UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

KAIROS ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

Cayman Islands

001-39841

N/A

(State or other jurisdiction

of incorporation or organization)

(Commission File Number)

(IRS Employer Identification No.)

c/o Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas

New York, NY

(Address Of Principal Executive Offices)

10105

(Zip Code)

(917) 783-4057

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Trading Symbol(s)	Name of Each Exchange on Which Registered:
Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant	KAIRU	The Nasdaq Capital Market
Class A ordinary shares, par value $0.0001 per share	KAIR	The Nasdaq Capital Market
Redeemable warrants included as part of the units, each whole warrant exercisable for one share of Class A ordinary share at an exercise price of $11.50 per share	KAIRW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	⌧	Smaller reporting company	⌧
Emerging growth company	⌧

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ⌧ No ☐

As of August 13, 2021, 27,600,000 Class A ordinary shares, par value $0.0001 per share, and 6,900,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.

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KAIROS ACQUISITION CORP.

Form 10-Q

For the Quarter Ended June 30, 2021

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		Page
	Certain Defined Terms	1

	Cautionary Statement Regarding Forward-Looking Statements	3

	Summary of Risk Factors	4

PART I. FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements	6

	Condensed Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	6

	Unaudited Condensed Statements of Operations for the Six Months Ended June 30, 2021	7

	Unaudited Condensed Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2021	8

	Unaudited Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021	9

	Notes to Unaudited Condensed Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	74

Item 3.	Defaults Upon Senior Securities	75

Item 4.	Mine Safety Disclosures	75

Item 5.	Other Information	75

Item 6.	Exhibits	76

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CERTAIN DEFINED TERMS

In this Quarterly Report on Form 10-Q (the “Quarterly Report”), unless otherwise stated or unless the context otherwise requires:

●

“amended and restated memorandum and articles of association” means our amended and restated memorandum and articles of association;

●

“board of directors” or “board” means the board of directors of the Company;

●

“Companies Act” means the Companies Act (2020 Revision) of the Cayman Islands as the same may be amended from time to time;

●

“Company,” “we,” “us,” “our” or “our company” means (i) prior to the closing of the initial business combination, Kairos Acquisition Corp., a Cayman Islands exempted company, and (ii) upon closing of the initial business combination, the post-combination company;

●

“Exchange Act” means the Securities Exchange Act of 1934, as amended;

●

“founder shares” means our Class B ordinary shares initially purchased by our sponsor in a private placement prior to our initial public offering, a portion of which were transferred to HS Chronos in a private placement prior to our initial public offering, and, unless the context otherwise requires, our Class A ordinary shares issued upon the conversion thereof as provided herein;

●

“HS Chronos” means HS Chronos LLC, one of our initial shareholders and an affiliate of Vikas Singhal, our director, and Michael Millette, our board observer;

●

“initial business combination” means a merger, capital share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

●

“initial public offering” means the initial public offering that was consummated by the Company on January 8, 2021;

●

“initial shareholders” means, collectively, our sponsor and HS Chronos, in their capacity as the holders of our founder shares that were purchased prior to our initial public offering;

●

“Investment Company Act” means the Investment Company Act of 1940, as amended;

●

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012;

●

“letter agreement” means the letter agreement entered into on January 5, 2021, by and among the Company, its officers, directors, Kairos Alpha Acquisition LLC and HS Chronos LLC;

●

“management” or “management team” means our officers and directors;

●

“Nasdaq” means The Nasdaq Capital Market;

●

“ordinary shares” means our Class A ordinary shares and our Class B ordinary shares;

●

“post-combination company” means the Company upon the consummation of the initial business combination;

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●

“private placement” means the private placement of an aggregate of 8,020,000 warrants purchased by our sponsor and HS Chronos which occurred simultaneously with the completion of our initial public offering at an average purchase price of $1.00 per warrant for a total purchase price of $8.02 million;

●

“private placement warrants” means the warrants issued to our sponsor and HS Chronos in a private placement that closed simultaneously with the closing of our initial public offering;

●

“prospectus” means our final prospectus for our initial public offering filed with the SEC on January 8, 2021;

●

“public shareholders” means the holders of our public shares;

●

“public shares” means our Class A ordinary shares offered as part of the units in our initial public offering (whether they were subscribed for in our initial public offering or thereafter in the open market);

●

“public warrants” means the redeemable warrants sold as part of the units in our initial public offering (whether they were subscribed for in our initial public offering or in the open market);

