Business Context and Reporting Period
Filing: Form 8-K filed by KINS Technology Group Inc. (KINS), dated September 25, 2022 and signed September 26, 2022. The filing reports entry into a definitive agreement to combine KINS with CXApp Holding Corp., Inpixon’s enterprise apps business.
The transaction involves Inpixon transferring its enterprise apps business—including workplace experience technologies, indoor mapping, events, augmented reality and related solutions—to CXApp, distributing CXApp shares to Inpixon stockholders and other security holders, and then merging CXApp with a KINS subsidiary. CXApp would survive as a wholly owned subsidiary of KINS.
Key Financial and Transaction Metrics
- Inpixon is required to contribute $10 million of capital to CXApp as part of the separation.
- At closing, CXApp’s outstanding shares are expected to convert into an aggregate of approximately 6.9 million shares of KINS common stock, subject to adjustment.
- Merger consideration is expected to comprise approximately 10% Class A common stock and 90% Class C common stock, subject to adjustment for Nasdaq requirements.
- KINS must have at least $5,000,001 of net tangible assets at closing.
- Available cash and qualifying financing proceeds, after redemptions and before transaction expenses, must be at least $9.5 million.
- The Sponsor agreed to exchange 6.15 million shares of KINS Class B common stock, with the number of shares issued to the Sponsor in the exchange not falling below 5.15 million KINS Class A shares.
- The filing does not provide revenue, profit, operating cash flow, margins, debt, cash balances, liquidity ratios or comparable-period financial results for CXApp or KINS.
Material Changes Versus the Prior Comparable Period
The filing is transaction-related and does not present historical or comparative operating results. The material change is the signing of the proposed business combination and related separation, distribution and sponsor support agreements.
Following closing, KINS is expected to have Class A and Class C common stock. Class C shares will be transfer-restricted and automatically convert into Class A shares on the earlier of 180 days after closing or the achievement of a $12.00 Class A share-price condition over the specified trading period.
Guidance, Outlook, Risks and Unusual Items
- No formal financial guidance is provided. Forward-looking statements address the expected timing and benefits of the transaction, anticipated proceeds, CXApp’s future operations, market acceptance, addressable markets and potential customer payments.
- Closing remains subject to customary conditions, including regulatory and stockholder approvals, an effective SEC registration statement, Nasdaq listing approval, completion of the separation and distribution, compliance with representations and covenants, and satisfaction of the minimum asset and funding thresholds.
- The merger agreement may be terminated if closing has not occurred by March 16, 2023, among other customary termination events. Certain specified terminations may require a $2.0 million termination fee.
- The Sponsor agreed to vote its KINS securities in favor of the transaction and not seek redemption of those securities. Lock-up provisions generally extend until the earlier of 180 days after closing or specified transaction or share-price events, with an exception for 10% of the applicable shares.
- Key risks include failure to obtain approvals, insufficient cash after redemptions, inability to satisfy Nasdaq listing standards, failure to realize expected transaction benefits, litigation, transaction costs, market volatility, changes in economic conditions, and failure to implement CXApp’s strategy.
- The parties intend the separation, distribution and merger to qualify as tax-free transactions, but the filing does not guarantee the intended tax treatment.
Important Facts for Investors to Verify
- Whether the SEC registration statements and proxy or information materials are filed and declared effective.
- Whether KINS and CXApp stockholders approve the transaction and whether Nasdaq approves the post-closing listing.
- The actual amount remaining in KINS’s trust account after redemptions and transaction expenses, and whether the $9.5 million minimum funding condition is satisfied.
- The final share count, allocation between Class A and Class C shares, Sponsor exchange terms and dilution at closing.
- Whether the separation, distribution and merger close by the March 16, 2023 termination deadline.
- CXApp’s historical and projected revenue, profitability, cash requirements, debt and customer concentration, which are not provided in this 8-K.