations include the fact that:
Current wording
Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net loss and the other unaudited condensed consolidated statement of operations and comprehensive loss data prepared in accordance with GAAP. Some of these limitations include the fact that:
Previous wording
Net cash used in operating activities was $4,455 thousand for the six months ended June 30, 2026, reflecting a net loss of $12,623 thousand, adjusted for noncash items and changes in operating assets and liabilities. During the period, the Company received net proceeds of approximately $5,990 thousand from the issuance of convertible debt under the Securities Purchase Agreement entered into on March 27, 2026 and $2,464 thousand from its at-the-market offering program.
Current wording
Net cash used in operating activities was $7,091 thousand for the nine months ended September 30, 2026, reflecting a net loss of $15,775 thousand, adjusted for noncash items and changes in operating assets and liabilities. During the period, the Company received net proceeds of approximately $5,990 thousand from the issuance of convertible debt under the Securities Purchase Agreement entered into on March 27, 2026 and $2,464 thousand from its at-the-market offering program.
Previous wording
As of June 30, 2026, the Company had cash and cash equivalents of $11,675 thousand and working capital surplus of $5,258 thousand. Management continues to implement expense-management and working-capital initiatives and evaluate available financing sources. Certain financing sources are dependent on market and contractual conditions, including the Company’s stock price, trading volume, registration effectiveness and applicable issuance limitations. See Note 2, Summary of Significant Accounting Policies, for the Company’s liquidity and going-concern disclosures.
Current wording
As of September 30, 2026, the Company had cash and cash equivalents of $8,986 thousand and working capital surplus of $3,717 thousand. Management continues to implement expense-management and working-capital initiatives and evaluate available financing sources. Certain financing sources are dependent on market and contractual conditions, including the Company’s stock price, trading volume, registration effectiveness and applicable issuance limitations. See Note 2, Summary of Significant Accounting Policies, for the Company’s liquidity and going-concern disclosures.
Previous wording
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.
Current wording
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 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.
Previous wording
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 wording
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 subscribe to licenses for monthly or annual periods.
Previous wording
As of June 30, 2026, the Company had a working capital surplus of approximately $5,258 thousand and cash and cash equivalents of approximately $11,675 thousand. For the six months ended June 30, 2026, the Company incurred a net loss of approximately $12,623 thousand and used approximately $4,455 thousand of cash for operating activities.
Current wording
As of September 30, 2026, the Company had a working capital surplus of approximately $3,717 thousand and cash and cash equivalents of approximately $8,986 thousand. For the nine months ended September 30, 2026, the Company incurred a net loss of approximately $15,775 thousand and used approximately $7,091 thousand of cash for operating activities.
Previous wording
For the six months ended June 30, 2026 the non-cash loss was approximately $7,059 thousand and for the six months ended June 30, 2025 the non-cash income was approximately $65 thousand:
Current wording
For the nine months ended September 30, 2026 the non-cash expenses was approximately $8,347 thousand and for the nine months ended September 30, 2025 the non-cash expenses was approximately $956 thousand:
Previous wording
The net cash provided in the change in operating assets and liabilities were approximately $1,109 thousand, for the six months ended June 30, 2026 and net cash provided in the change in operating assets and liabilities were approximately $829 thousand for the six months ended June 30, 2025:
Current wording
The net cash provided in the change in operating assets and liabilities were approximately $337 thousand, for the nine months ended September 30, 2026 and net cash provided in the change in operating assets and liabilities were approximately $206 thousand for the nine months ended September 30, 2025:
Previous wording
Cash Flows from Investing Activities for the six months ended June** 30, 2026 and June **30, 2025
Current wording
Cash Flows from Investing Activities for the nine months ended September 30, 2026 and September 30, 2025
Previous wording
Net cash flows used in investing activities were $3,273 thousand for the six months ended June 30, 2026, compared to net cash flows used in investing activities of $16 thousand for the six months ended June 30, 2025. Investing activities during the six months ended June 30, 2026 related to purchase price allocation of new subsidiary, EngineRoom.
