Company: CXAI
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001829126-25-006141
Chunk: 40

Company: CXApp Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 40
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192 shares of the company’s Class A Common stock to satisfy obligations due under the convertible debt.

In June 2025, the company issued total of 471,973 shares of the company’s Class A Common stock to satisfy obligations due under the convertible debt.

During six months ended June 30, 2025, the Company issued total of 2,109,652 shares of Class A Common Stock to satisfy obligations due under the promissory note and convertible debt. See Note 8, Promissory Note and Note 11, Convertible Debt, in the accompanying notes to the consolidated financial statements for further detail.

NOTE 13 – Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income
Taxes. The provision for income taxes is determined using the discrete method. This is because the Company has determined that it
is not able to reliably forecast its annual earnings which results in an inability to calculate its annual effective tax rate.

Under the discrete method, the Company is calculating
its income tax expense for the interim period based only on actual year-to-date results. This is an appropriate approach when the estimated
annual effective tax rate method would not provide a reliable estimate of the quarterly income tax provision.

The Company recorded an income tax expenses of approximately $1 thousand and provision of $159 thousand, for the three months ended June 30, 2025 and 2024 respectively, income tax expense of approximately $1 thousand and provision of $366 thousand for the six months ended June 30, 2025 and 2024, respectively.

The effective tax rate for three and six months ended June 30, 2025 and 2024 was (0.03%) and (0.02%), (2.94%) and (3.39%), respectively. The effective tax rate differs from the U.S. Federal statutory rate primarily due to recording a valuation allowance against deferred tax assets in the foreign jurisdictions and the significant permanent differences including impairment of goodwill and change in fair value of derivative warrant liabilities.

The Company continues to evaluate the realizability
of its deferred tax assets and has maintained a valuation allowance on its deferred tax assets as of June 30, 2025.

NOTE 14 – Credit Risk and Concentrations

Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash and cash equivalents. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited