Company: CXAI
Filing Date: 2025-05-09
Form Type: S-1
Source: 0001829126-25-003532
Chunk: 23

Company: CXApp Inc.
Filing Date: 2025-05-09
Form: S-1
Chunk 23
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 and potential investors, and it may be difficult for our stock price to appreciate even if our business fundamentals improve.

Our ability to access the full $20 million committed by Avondale is subject to stockholder approval and other conditions; if we cannot satisfy these conditions, we may never receive the remaining funds, or we may be required to repay the Avondale Pre-Paid Purchases in cash.

The Avondale Purchase Agreement includes certain important limitations. Notably, under Nasdaq Listing Rule 5635(d), we are not permitted to issue more than 19.99% of our outstanding common stock (approximately 3.9 million shares based on shares outstanding as of March 2025) to Avondale unless and until we obtain stockholder approval. This means that without stockholder approval, we cannot draw the full $20 million commitment in the form of shares – our issuances would be capped at the Exchange Cap, after which any additional funding from Avondale would have to be provided in cash or not at all. We have agreed to seek stockholder approval by May 31, 2025 for the issuance of shares beyond the Exchange Cap. However, there is no assurance that our stockholders will approve such a proposal. If stockholder approval is not obtained at our annual meeting (or any adjournment thereof), we will be unable to issue shares above the cap. In that scenario, any outstanding prepaid amount that exceeds the value of the shares we are permitted to issue would become payable in cash.

For example, if we had drawn additional Avondale Pre-Paid Purchases and reached the Exchange Cap limit, we could owe Avondale the remaining balance in cash if approval is not obtained. A requirement to pay a large sum in cash (potentially several millions of dollars) on short notice could severely strain our liquidity, especially if we have used the initial funding for operations. We may not have sufficient cash on hand or available resources to meet such a repayment obligation, which could force us to seek emergency financing or other arrangements on unfavorable terms. Moreover, even aside from the Exchange Cap, the Avondale Purchase Agreement requires that certain conditions be met for each additional draw, such as minimum trading volumes for our stock and the continued listing of our stock on Nasdaq.

If our stock becomes very thinly traded or if we were to lose our Nasdaq listing (for example, due to falling below listing standards), Avondale would not be obligated to provide additional funding. Therefore, there is a risk that we may not