Company: CXAI
Filing Date: 2025-05-09
Form Type: S-1
Source: 0001829126-25-003532
Chunk: 24

Company: CXApp Inc.
Filing Date: 2025-05-09
Form: S-1
Chunk 24
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 be able to utilize the Avondale Purchase Agreement to its full $20 million capacity. In sum, investors should not assume that the entire $20 million will be available to us – our access to the remaining ~$15.8 million beyond the initial $4.2 million draw is contingent on meeting these regulatory and market conditions. If we fail to meet the conditions or obtain stockholder approval, we would need to seek alternative financing to support our operations and growth. Such alternative financing might not be available when needed, or could be available only on terms that further dilute our stockholders or restrict our business (for instance, debt financing with onerous terms). If we are unable to secure replacement funding, our business, financial condition, and results of operations could be adversely affected.

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The Avondale Purchase Agreement could lead to significant sales of our stock by Avondale, and the perceived risk of these sales may cause our stock price to be volatile or decline.

Once the registration statement covering Avondale’s resale of shares is effective, Avondale will have the ability to periodically convert the prepaid balance into shares and sell those shares on the open market. This arrangement is sometimes referred to as an “equity line” or “dilutive financing” and can result in an overhang on the market. Market participants aware of Avondale’s rights may anticipate that Avondale will continuously sell shares (especially during periods of higher trading volume or price spikes) to realize its gain on the discounted purchase price. This anticipation alone can create a negative feedback loop on our share price – buyers may be hesitant to purchase shares knowing that any uptick could be met with selling pressure from Avondale. Additionally, Avondale’s ability to convert at 91% of market price means it can still profit from its shares even if our stock price is falling, which could encourage sales in a declining market. All of these dynamics could make our stock price highly volatile and could result in our stock trading at prices below what it might otherwise trade at absent the Avondale arrangement. The extent of this impact will depend on a variety of factors, including the actual number of shares issued to Avondale, the timing and speed at which Avondale sells shares, and the overall market demand for our stock. We cannot predict with certainty the effect that sales by Avondale may have on the market price of our common stock, but investors should be prepared for the possibility of significant volatility and declines, especially