Filing summary
Important entity discrepancy: The supplied filing is Kayne Anderson Acquisition Corp.’s Form 10-Q for the quarter ended June 30, 2018—not a filing for Kinetik Holdings Inc. The summary below reflects the filing text provided.
Business context and reporting period
Kayne Anderson Acquisition Corp. was a blank-check company seeking an initial business combination, with a stated focus on the energy industry. It had not begun operating activities or generated operating revenue. Its principal assets were funds invested in a trust account following its April 2017 public offering.
Financial performance and liquidity
| Metric | Three months ended June 30, 2018 | Six months ended June 30, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Net income | $582,842 | $1,297,553 |
| Trust investment income | $1,479,003 | $2,650,263 |
| General and administrative expense | $546,061 | $714,328 |
| Franchise tax expense | $50,012 | $100,025 |
| Income tax expense | $300,088 | $538,357 |
- At June 30, 2018, total assets were $380.95 million, including $380.71 million in the trust account; cash outside the trust was $48,630.
- Total liabilities were $14.38 million, including $13.21 million of deferred underwriting compensation payable only if a business combination is completed. Current liabilities included a $100,000 non-interest-bearing sponsor note.
- Stockholders’ equity was $5.00 million. No operating margins are meaningful because the company had no revenue.
- Six-month operating cash use was $530,425; financing provided $100,000, and cash declined by $430,425 to $48,630. The filing says $3.39 million of trust investment income was available for additional taxes.
Changes versus the prior comparable period
For Q2 2017, the company reported a net loss of $733,270, compared with Q2 2018 net income of $582,842. For the six-month periods, it reported a $733,270 net loss in 2017 versus $1,297,553 net income in 2018. The change primarily reflects higher trust investment income: $2.65 million in the first half of 2018 versus $544,025 in the first half of 2017. First-half 2018 general and administrative expense was lower, at $714,328 versus $1,063,946. The company reported no revenue in either period.
Outlook, risks, and notable items
- The company had to complete a business combination within 24 months of its April 2017 offering—by April 2019—or redeem public shares and liquidate. Management stated that this mandatory liquidation raised substantial doubt about the company’s ability to continue as a going concern.
- Public shareholders could redeem shares in connection with a business combination, subject to the company’s minimum net tangible asset requirement of $5,000,001. The company noted no assurance it would complete a transaction.
- The sponsor had agreed to provide up to $500,000 for working capital; $100,000 was borrowed at quarter-end. Additional sponsor or affiliate loans were possible but not committed.
- The company reported no legal proceedings, no material change to previously disclosed risk factors, and no off-balance-sheet arrangements. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
- Trust funds were invested in short-term money market funds holding direct U.S. government obligations; management said interest-rate exposure was not material. No transaction-specific guidance was provided.
Important facts for investors to verify
- Confirm the issuer and filing: the supplied document names Kayne Anderson Acquisition Corp., not Kinetik Holdings Inc.
- Verify whether a business combination was completed before the April 2019 deadline and whether public-share redemptions or liquidation followed.
- Check the terms and repayment or conversion status of the sponsor note, and whether the deferred $13.21 million underwriting fee became payable.
- Review the trust balance, redemption value, and use of trust investment income for taxes against subsequent filings.