Company: CXAI
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001829126-25-009077
Chunk: 12

Company: CXApp Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 12
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.S. dollar. The aggregate foreign
currency net transaction gain was approximately $98
thousand, and loss of $204
thousand, for the three and nine months ended September 30, 2025 and net loss of $42
thousand and net gain of $34
thousand for the three and nine months ended September 30, 2024, respectively.

    10

Convertible Debt

The
Company issued convertible debt in the form of Pre-Paid Purchases during December 2024 and March 2025 (Settlement date April 2025)
and evaluated such instruments to determine whether they contain features that qualify as embedded derivatives in accordance with
ASC 815 “Derivatives and Hedging” (“ASC 815”). Embedded derivatives must be separately measured from the
host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of
embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance
of the convertible debt, the Company elected the fair value option under ASC 825 “Financial Instruments” (“ASC
825”). Under the fair value option election, the convertible debt is initially measured at its issuance date estimated fair
value and subsequently remeasured at estimated fair value on a recurring basis. The estimated fair value adjustment is presented
within change in fair value of derivative liability in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company classifies its convertible debt that are being valued under the fair value option election as Level 3 due to the lack of
relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios that can impact
settlement of the arrangement. The Company recognized a net gain on changes in the estimated fair value of the convertible debt of
approximately $887 thousand
and $387 thousand
for the three and nine months ended September 30, 2025, respectively, and loss of $67 thousand
and $17 thousand for the three and nine months ended September 30, 2024.

Debt Issuance Costs

Under the fair value option election, costs directly associated with the borrowing are expensed as incurred.

Note
                                            Conversion

Convertible notes that are exchanged for equity
pursuant to their original contractual terms are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options.
Upon conversion, the carrying amount of the convertible debt is reclassified to equity. No gain or