Company: CXAI
Filing Date: 2025-05-09
Form Type: S-1
Source: 0001829126-25-003532
Chunk: 22

Company: CXApp Inc.
Filing Date: 2025-05-09
Form: S-1
Chunk 22
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 stock for the
Avondale Pre-Paid Purchase shares based on the original issue discount of $200,000.00 on the $4,200,000.00 initial principal amount of
the Avondale Purchase Shares pursuant to the Avondale Purchase Agreement.

Public securityholders may
not be able to experience the same positive rates of return on securities they purchase due to the low price at which certain Selling
Securityholders purchased shares of our common stock or our warrants.

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Risks Related to Dilution and our Financing Agreements

Issuances of our common stock to Avondale under the Avondale Purchase Agreement will cause significant dilution to our stockholders and could depress the market price of our stock.

Pursuant to the Avondale Purchase Agreement, we may issue a very large number of shares of our common stock to Avondale at a discount to the then-current market price (91% of the lowest VWAP over a 10-day period, subject to a floor). The 18,500,000 shares being registered for resale in connection with this arrangement would nearly equal the number of shares of our common stock outstanding as of March 2025. If we issue all or a substantial portion of these shares, it will significantly dilute the ownership interests of existing stockholders and could reduce our stock price. Avondale received 80,000 Commitment Shares at effectively no cash cost upon closing, and any additional shares it receives in exchange for the prepaid funding will be at a discounted price. All of these shares may be resold into the public market by Avondale (subject to volume and timing limitations to stay below 19.99% ownership at any time), potentially in large quantities and rapidly.

The resale of a substantial number of shares by Avondale within a short period, or the perception that such sales could occur, could exert significant downward pressure on the market price of our common stock. Investors should be aware that Avondale’s interests may not align with those of our long-term stockholders: Avondale may have an incentive to quickly sell the shares it acquires to lock in its profit on the discounted purchase price, which could accelerate price declines. This risk is in addition to the dilution effect of the issuance itself – as more shares enter the market, the percentage ownership of existing stockholders will drop, and the value of each individual share may decline due to the increased supply. These factors combined could make our stock less attractive to current