Item 8.01 Other Events.
Risks Related to the Business Combination
There are a number of significant risks related to the Business Combination,
including the risk factors enumerated below.
The Merger (as defined in the Merger Agreement) is subject to the satisfaction
of certain conditions, which may not be satisfied on a timely basis, if at all.
The consummation of the Merger is subject to customary closing conditions for
transactions involving special purpose acquisition companies, including, among
others:
? there is not in force any order, judgment, injunction, decree, writ,
stipulation, determination or award, in each case, entered by or with any
governmental authority of competent jurisdiction, statute, rule or regulation
enjoining or prohibiting the consummation of the Merger;
? KINS shall have at least $5,000,001 of net tangible assets as of the closing;
? the KINS Class A common stock issuable pursuant to the Business Combination
shall have been approved for listing on the Nasdaq Capital Market;
? CXApp and KINS shall each have performed and complied in all material respects
with the covenants required by the Merger Agreement to be performed by it as of
or prior to closing;
? customary bring down conditions related to the accuracy of the CXApp's and
KINS's respective representations and warranties in the Merger Agreement;
? the consummation of the Separation and other transactions contemplated by the
Separation Agreement;
? KINS's registration statement to be filed with the Securities and Exchange
Commission ("SEC") shall have become effective (and no stop order suspending
effectiveness have been issued and no proceedings for that purpose has been
initiated or threatened by the SEC);
? each of KINS's and CXApp's stockholder approvals shall have been obtained; and
? the sum of (A) the aggregate amount of cash available in KINS's trust account
following KINS's stockholders' meeting, after deducting the amount required to
satisfy the Acquiror Share Redemption Amount (as defined in the Merger
Agreement) (but prior to payment of any transaction expenses), (B) the
aggregate gross purchase price of any other purchase of shares of KINS common
stock (or securities convertible or exchangeable for KINS common stock)
actually received by KINS prior to or substantially concurrently with the
closing of the Merger, and (C) the aggregate gross purchase price of any other
purchase of shares of CXApp common stock (or securities convertible or
exchangeable for CXApp common stock) actually received by CXApp prior to or
substantially concurrently with the closing of the Merger, shall be equal to or
greater than $9.5 million.
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Additionally, KINS's obligation to consummate the Business Combination is also
conditioned on there having been no event that has had, or would reasonably be
expected to have, individually or in the aggregate, a "Material Adverse Effect"
on CXApp.
There can be no assurance that such closing conditions will be satisfied or
waived, or that the Merger will be consummated. Further, Inpixon cannot assure
you that the approval of KINS' stockholders will be obtained. Inpixon, CXApp and
KINS may be subject to shareholder lawsuits, or other actions filed in
connection with or in opposition to the Merger, which could prevent or delay the
consummation of the Merger.
If the Distribution (as defined in the Separation Agreement), together with
certain related transactions, fails to qualify as a reorganization under
Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended
(the "Code"), or the Merger fails to qualify as a reorganization under Section
368(a) of the Code, Inpixon and its stockholders could incur significant tax
liabilities, and KINS and CXApp could be required to indemnify Inpixon for taxes
that could be material, pursuant to indemnification obligations under the Tax
Matters Agreement.
Although the Distribution and Merger are not conditioned on its receipt, Inpixon
expects to receive a tax opinion, which will provide that the Contribution (as
defined in the Separation Agreement) and Distribution, taken together, will
qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code. The
tax opinion will be based on, among other things, certain facts, assumptions,
representations and undertakings from Inpixon, CXApp and KINS, including those
regarding the past and future conduct of the companies' respective businesses
and other matters. If any of these facts, assumptions, representations, or
undertakings are incorrect or not satisfied, Inpixon may not be able to rely on
such opinion. Moreover, even if Inpixon receives the opinion, such opinion will
not be binding on the IRS or the courts, and no assurance can be given that the
IRS will not challenge its conclusions or otherwise determine on audit that the
Distribution or Merger does not qualify for its respective intended tax
treatment, including as a result of a change in stock or asset ownership of
Inpixon, CXApp or KINS after the Distribution.