●

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002;

●

“SEC” means the U.S. Securities and Exchange Commission;

●

“Securities Act” means the Securities Act of 1933, as amended;

●

“sponsor” means Kairos Alpha Acquisition LLC, a Delaware limited liability company;

●

“trust account” means the trust account established in connection with the initial public offering where an amount of $276,000,000 ($10.00 per unit) from the net proceeds of the sale of the units in the initial public offering was placed; and

●

“units” means the units sold in our initial public offering (whether they are subscribed for in our initial public offering or in the open market), which consist of one public share and one-half of one public warrant.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

●

our ability to complete our initial business combination;

●

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

●

our officers and directors allocating their time to other businesses and having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements;

●

our ability to consummate an initial business combination due to the uncertainty resulting from our officers and directors having conflicts of interest;

●

our ability to obtain additional financing to complete our initial business combination;

●

the ability of our officers and directors to generate a number of potential acquisition opportunities;

●

our pool of prospective target businesses;

●

our public securities’ liquidity and trading;

●

the lack of a market for our securities;

●

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or

●

our financial performance.

The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited, to those factors described under the sections of this Quarterly Report entitled “Summary of Risk Factors” and “Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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SUMMARY OF RISK FACTORS

As a smaller reporting company, we are not required to include risk factors in this Quarterly Report. However, an investment in our securities involves a high degree of risk. Below is a summary of the principal risk factors that make an investment in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this summary of risk factors, and other risks that we face, can be found in the section of this Quarterly Report entitled “Item 1A. Risk Factors” and should be carefully considered, together with other information in this Quarterly Report. The occurrence of one or more of the events or circumstances described in the section of this Quarterly Report entitled “Item 1A. Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results. In that event, the trading price of our securities could decline, and our investors could lose all or part of their investments. Our principal risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:

Risks Relating to Our Search for and Consummation of a Business Combination

●

We are a recently incorporated company with a limited operating history and no revenues, and our public shareholders have no basis on which to evaluate our ability to achieve our business objective.

●

Our public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.

●

The only opportunity of our public shareholders to affect the investment decision regarding a potential business combination will be limited to the exercise of their right to redeem their shares from us for cash, unless we seek shareholder approval of the business combination.

●

The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.

●

The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.

●

The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that our public shareholders would have to wait for liquidation in order to redeem their shares.

●

As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.

●

We may not be able to complete our initial business combination prior to January 8, 2023 (24 months from the closing of our initial public offering) and would have to cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may only receive approximately $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.

●

If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

●

If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, our amended and restated memorandum and articles of association provides that a public shareholder or a “group” of shareholders that are deemed to hold in excess of 15% of our Class A ordinary shares will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.

●

If the funds available to us outside the trust account are insufficient, we may need additional funds to facilitate our search for a target business or businesses and complete our initial business combination and we will depend

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on loans or other financing from our initial shareholders, our management team or other third parties to fund our search, to pay our taxes and to complete our initial business combination.

●

Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.

Risks Relating to the Post-Business Combination Company

●

Subsequent to the completion of our initial business combination, the post-combination company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and its share price, which could cause our shareholders to lose some or all of their investments.

Risks Relating to Potential Conflicts of Interest

●

If we seek shareholder approval of our initial business combination, our initial shareholders, officers and directors may have potential conflicts of interest in recommending to vote in favor of approving any business combination and such other proposals related thereto.

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If we seek shareholder approval of our initial business combination, our initial shareholders, officers, directors, advisors and their affiliates may elect to purchase shares from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float” of our ordinary shares.

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If we seek shareholder approval of our initial business combination, our initial shareholders, officers and directors have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.

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Our sponsor, our officers and directors (who have economic interests in our sponsor), and HS Chronos paid, directly or indirectly, approximately $0.004 per each founder share and approximately $1.00 per each private placement warrant. As a result of these low initial prices, our sponsor, our officers and directors, HS Chronos, and their respective affiliates stand to make a substantial capital gain upon removal of trading restrictions on such founder shares and warrants even if an initial business combination subsequently declines in value for our public shareholders.

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Financial incentives may cause the underwriters of our initial public offering to have potential conflicts of interest in rendering any additional services to us after such offering, including, for example, in connection with the sourcing and consummation of an initial business combination.

