Business Combination |
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| Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination | NOTE 12 - Business Combination
Acquisition of EngineRoom
On June 3, 2026, CXAI Australia Pty Ltd, a wholly owned subsidiary of CXApp Inc., completed the acquisition of 100% of the outstanding equity interests of Virtus Digital Marketing Pty Ltd, doing business as EngineRoom, pursuant to a Share Sale Deed entered into among CXAI Australia Pty Ltd, CXApp Inc., the sellers identified therein and the founder guarantors. As a result of the acquisition, EngineRoom became an indirect wholly owned subsidiary of the Company.
EngineRoom is an Australia-based growth marketing solutions provider that provides managed advertising and growth marketing advisory services, including performance marketing, search engine optimization, customer engagement, network development, website development and advisory services. The Company completed the acquisition to expand its service offerings and incorporate EngineRoom’s workforce, customer relationships, proprietary software and other intellectual property into the Company’s operations. EngineRoom’s results of operations have been included in the Company’s unaudited condensed consolidated financial statements from June 3, 2026, the acquisition date.
The acquisition has been accounted for as a business combination in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the acquisition. These preliminary values are subject to adjustment as the Company completes its review of the assumptions and estimates used in the purchase-price allocation.
The purchase price under the Share Sale Deed includes a cash completion payment, amounts deposited into escrow and a promissory note. The completion payment is subject to adjustment based on the final acquisition-date working capital, cash and debt amounts determined in accordance with the Share Sale Deed.
Prior to the acquisition, EngineRoom had an unsecured loan receivable of $606 thousand from Adam John Laurie, a director and majority shareholder of EngineRoom. The loan was non-interest-bearing, had no fixed maturity date, and was repayable on demand. Accordingly, no interest income was recognized.
In connection with the acquisition on June 3, 2026, CXAI Australia Pty Ltd issued a $606 thousand promissory note to Adam John Laurie, which was immediately endorsed and delivered to EngineRoom. This fully settled and terminated the related-party loan and replaced EngineRoom’s receivable from Adam John Laurie with a receivable from the buyer. The replacement receivable was included in the net assets acquired and eliminated against the corresponding intercompany obligation in consolidation. Accordingly, no related-party loan or related intercompany balance remained in the consolidated balance sheet as of June 30, 2026.
Earn-Out Arrangement
The Share Sale Deed also provides for potential earn-out payments based on EngineRoom’s achievement of specified revenue targets for the periods ending June 30, 2027 and June 30, 2028. Payment of the earn-out is subject to a continuing-employment condition relating to a key employee. Based on the terms of the arrangement, the Company has preliminarily concluded that the earn-out represents post-combination compensation rather than consideration transferred in the business combination.
Accordingly, the earn-out has been excluded from the preliminary purchase consideration and will be recognized as compensation expense over the applicable service period, subject to reassessment at each reporting date.
The Company has made a provisional allocation of the purchase consideration to the assets acquired and liabilities assumed as of the acquisition date. The following table summarizes the preliminary purchase-price allocation relating to the acquisition:
The preliminary fair values and useful lives of the identifiable intangible assets are being determined with the assistance of a third-party valuation specialist based on projections and financial information provided by management. The valuation of identifiable intangible assets, deferred income taxes and other acquisition-date fair-value adjustments had not been finalized as of the date of these unaudited condensed consolidated financial statements. Goodwill represents the excess of the preliminary purchase consideration over the preliminary fair value of the identifiable net assets acquired. The goodwill is expected to reflect the value of EngineRoom’s assembled workforce, expected operational benefits and the benefits arising from integrating EngineRoom’s managed advertising and growth marketing advisory capabilities with the Company’s existing operations.
Escrow Arrangement
At closing, $464 thousand was deposited into an escrow account to secure certain seller indemnification obligations under the Share Sale Deed. Subject to any properly asserted claims, 50% of the escrow amount is scheduled for release approximately six months following completion and the remaining 50% approximately twelve months following completion. Amounts paid to the Company from the escrow account in settlement of qualifying claims will be accounted for based on the nature of the related claim.
Acquisition-Related Costs
The Company incurred acquisition-related costs of approximately $208 thousand during the three months ended June 30, 2026. These costs were expensed as incurred and are included in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.
Measurement Period
The preliminary purchase-price allocation is based on initial estimates and provisional amounts. In accordance with ASC 805, when the initial accounting for a business combination is incomplete at the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete.
During the measurement period, the Company will adjust the provisional amounts recognized as of the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that, if known, would have affected the measurement of the amounts initially recognized.
The Company continues to refine the inputs and estimates relating to the valuation of identifiable intangible assets, property and equipment, lease-related assets and liabilities, deferred income taxes, the realizability of acquired assets, the completeness of assumed liabilities and the final working-capital, cash and debt adjustments under the Share Sale Deed.
Any resulting measurement-period adjustments will be recognized during the period in which the adjustments are determined and reflected as if the accounting had been completed as of the acquisition date. The Company expects to complete the purchase-price allocation within the measurement period permitted under U.S. GAAP.
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