Business context and reporting period
This is KINS Technology Group Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2022—not a filing that identifies Cxapp Inc. as the registrant. KINS was a blank-check SPAC searching for a business combination and had not begun operating activities or generated operating revenue.
Key financial metrics
| Metric | Q1 2022 / March 31, 2022 | Comparable period / prior year-end |
|---|---|---|
| Operating costs | $323,252 | $397,205 in Q1 2021 |
| Net income | $7,868,169 | $5,909,731 in Q1 2021 |
| Net income per share, Class A and B | $0.23 | $0.17 in Q1 2021 |
| Cash outside Trust Account | $391,097 | $406,126 at December 31, 2021 |
| Trust Account cash and investments | $278,778,904 | $278,836,080 at December 31, 2021 |
| Working capital | Deficit of $534,380 | — |
| Total liabilities | $13,686,248 | $21,702,622 at December 31, 2021 |
| Cash used in operating activities | $95,529 | $240,537 in Q1 2021 |
Net income primarily reflected an $8.17 million noncash gain from a decrease in the fair value of warrant liabilities, plus $23,324 of Trust Account interest; it did not reflect operating revenue. Warrant liabilities were $3.11 million, down from $11.28 million at year-end. The company reported no long-term debt and no working-capital loans outstanding. A $9.66 million deferred underwriting fee is payable if a business combination is completed.
Material changes, outlook and risks
- Net income rose year over year, while operating costs and operating cash use declined. The earnings increase was driven mainly by the larger fair-value gain on derivative liabilities, not business growth.
- At the filing date, the stated business-combination deadline was June 17, 2022. Management said it was uncertain it could complete a transaction by then and concluded substantial doubt existed about the company’s ability to continue as a going concern. If no combination or approved extension occurred, the company faced liquidation.
- After quarter-end, KINS reported signing a non-binding letter of intent with a target on April 22, 2022. A definitive agreement and transaction were not assured. It planned an extension vote to seek more time through December 16, 2022; public shareholders could elect redemption. The filing states no subsequent event requiring adjustment to the quarter-end statements.
- Disclosure controls were deemed ineffective due to a material weakness involving complex financial-instrument accounting. The filing also describes an improper initial valuation of redeemable Class A shares that caused a material misstatement for affected periods. Management planned remediation but gave no assurance it would be successful.
- The company identified potential adverse effects from COVID-19, the Russia-Ukraine conflict and related sanctions, market disruption, and proposed SEC SPAC rules; specific effects were not determinable.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing is for KINS Technology Group Inc., not Cxapp Inc.
- Check the outcome of the proposed extension vote, any definitive business-combination agreement, and whether the June 17, 2022 deadline was extended or liquidation followed.
- Review subsequent filings for remediation of the internal-control material weakness and any restatement or corrected accounting disclosures.
- Distinguish cash available outside the Trust Account ($391,097) from the approximately $278.8 million restricted to the SPAC transaction/redemption framework; assess near-term funding needs and redemption effects.