Filing summary
Issuer discrepancy: The request identifies Cxapp Inc., but the supplied Form 10-Q is for KINS Technology Group Inc., a special purpose acquisition company (SPAC). This summary covers KINS Technology Group, not Cxapp Inc.
Business context and reporting period
Unaudited quarterly report for the three and nine months ended September 30, 2021, filed November 15, 2021. KINS was formed to pursue a business combination and had not commenced operating activities or generated operating revenue. Its reported activity primarily reflects public-company and transaction-search costs, trust-account interest, and warrant remeasurement.
Key financial metrics
| Metric | Three months ended September 30, 2021 | Nine months ended September 30, 2021 |
|---|---|---|
| Operating revenue | $0 | $0 |
| Operating and formation costs | $346,362 | $1,070,671 |
| Operating loss | $346,362 | $1,070,671 |
| Net income | $4,235,886 | $5,251,355 |
| Basic and diluted earnings per share, Class A and Class B | $0.12 | $0.15 |
| Operating cash flow | Not separately provided for the quarter | $(514,969) |
Net income chiefly reflected noncash gains from a decrease in warrant fair value: $4,575,200 for the quarter and $6,260,800 year to date. Trust-account interest was $7,029 and $61,163, respectively. The filing reports no operating revenue, so operating margins are not meaningful.
At September 30, 2021, cash outside the trust was $486,478; working capital was $192,774; and trust-account cash and investments were $278,828,948. Total assets were $279,540,510, total liabilities were $25,830,788, and stockholders’ deficit was $25,050,278. Liabilities included a $15,652,000 derivative warrant liability and $9,660,000 deferred underwriting fee payable. The filing reports no long-term debt and no outstanding working-capital loans.
Material changes and unusual items
- For the comparable 2020 period from inception through September 30, the company reported a $1,000 net loss and no revenue. The filing does not provide a directly comparable 2020 third-quarter operating period.
- The company revised its presentation of all redeemable Class A shares as temporary equity and revised earnings-per-share allocation between Class A and Class B. It stated the revision did not change total assets, liabilities, or operating results; historical figures are recast prospectively in current and future filings rather than through amendment of prior filings.
- Warrant fair-value changes materially affected reported earnings. These gains are noncash, and warrant liabilities remain subject to recurring fair-value measurement.
- The company reported that a previously identified material weakness in internal control was remediated by June 30, 2021. Management concluded disclosure controls were effective as of September 30, 2021.
Outlook, liquidity, and risks
KINS intended to use substantially all trust funds toward a business combination and expected to continue incurring search and public-company costs. It had until June 17, 2022 to complete a combination, subject to any extension. Failure to complete one by the deadline would require liquidation and redemption of public shares; warrants would expire worthless. Management said the limited outside-trust liquidity and mandatory liquidation deadline raise substantial doubt about the company’s ability to continue as a going concern. Additional sponsor or other financing was possible but not committed, and the company gave no assurance it would be available.
The company disclosed uncertainty about the COVID-19 pandemic’s possible impact on its financial position and search for a target, with the effect not readily determinable. No legal proceedings or material changes to previously disclosed risk factors were reported. The filing provides no quantified business-combination guidance or operating forecast.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing is for KINS Technology Group Inc., not Cxapp Inc.
- Verify the status and terms of any business combination, deadline extensions, and potential redemptions; the filing describes the search and deadline but does not establish a completed transaction.
- Assess how much cash is available outside the trust for operating and transaction expenses, and whether additional financing is committed.
- Distinguish noncash warrant remeasurement gains from operating performance and review the warrant liability valuation and potential dilution.
- Review the revised temporary-equity and earnings-per-share presentation alongside prior filings, and confirm the impact of the reported control remediation.