Business Context and Reporting Period
The filing is a Form 10-K for KINS Technology Group Inc., not Cxapp Inc., for the fiscal year ended December 31, 2020. KINS was incorporated on July 20, 2020 and operated as a blank check company, or SPAC, formed to complete an initial business combination. It had no operating business, operating revenue, or selected target as of December 31, 2020.
The company completed its initial public offering on December 17, 2020, selling 27.6 million units at $10.00 per unit and raising gross proceeds of $276.0 million. It also sold 10.28 million private placement warrants for $10.28 million. The securities were listed on Nasdaq under the symbols KINZU, KINZ, and KINZW; the Class A common stock and warrants began trading separately on February 4, 2021.
Financial Results, Cash Flow, Liquidity, and Capitalization
| Metric | Period or date | Amount |
|---|---|---|
| Operating revenue | July 20–December 31, 2020 | $0 |
| Net loss | July 20–December 31, 2020 | $244,985 |
| General and administrative expenses | July 20–December 31, 2020 | $252,783 |
| Interest income | July 20–December 31, 2020 | $7,798 |
| Cash used in operating activities | July 20–December 31, 2020 | $514,705 |
| Cash and investments held in Trust Account | December 31, 2020 | $278,767,785 |
| Cash outside Trust Account | December 31, 2020 | $1,019,026 |
| Total assets | December 31, 2020 | $280,243,445 |
| Total liabilities | December 31, 2020 | $9,872,278 |
| Stockholders’ equity | December 31, 2020 | $5,000,010 |
| Deferred underwriting fee payable | December 31, 2020 | $9,660,000 |
The Trust Account was invested primarily in U.S. Treasury securities and held $278,766,888 of Treasury securities plus $897 of cash at year-end. No Trust Account interest was withdrawn during the period. The filing reports no long-term debt, capital leases, operating leases, or off-balance-sheet financing arrangements. The company paid its Sponsor $20,000 for office, administrative, and support services during the period and was obligated to pay up to $20,000 per month until a business combination or liquidation.
At December 31, 2020, 26,274,372 Class A shares were subject to possible redemption at $10.10 per share. The company also had 6.9 million Class B founder shares outstanding and 24.08 million warrants outstanding, including public and private placement warrants, generally exercisable at $11.50 per share subject to adjustment provisions.
Material Changes Versus the Prior Comparable Period
No prior comparable operating period exists because the company was formed on July 20, 2020. The reported period primarily reflects formation expenses, IPO and private placement activity, establishment of the Trust Account, and the initial search for a business combination.
- The company moved from formation to public-company status through its December 2020 IPO.
- It placed $278.76 million in the Trust Account and retained approximately $1.02 million outside the Trust Account for operating and transaction expenses.
- It incurred $15.69 million of IPO transaction costs, including $9.66 million of deferred underwriting fees payable only if a business combination is completed.
- There were no material legal proceedings, no operating revenue, and no completed or definitive business combination as of the filing date.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
Management expected to continue searching for a transformative technology business, with an emphasis on digital infrastructure, network, communications, and computing technologies. No formal financial guidance was provided. The company did not expect operating revenue until after completion of a business combination.
- The company was required to complete a business combination by June 17, 2022, subject to any approved extension. If unsuccessful, it would cease operations, redeem public shares, and liquidate; public warrants would expire worthless.
- A target generally must have a fair market value equal to at least 80% of the net assets held in the Trust Account, excluding specified amounts, and the post-transaction company must acquire a controlling interest.
- Public shareholders could redeem shares for a pro rata portion of the Trust Account, initially approximately $10.10 per share, subject to applicable limitations and potential reductions from creditor claims, negative investment returns, taxes, or other obligations.
- The company had broad discretion in selecting a target and faced substantial competition from other SPACs, private equity funds, strategic acquirers, and other investors.
- Redemptions could reduce cash available for a transaction and could require additional equity or debt financing. Additional financing could dilute shareholders or increase leverage.
- The Sponsor, officers, and directors had conflicts of interest arising from founder shares, private placement warrants, other business activities, fiduciary obligations, and potential working capital loans. Initial stockholders controlled director elections before the business combination and agreed to vote their shares in favor of a proposed transaction if submitted for a vote.
- COVID-19 was identified as a risk to the target search, financing availability, negotiations, and transaction execution. The filing states that the specific financial impact was not determinable at year-end.
- The Sponsor agreed to indemnify the Trust Account for certain third-party claims that reduce the per-share amount below $10.10, but the filing states that the Sponsor was newly formed, its assets were believed to consist primarily of company securities, and its ability to satisfy the indemnity had not been independently verified.
- The independent auditor issued an unqualified opinion on the financial statements. Management concluded that disclosure controls and procedures were effective, while the filing did not include management’s internal-control assessment or an auditor attestation because of the applicable transition period.
Most Important Facts to Verify
- Confirm the issuer identity: the supplied filing is for KINS Technology Group Inc., whereas the request identifies Cxapp Inc.
- Verify whether KINS completed a business combination after December 31, 2020 and whether the stated liquidation deadline or any extension remained applicable.
- Review the post-filing Trust Account balance, redemptions, deferred underwriting fees, and any changes to the number or terms of outstanding warrants.
- Assess the target company, transaction valuation, financing structure, dilution, and any debt incurred in connection with a subsequent business combination.
- Review related-party payments, Sponsor indemnification capacity, potential creditor claims, and the $20,000 monthly administrative-services obligation.
- Evaluate the effect of founder shares, warrant exercise and redemption provisions, and potential Class B conversion adjustments on public-shareholder dilution.