Business context and reporting period
The filing is KINS Technology Group Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The request identifies Cxapp Inc., but the filing is for KINS Technology Group Inc., a SPAC formed to pursue a business combination. It had not begun operating activities or generated revenue. The filing discusses a proposed business combination but does not clearly identify its target or provide transaction terms in the supplied text.
Financial results and liquidity
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating and formation costs | $327,104 | $724,309 |
| Net income (loss) | $(4,894,262) | $1,015,469 |
| Class B basic and diluted earnings (loss) per share | $(0.71) | $0.15 |
| Net cash used in operating activities | $323,279 for the six-month period |
The quarterly loss primarily reflected a $4.575 million non-cash loss from the change in fair value of warrant liabilities. Six-month net income included a $1.686 million non-cash gain from warrant remeasurement and $54,134 of trust-account interest. No operating margin is meaningful because the company had no revenue.
At June 30, 2021, cash outside the trust was $678,168, working capital was $539,117, and trust assets were $278.822 million. Total assets were $279.833 million; total liabilities were $30.359 million, including a $20.227 million warrant liability and $9.660 million deferred underwriting fee payable. The deferred fee is due only upon completion of a business combination. The filing reports no long-term debt and no working capital loans outstanding. Cash outside the trust declined from $1.019 million at December 31, 2020.
Changes, outlook, and risks
- Compared with the prior year period, a meaningful year-over-year comparison is not presented in the supplied statements. The six-month net income and second-quarter loss reflect different warrant fair-value movements.
- The company held $278.822 million in trust, intended principally to fund a business combination. It had until June 17, 2022, subject to any permitted extension, to complete one or face liquidation and redemption of public shares under the stated terms.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing limited operating liquidity and the mandatory liquidation date. It also stated it did not believe additional funds would be needed for anticipated expenditures, while warning that cost overruns or transaction needs could require financing that may not be available.
- No specific financial guidance or forecast is provided. Management cautioned that completion of a business combination is uncertain and that COVID-19 could adversely affect the search for a target, though the impact was not determinable.
- Disclosure controls were deemed ineffective as of June 30, 2021 because of a material weakness in accounting for warrants. Remediation steps had begun but were not complete.
- The filing reports no legal proceedings and no material changes to the risk factors in the company’s prior annual report.
Key facts for investors to verify
- Confirm the issuer: the supplied filing is for KINS Technology Group Inc., not Cxapp Inc.
- Verify the status, target, conditions, financing, and expected timing of the proposed business combination; these are not clearly specified in the supplied text.
- Assess whether the $678,168 of cash outside the trust is sufficient for transaction costs and ongoing obligations, and whether additional financing or sponsor loans will be needed.
- Review the warrant-liability valuation and its significant effect on reported quarterly earnings, along with progress remediating the disclosed material weakness.
- Confirm the business-combination deadline and any extension, redemption exposure, and the consequences of failing to complete a transaction.