Current wording
Net cash flows used in investing activities were $3,302 thousand for the nine months ended September 30, 2026, compared to net cash flows used in investing activities of $21 thousand for the nine months ended September 30, 2025. The cash flows used in investing activities for the nine months ended September 30, 2026 primarily reflected cash paid for the acquisition of EngineRoom, net of cash acquired, of $3,217 thousand, and purchases of property and equipment and capitalized software of $85 thousand.
Previous wording
Cash Flows from Financing Activities for the six months ended June** 30, 2026 and June **30, 2025
Current wording
Cash Flows from Financing Activities for the nine months ended September 30, 2026 and September 30, 2025
Previous wording
Net cash flows provided by financing were approximately $8,308 thousand and $3,990 thousand during the six months ended June 30, 2026 and June 30, 2025, respectively. These cash inflows were primarily attributable to proceeds from debt and equity financings. Specifically, the first tranche of the issuance of convertible debt under the Securities Purchase Agreement (“SPA”) was issued on March 27, 2026, with a principal amount of $1,050 thousand, resulting in net proceeds to the Company of approximately $990 thousand, followed by the second tranche of the issuance of convertible debt under the SPA was issued in May 26, 2026, with a principal amount of $5,250 thousand, resulting in net proceeds of the Company of approximately $5,000 thousand. In addition, under its effective shelf registration statement on Form S-3, the Company commenced sales of its Class A common stock pursuant to an equity distribution agreement with Maxim Group LLC, acting as sales agent. During the period, the Company received net proceeds of approximately $2,464 thousand from the issuance of 7,995,651 shares of Class A common stock. The proceeds from these financing activities are intended to be used for general working capital and other general corporate purposes.
Current wording
Net cash flows provided by financing were approximately $8,308 thousand and $6,990 thousand during the nine months ended September 30, 2026 and September 30, 2025, respectively. These cash inflows were primarily attributable to proceeds from debt and equity financings. Specifically, the first tranche of the issuance of convertible debt under the Securities Purchase Agreement (“SPA”) was issued on March 27, 2026, with a principal amount of $1,050 thousand, resulting in net proceeds to the Company of approximately $990 thousand, followed by the second tranche of the issuance of convertible debt under the SPA was issued in May 26, 2026, with a principal amount of $5,250 thousand, resulting in net proceeds of the company of approximately $5,000 thousand. In addition, under its effective shelf registration statement on Form S-3, the Company commenced sales of its Class A common stock pursuant to an equity distribution agreement with Maxim Group LLC, acting as sales agent. During the period, the Company received net proceeds of approximately $2,464 thousand from the issuance of 159,913 shares of Class A common stock. The proceeds from these financing activities are intended to be used for general working capital and other general corporate purposes.
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 June 30, 2026, the present value of operating lease liabilities was approximately $428 thousand, consisting of $258 thousand classified as current and $170 thousand classified as noncurrent. Undiscounted lease payments due during the remainder of 2026 were $143 thousand.
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 September 30, 2026, the present value of operating lease liabilities was approximately $328 thousand, consisting of $208 thousand classified as current and $120 thousand classified as noncurrent. Undiscounted lease payments due during the remainder of 2026 were $58 thousand.
Previous wording
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies. There were no significant changes during the six months ended June 30, 2026 to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025, other than estimates arising from the EngineRoom acquisition, including the preliminary valuation of acquired assets and assumed liabilities, acquired intangible assets, goodwill, deferred taxes and the classification and measurement of the earn-out arrangement.
Current wording
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies. There were no significant changes during the nine months ended September 30, 2026 to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025, other than estimates arising from the EngineRoom acquisition, including the preliminary valuation of acquired assets and assumed liabilities, acquired intangible assets, goodwill, deferred taxes and the classification and measurement of the earn-out arrangement.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Comparison of the results of operations for the nine months ended September 30, 2026 and September 30, 2025
Current report — wording carried from elsewhere
The following table sets forth our results of operations. The following information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report.
Current report — wording carried from elsewhere
Management continues to implement expense-management and working-capital initiatives and evaluate available financing sources. Certain financing sources depend on market and contractual conditions, including the Company’s stock price, trading volume, continued effectiveness of applicable registration statements and compliance with contractual issuance limitations. Accordingly, the contractual capacity of these arrangements may differ from the amounts practically available to the Company. See Note 2, Summary of Significant Accounting Policies, for additional information concerning liquidity and management’s going-concern assessment.