Form 8-K Summary
Registrant: KINS Technology Group Inc. (the filing identifies KINS, not Cxapp Inc.)
Report date: June 17, 2021. The filing reports an Item 4.02 non-reliance event concerning previously issued financial statements.
Business Context and Reporting Period
KINS was a special purpose acquisition company that had not generated operating revenue and expected to remain without operating revenue until, at the earliest, completion of its initial business combination. The affected financial information covers the audited balance sheet as of December 17, 2020 and the period from July 20, 2020, inception, through December 31, 2020.
Financial Metrics and Accounting Impact
- The company had 13,800,000 public redeemable warrants and 10,280,000 private-placement redeemable warrants, for a total of 24,080,000 warrants.
- Following April 2021 SEC guidance on SPAC warrant accounting, management concluded that the warrants should be classified as liabilities measured at fair value.
- Changes in warrant fair value will be recorded in earnings as a non-cash charge.
- The filing does not provide the restated warrant liability, fair-value adjustment, net loss, cash flow, liquidity, debt, or margin amounts.
Material Changes Versus Prior Reporting
- Management and the Audit Committee concluded that certain previously issued financial statements should be restated.
- The company stated that the affected financial statements and communications based on them should no longer be relied upon.
- The audit reports of WithumSmith+Brown, PC included in the December 23, 2020 Form 8-K and the March 30, 2021 Form 10-K should also no longer be relied upon.
- The company plans to amend its 2020 Form 10-K to include restated financial statements.
Outlook, Risks, and Unusual Items
- Unless the warrant agreement is amended, the company expects to continue classifying the warrants as liabilities and incurring recurring costs to measure their fair value.
- Warrant fair-value changes may adversely affect reported results of operations, although the charges are non-cash.
- The planned Form 10-K amendment is a forward-looking statement and could be affected by conditions beyond management’s control.
- The filing does not provide a completion date for the amended Form 10-K or quantify the expected restatement.
Key Facts for Investors to Verify
- Confirm the amended 2020 Form 10-K and the amounts of the restated warrant liability, fair-value adjustment, and net loss.
- Review whether the warrant agreement was subsequently amended and whether liability classification continued.
- Assess the effect of warrant valuation changes on earnings, balance-sheet presentation, and any future financial statements.
- Verify the status of the initial business combination and the company’s available cash and liquidity, which are not provided in this filing.