CXApp Authorizes $1 Million Share Buyback and Restricts Avondale Purchases Under Trading Conditions
Key Facts
CXApp’s board authorized an optional program on October 21 to repurchase up to $1 million of common stock, alongside a 90-day standstill agreement with Avondale Capital on purchases tied to existing financing instruments. The authorization does not require the company to buy a set number of shares, making $1 million a cap on potential purchases rather than an amount already spent. CEO Khurram Sheikh said the authorization “reflects our confidence in CXAI’s long-term prospects,” linking the move to disciplined capital allocation. The agreement, however, does not cancel the financing instruments with Avondale; it restricts purchases for a set period and subject to price and trading-volume conditions. The announcement therefore pairs the company’s signal that it may return capital to shareholders with the possibility of additional share issuance if conversions resume later.
The buyback program has no set expiration date and will continue until the authorized amount is used or the board decides to amend, suspend or terminate it. Purchases may be made in the open market, through privately negotiated transactions or by other lawful means, at management’s discretion and depending on market conditions, financial position, liquidity and capital needs. The announcement therefore does not mean the company has begun buying shares or will use the full authorization. The timing and size of any purchases remain subject to decisions by management and the board. This optional authorization differs from the existing Avondale financing, which remains in effect under its governing documents.
The company and Avondale signed the standstill agreement on October 21. For 90 days, Avondale is barred from making purchases under the prepaid purchase instruments on any trading day unless the stock meets both conditions. The stock must trade at no less than 110% of the “minimum price” determined under Nasdaq Rule 5635(d), and trading volume must reach at least $250,000 on the same day. If both conditions are met, purchases may resume even while the standstill period remains in effect. The mechanism allows transactions conditioned on the stock’s performance and liquidity instead of an absolute ban throughout the period. It does not, however, terminate the prepaid purchase instruments or replace their underlying terms.
Dilution risks remain after the standstill period expires or is terminated, as Avondale may then resume purchases, potentially leading to the issuance of additional shares and reducing existing shareholders’ ownership percentages. The agreement also provides for immediate termination if the company breaches it or related transaction documents. It does not waive any existing breach, and the prepaid purchase instruments remain in effect. The quarterly report said the company issued about 7.67 million shares to Avondale after the end of the second quarter through conversions tied to Instrument No. 4. The broader agreement with Avondale dates to March 2025 and allows for the issuance of prepaid purchase instruments with an aggregate value of up to $20 million.
The authorization comes as CXApp seeks to move toward positive operating cash flow by the third quarter of 2027, a management target the company links to recurring revenue growth, cost reductions, improved efficiency and continued commercial execution. The company said it is implementing an efficiency initiative that uses AI-powered automation to streamline operations, improve external spending and increase operating leverage. It added that the plan also aims to continue investing in and deploying its AI platform and growing the business. Reaching the cash flow target remains dependent on executing these priorities, realizing cost savings and growing revenue, according to the company. The message thus combines a potential share buyback with an operating plan aimed at improving cash flows.
The company’s growth narrative is based in part on its acquisition of EngineRoom, which it said lifted its pro forma annual recurring revenue run rate to more than $12 million. It also cited announced agreements with global financial services institutions with a total contract value of more than $4 million, and the launch of Beat, a solution for automating enterprise workflows. Second-quarter 2026 results showed revenue of about $1.7 million, up 79% from $0.95 million in the first quarter and about 42% year over year. But the company’s 2025 revenue was $4.583 million, compared with $7.142 million in 2024. That year, it recorded a net loss of about $13.473 million and used about $10.381 million in operating activities, while cash and cash equivalents totaled $11.101 million at year-end.
In the first half of 2026, the company used about $4.455 million in cash for operating activities, according to its quarterly filing. The company has tied some funding sources to market conditions, the share price and trading volume, factors that intersect with the terms of the new standstill agreement. CXAI shares closed at $1.83 on October 23, after $1.86 in the previous session, according to EL7 data. The closing price also declined from $1.89 on October 19 to $1.83 on October 23. The moves followed the company’s announcement on October 22, while the next stated operating milestone is its target of positive cash flow in the third quarter of 2027.