Risks Relating to Our Securities

●

Our public shareholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate their investments, therefore, our public shareholders may be forced to sell their public shares or warrants, potentially at a loss.

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Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

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Our public shareholders will not be entitled to protections normally afforded to investors of many other blank check companies.

General Risk Factors

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We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

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Because we are incorporated under the laws of the Cayman Islands, our investors may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. Federal courts may be limited.

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PART I. FINANCIAL INFORMATION

Item 1.Condensed Financial Statements

KAIROS ACQUISITION CORP.

CONDENSED BALANCE SHEETS


	June 30, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets
Cash	$	1,066,814	$	111,696
Prepaid expenses		739,236		—
Total current assets		1,806,050		111,696
Investments held in Trust Account		276,007,869		—
Deferred offering costs		—		237,539
Total Assets	$	277,813,919	$	349,235

Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	387,030	$	15,161
Accrued expenses		78,262		65,076
Note payable - related party		—		280,000
Total current liabilities		465,292		360,237
Deferred underwriting commissions		9,660,000		—
Derivative warrant liabilities		17,237,800		—
Total Liabilities		27,363,092		360,237

Commitments and Contingencies

Class A ordinary shares; 24,545,082 and -0- shares subject to possible redemption at $10.00 per share at June 30, 2021 and December 31, 2020, respectively		245,450,820		—

Shareholders’ Equity (Deficit):
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2021 and December 31, 2020		—		—
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,054,918 shares issued and outstanding (excluding 24,545,082 shares subject to possible redemption) and none issued and outstanding at June 30, 2021 and December 31, 2020, respectively		305		—
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 6,900,000 shares issued and outstanding June 30, 2021 and December 31, 2020		690		690
Additional paid-in capital		2,213,010		24,310
Retained earnings (Accumulated deficit)		2,786,002		(36,002)
Total shareholders’ equity (deficit)		5,000,007		(11,002)
Total Liabilities and Shareholders’ Equity (Deficit)	$	277,813,919	$	349,235

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KAIROS ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS


	For The		For The
	Three Months Ended		Six Months Ended
	June 30,		June 30,
		2021	2021
General and administrative expenses	$	689,308	$	871,185
Administrative expenses - related party		60,000		120,000
Loss from operations		(749,308)		(991,185)

Other income (expenses)
Change in fair value of derivative warrant liabilities		(5,455,000)		4,582,200
Financing costs - derivative warrant liabilities		—		(776,880)
Interest income from investments held in Trust Account		4,194		7,869
Net (loss) income	$	(6,200,114)	$	2,822,004

Basic and diluted weighted average shares outstanding of Class A ordinary shares		27,600,000		27,517,241
Basic and diluted net income per share, Class A ordinary shares	$	0.00	$	0.00
Basic and diluted weighted average shares outstanding of Class B ordinary shares		6,900,000		6,845,304
Basic and diluted net (loss) income per share, Class B ordinary shares	$	(0.90)	$	0.41

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KAIROS ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021


	Ordinary Shares									Retained Earnings	Total
	Class A			Class B			Additional Paid-in		(Accumulated		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Deficit)		Equity
Balance — December 31, 2020	—	$	—	6,900,000	$	690	$	24,310	$	(36,002)	$	(11,002)
Sale of units in initial public offering, less fair value of public warrants	27,600,000		2,760	—		—		262,197,240		—		262,200,000
Offering costs	—		—	—		—		(14,490,175)		—		(14,490,175)
Ordinary shares subject to possible redemption	(25,172,094)		(2,517)	—		—		(247,731,375)		(3,987,048)		(251,720,940)
Net income	—		—	—		—		—		9,022,118		9,022,118
Balance - March 31, 2021 (unaudited)	2,427,906		243	6,900,000		690		—		4,999,068		5,000,001
Offering costs	—		—	—		—		(70,000)		—		(70,000)
Ordinary shares subject to possible redemption	627,012		62	—		—		2,283,010		3,987,048		6,270,120
Net loss	—		—	—		—		—		(6,200,114)		(6,200,114)
Balance — June 30, 2021 (unaudited)	3,054,918	$	305	6,900,000	$	690	$	2,213,010	$	2,786,002	$	5,000,007

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KAIROS ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED June 30, 2021


Cash Flows from Operating Activities:
Net income	$	2,822,004
Adjustments to reconcile net income to net cash used in operating activities:

SEC Form 10-Q filed by Kairos Acquisition Corp.