NOTE 9 – Stock Option Plan and Stock-Based Compensation

2023 Equity Incentive Plan

At the special meeting held on March 10, 2023, stockholders approved, among other things, the Incentive Plan, which had previously been approved by the board of directors, subject to stockholder approval. The Incentive Plan became effective immediately upon the closing of the Business Combination. Pursuant to the terms of the Incentive Plan, there were 5,676,000 shares of CXApp Class A Common Stock available for issuance under the Incentive Plan, which is equal to 15% of the aggregate number of shares of CXApp common stock issued and outstanding immediately after the closing of the Business Combination (giving effect to the redemptions).

Employee Stock Options

To calculate the stock-based compensation resulting from the issuance of options, the Company uses the Black-Scholes option pricing model, which is affected by the Company’s fair value of its stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

On April 4, 2025, the Board approved the award of 350,000 options to purchase common stock pursuant to the 2023 Equity Incentive plan to Khurram Sheikh, the Chief Executive Officer of the company and Joy Mbanugo, the Chief Financial Officer of the company. The options have an exercise price of $1.00 per share and expire on May 23, 2035. The stock options were valued using the Black-Scholes option valuation model and the fair value of the awards granted was determined to be $0.56 per option on the grant date. The fair value of the common stock as of the grant date utilized in the Black-Scholes options valuation model was $1.00 per share.

For the three months ended March 31, 2026, there were no stock options granted, exercised or forfeited.

See below for a summary of the stock options granted under the Incentive Plan for the three months ended March 31, 2026 and year ended December 31, 2025:

Non-cash stock-based compensation expenses related to stock option were recorded in the condensed consolidated financial statements as summarized below:

As of March 31, 2026, the remaining unrecognized stock compensation expense totaled approximately $560 thousand. This amount will be recognized as an expense over the weighted average remaining term of 1.83 years.

The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. For the three months ended March 31, 2026 and March 31, 2025, there were no grants issued.

Restricted Stock Units

The grant date fair value for Restricted Stock Units (‘RSU’) are valued using the closing price of the Company’s common stock on the date of grant.

On May 23, 2025, a total of 1,000,000 restricted stock units of the Company’s common stock were granted to directors of the Company under the 2023 Equity Incentive Plan.

The fair value of the common stock as of the various grant dates was determined to be $1 to $11.80 per restricted stock unit, for a weighted average fair value of $1.33 per restricted stock unit. There was no other activity related to restricted stock units for the three months ended March 31, 2026 and March 31, 2025.

The following summarizes our RSUs transaction activity for the three months ended March 31, 2026 and year ended December 31, 2025:

The total fair value of RSUs vested during the three months ended March 31, 2026 and year ended December 31, 2025 was $15 thousand and $2,226 thousand, respectively.

Non-cash stock-based compensation expenses related to restricted stock units recorded in the condensed consolidated financial statements is summarized below:

As of March 31, 2026 and March 31, 2025, the Company has approximately $234 thousand and $656 thousand of unrecognized restricted stock unit compensation to be expensed over a weighted average period of 0.24 years and 0.78 years, respectively.