If the Distribution does not qualify under Section 355 of the Code, the
Distribution would be treated as a taxable dividend to Inpixon securityholders
equal to the fair market value of the CXApp stock to the extent of Inpixon's
earnings and profits. If the dividend exceeds such earnings and profits, the
amount of such excess will be treated as a return of capital to the extent of an
Inpixon Stockholder's basis in its Inpixon stock, and then a capital gain. To
the extent that the Merger does not qualify as a reorganization under Section
368(a) of the Code, Inpixon securityholders would recognize taxable income equal
to the difference between the fair market value of the KINS shares received and
their tax basis in the CXApp Shares. In either such case, Inpixon
securityholders that are subject to U.S. federal income tax could incur
significant U.S. federal income tax liabilities.
In addition, if the Contribution and Distribution, taken together, do not
qualify under Section 355 and 368(a)(1)(D) of the Code, Inpixon would recognize
taxable income on the Distribution equal to the difference between the fair
market value of the CXApp shares distributed by Inpixon to the Inpixon
securityholders and Inpixon's basis in such shares. Inpixon does not anticipate
that it would have net operating losses to offset any taxable income triggered
as a result of failure to qualify under Section 355 and 368(a)(1)(D) of the Code
because its net operating losses will be limited by Section 382 of the Code.
Even if the Contribution and Distribution, taken together, otherwise qualify as
a transaction described in Sections 355 and 368(a)(1)(D) of the Code, the
Distribution would be taxable to Inpixon (but not to Inpixon securityholders)
pursuant to Section 355(e) of the Code if one or more persons acquire a 50% or
greater interest (measured by vote or value) in the stock of Inpixon or CXApp,
directly or indirectly (including through acquisitions of the stock of the
combined company after the Merger), as part of a plan or series of related
transactions that includes the Distribution. Pursuant to the tax matters
agreement to be entered into prior to the Separation, Inpixon will bear the
responsibility for this tax if such tax relates to or arises out of the failure
of the intended tax treatment or to certain actions taken by Inpixon. If,
however, such tax is attributable to certain actions or omissions by KINS or
CXApp, inaccuracies, misrepresentations or misstatements relating to KINS or
CXApp, or certain events involving the stock of KINS or CXApp or assets of CXApp
post-Distribution, KINS and CXApp will be obligated to indemnify Inpixon for
such taxes. Further, even if KINS and CXApp are not responsible for tax
liabilities of Inpixon under the tax matters agreement, CXApp nonetheless could
be liable under applicable U.S. federal tax law for such liabilities if Inpixon
were to fail to pay them.
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The anticipated benefits of the Business Combination may not be achieved.
Inpixon may not be able to achieve the full strategic and financial benefits
expected to result from the Business Combination, including the potential that
the Business Combination will:
? allow each business to pursue its own operational and strategic
priorities and more quickly respond to trends, developments and
opportunities in its respective markets;
? increase the potential value for Inpixon securityholders to receive
shares of the combined company post-Merger based on a pre-transaction
equity value of CXApp of $69.0 million, which was greater than the
market capitalization of Inpixon as of the date of the Merger
Agreement;
? create two separate and distinct management teams focused on each business's
unique strategic priorities, target markets and corporate development
opportunities;
? give each business opportunity and flexibility by pursuing its own investment,
capital allocation and growth strategies consistent with its long-term
objectives;
? allow investors to separately value each business based on the unique merits,
performance and future prospects of each business, providing investors with two
distinct investment opportunities;
? enhance the ability of each business to attract and retain qualified management
and to better align incentive-based compensation with the performance of each
separate business; and
? give each of CXApp and Inpixon its own equity currency for use in connection
with acquisitions.
Inpixon may not achieve the anticipated benefits of the Business Combination for
a variety of reasons.
Further, such benefits, if ultimately achieved, may be delayed. In addition, the
Business Combination could materially and adversely affect Inpixon's business,
financial condition and results of operations.
The Separation and Distribution may expose Inpixon to potential liabilities
arising out of legal dividend requirements.
