Business Context and Reporting Period
This Form 8-K, filed on September 25, 2022, by Inpixon (a Nevada corporation), reports the entry into a material agreement to spin off its Enterprise Apps Business and merge it with KINS Technology Group Inc. (KINS), a Special Purpose Acquisition Company (SPAC). The transaction involves the separation of Inpixon's workplace experience, indoor mapping, events platform, and augmented reality solutions into a new subsidiary, CXApp Holding Corp., followed by a merger with KINS.
Key Financial Metrics and Transaction Terms
- Transaction Value: The Enterprise Apps Business is valued at $69 million in KINS capital stock.
- Consideration: Inpixon shareholders will receive an aggregate of 6.9 million shares of KINS Common Stock. The allocation is 10% KINS Class A Common Stock and 90% KINS Class C Common Stock (subject to transfer restrictions and automatic conversion triggers).
- Cash Contribution: Inpixon will contribute $10 million in cash to the new subsidiary, CXApp, prior to the distribution.
- Minimum Cash Requirement: Closing is conditioned on KINS having at least $9.5 million in aggregate cash available (including trust account funds, purchase of shares, and other financing) after redemptions.
- Net Tangible Assets: KINS must have at least $5,000,001 of net tangible assets as of the Closing.
- Termination Fee: A $2.0 million fee is payable if the agreement is terminated due to uncured breaches or failure to obtain requisite stockholder approvals under specific conditions.
Material Changes and Transaction Structure
The filing details a three-step transaction structure intended to qualify as tax-free:
- Reorganization: Inpixon transfers the Enterprise Apps Business and related subsidiaries (including Design Reactor) to its wholly-owned subsidiary, CXApp.
- Distribution: Inpixon distributes 100% of CXApp Common Stock to its existing stockholders.
- Merger: A KINS subsidiary merges with CXApp, making CXApp a wholly-owned subsidiary of KINS.
Post-transaction, KINS will have two classes of common stock. Class C shares will convert to Class A shares on the earlier of 180 days post-closing or when the Class A share price exceeds $12.00 for 20 trading days within a 30-day period.
Guidance, Risks, and Conditions
Conditions to Closing: The transaction is subject to customary SPAC conditions, including stockholder approvals from both KINS and CXApp, Nasdaq listing approval for the new shares, effectiveness of the SEC registration statement (Form S-4), and the absence of a "Material Adverse Effect" on CXApp.
Termination Rights: The agreement may be terminated if the closing does not occur by March 16, 2023, or if governmental orders prohibit the merger.
Risks and Uncertainties: Management highlights risks including the potential failure to complete the transaction, inability to obtain stockholder approval, volatility in security prices, and the impact of general economic conditions (including the pandemic and geopolitical conflicts). The filing explicitly states that forward-looking statements are not guarantees of future performance.
Management Commentary: The filing does not provide specific operational guidance or financial projections for the combined entity beyond the transaction mechanics. It directs investors to the upcoming Form S-4 and proxy statement for detailed information.
Investor Verification Checklist
- Verify the final redemption rate of KINS shareholders to ensure the $9.5 million minimum cash condition is met.
- Confirm the approval of the transaction by both KINS and CXApp stockholders.
- Review the upcoming Form S-4 and proxy statement for detailed risk factors and financial data not included in this 8-K.
- Monitor the Nasdaq listing approval status for the KINS Class A Common Stock.
- Check for any regulatory orders or legal challenges that could trigger the termination of the Merger Agreement.