Company: CXAI
Filing Date: 2025-03-07
Form Type: 424B3
Source: 0001829126-25-001566
Chunk: 22

Company: CXApp Inc.
Filing Date: 2025-03-07
Form: 424B3
Chunk 22
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 the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award.

The grant date fair value of options is
estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for
awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions
were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield
is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the
foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the
time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates.

Derivative Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability.

For issued or modified warrants that meet all
the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time
of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to