The Distribution of CXApp common stock is subject to review under state
corporate distribution statutes. Under the Nevada Revised Statutes ("NRS"), no
distribution (including dividends on, or redemption or repurchases of, shares of
capital stock) may be made if, after giving effect to such distribution, the
corporation would not be able to pay its debts as they become due in the usual
course of business, or the corporation's total assets would be less than the sum
of its total liabilities plus the amount that would be needed at the time of a
liquidation to satisfy the preferential rights of preferred stockholders.
Although Inpixon intends to make the Distribution of CXApp common stock in
compliance with the NRS, Inpixon cannot assure you that a court will not later
determine that some or all of the Distribution to Inpixon securityholders was
unlawful.
Important Information and Where to Find It
In connection with the Business Combination and the distribution of CXApp common
stock to Inpixon securityholders, CXApp will file with the SEC a registration
statement on Form S-1 (the "Form S-1") registering shares of CXApp common stock
and KINS will file with the SEC a registration statement on Form S-4 (the
"Form S-4") registering shares of KINS common stock, warrants and certain equity
awards. The Form S-4 to be filed by KINS will include a proxy
statement/prospectus in connection with the KINS stockholder vote required in
connection with the Business Combination. This communication does not contain
all the information that should be considered concerning the Business
Combination. The Form S-1 to be filed by CXApp will include the Form S-4 filed
by KINS, which will serve as an information statement/prospectus in connection
with the spin-off of CXApp. This communication is not a substitute for the
registration statements that CXApp and KINS will file with the SEC or any other
documents that KINS or CXApp may file with the SEC, or that KINS, Inpixon or
CXApp may send to stockholders in connection with the Business Combination. It
is not intended to form the basis of any investment decision or any other
decision in respect to the Business Combination. KINS's stockholders and
Inpixon's stockholders and other interested persons are advised to read, when
available, the preliminary and definitive registration statements, and documents
incorporated by reference therein, as these materials will contain important
information about KINS, CXApp and the Business Combination. The proxy
statement/prospectus contained in KINS's registration statement will be mailed
to KINS's stockholders as of a record date to be established for voting on the
Business Combination.
The registration statements, proxy statement/prospectus and other documents
(when they are available) will also be available free of charge, at the SEC's
website at www.sec.gov, or by directing a request to: KINS Technology Group,
Inc., Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, CA
94306.
Participants in the Solicitation
Inpixon, KINS and CXApp, and each of their respective directors, executive
officers and other members of their management and employees may be deemed to be
participants in the solicitation of proxies from KINS's stockholders in
connection with the Business Combination. Stockholders are urged to carefully
read the proxy statement/prospectus regarding the Business Combination when it
becomes available, because it will contain important information. Information
regarding the persons who may, under the rules of the SEC, be deemed
participants in the solicitation of KINS's stockholders in connection with the
Business Combination will be set forth in the registration statement when it is
filed with the SEC. Information about KINS's executive officers and directors
and CXApp's management and directors also will be set forth in the registration
statement relating to the Business Combination when it becomes available.
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No Solicitation or Offer
This communication shall neither constitute an offer to sell nor the
solicitation of an offer to buy any securities, or the solicitation of any
proxy, vote, consent or approval in any jurisdiction in connection with the
Business Combination, nor shall there be any sale of securities in any
. . .
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
Unaudited pro forma condensed consolidated balance sheet of Inpixon and
Subsidiaries as of June 30, 2022 and the unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 2021 and
the six months ended June 30, 2022 are attached hereto as Exhibit 99.1 and
incorporated herein by reference. These unaudited pro forma financial statements
give effect to the Separation on the basis, and subject to the assumptions, set
forth in accordance with Article 11 of Regulation S-X.
(d) Exhibits.
The following exhibits are included with this Current Report on Form 8-K:
Exhibit No. Description
99.1 Unaudited pro forma condensed consolidated balance sheet of Inpixon
and Subsidiaries as of June 302022 and unaudited pro forma condensed
consolidated statements of operations for the year ended December 31,
2021 and the six months ended June 30, 2022.
Cover Page Interactive Data File (embedded within the Inline XBRL
104 document).
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