Company: CXAI
Filing Date: 2025-04-07
Form Type: 10-K
Source: 0001829126-25-002438
Chunk: 1091

Company: CXApp Inc.
Filing Date: 2025-04-07
Form: 10-K
Item: Item 8
Chunk 1091
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 fair value of derivative liability.

The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability is de-recognized at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the de-recognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that governs the cashless conversion.

The following table shows the changes in fair value of the liabilities during the period ended December 31, 2024:

    Schedule of changes in fair value of the liabilities

    Warrant liability - January 1, 2024
     
    $
    1,683

    Change in FV of derivative instruments

    3,365

    Warrant liability – December 31, 2024
     
    $
    5,048

    Warrant liability - March 15, 2023
     
    $
    2,649

    Change in FV of derivative instruments

    4,714

    FV of Warrants exchanged for Class A common stock (see Note 10 - Warrants)

    (1,914
    ) 
  
    FV of Warrants exercised for Class A common stock (see Note 10 - Warrants)

    (766
    ) 
  
    Warrant liability - December 31, 2023
     
    $
    1,683

    F-17

The Company accounts for convertible debt under the fair value option election using Level 3 inputs. For the year ended December 31, 2024, and for the period from March 15, 2023 to December 31, 2023, the Company recognized an unrealized gain in the Consolidated Statements of Operations and Comprehensive Income (Loss) of $213 thousand and $0 thousand, respectively, which are presented as change in fair value of derivative liability. See additional details within Note 12, Convertible debt.

The significant inputs in the valuations models for each of the three issuances were as follows