Company: CXAI
Filing Date: 2025-03-07
Form Type: 424B3
Source: 0001829126-25-001566
Chunk: 14

Company: CXApp Inc.
Filing Date: 2025-03-07
Form: 424B3
Chunk 14
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 event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

The Company calculates the estimated fair value
of a reporting unit using weighting of the income and market approaches. For the income approach, the Company uses internally
developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and
related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and
estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables,
including public company method, guideline transaction method, and market price method.

The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro
general economic condition projections, and its expectations. Based on its assessments, the Company did not
incur any impairment charges for the three and nine months ended September 30, 2024 (Successor), for the three months ended September
30, 2023 (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). See Note 6 for impairment that occurred during the period ended December 31, 2023.

Leases and Right-of-Use Assets and Liabilities

The Company determines if an arrangement is a
lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease
payments over the lease term. The Company generally uses its incremental borrowing rate based on the information available at the lease
commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known.
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