NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 - Description of Organization and Business Operations
Kismet
Acquisition Three Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on September
15, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses that the Company has not yet identified (“Business Combination”).
As
of September 30, 2021, the Company had not yet commenced operations. All activity for the period from September 15, 2020 (inception)
through September 30, 2021, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”),
which is described below, and since the Initial Public Offering, the search for a potential target. The Company will not generate any
operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income on investments held in the Trust Account (as defined below) from the proceeds derived from the
Initial Public Offering and the sale of the Private Placement Warrants (as defined below). The Company has selected December 31 as its
fiscal year end.
The
Company’s sponsor is Kismet Sponsor Limited, a British Virgin Islands company (“Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on February 17, 2021. On February 22, 2021, the Company consummated
its Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the Class A ordinary shares included in
the Units being offered, the “Public Shares”), including 3,750,000 additional Units to cover over-allotments (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of $287.5 million, and incurring offering costs of approximately $16.2 million,
of which approximately $10.1 million was for deferred underwriting commissions (Note 6).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,166,667
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price
of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of approximately $7.8 million, and incurring offering
costs of approximately $7,000 (Note 4).
Upon
the closing of the Initial Public Offering and the Private Placement, $287.5 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”) with
Continental Stock Transfer & Trust Company acting as trustee and invested in U.S. government treasury obligations with a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 (the
“Investment Company Act”), which invest only in direct U.S. government treasury obligations, as determined by the Company,
until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering
and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. The Company’s initial Business Combination must be with one or more operating businesses or
assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable, if any, on the income accrued on the Trust Account) at the time the Company signs a definitive agreement
in connection with the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will provide its holders of the Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a
portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called
to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated
to be $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). These Public Shares
will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance
with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and a majority of the shares are voted in favor of the Business Combination. If a shareholder vote is not required
by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to
the amended and restated memorandum and articles of association which will be adopted by the Company upon the consummation of the Initial
Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to
the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file tender offer documents with the
SEC prior to completing a Business Combination. If, however, a shareholder approval of the transactions is required by law, or the Company
decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy
solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect
to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder
approval in connection with a Business Combination, the holder of the Founder Shares prior to the Initial Public Offering (the “Initial
Shareholder”) agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial
Public Offering in favor of a Business Combination. In addition, the Initial Shareholders agreed to waive its redemption rights with
respect to its Founder Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Company’s Amended and Restated Memorandum and Articles of Association provides that a Public Shareholder, together
with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from redeeming its shares with respect to more than an aggregate of 20% or more of the Class A ordinary shares sold in the Initial Public
Offering, without the prior consent of the Company.
The
Company’s Sponsor, executive officers, directors and director nominees agreed not to propose an amendment to the Company’s
Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation
to provide for the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares if
the Company does not complete a Business Combination, unless the Company provides the Public Shareholders with the opportunity to redeem
their Class A ordinary shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February
22, 2023 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem all Public Shares then outstanding at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any amounts representing interest
earned on the Trust Account, less any interest released to the Company for the payment of taxes, if any (and less up to $100,000 in interest
reserved for expenses in connection with the Company’s dissolution), divided by the number of then outstanding Public Shares, which
redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In
connection with the redemption of 100% of the Company’s outstanding Public Shares for a portion of the funds held in the Trust
Account, each holder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned
on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes payable (less up to
$100,000 of interest to pay dissolution expenses).
The
Initial Shareholders agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial
Public Offering, it will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company
fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred
underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within
the Combination Period, and, in such event, such amounts will be included with the funds held in the Trust Account that will be available
to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value
of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially
held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed that it will be liable to the
Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target
business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination
agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount
per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due
to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or
not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have
to indemnify the Trust Account due to claims of creditors by endeavoring to have vendors, service providers (except the Company’s
independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
and Capital Resources
As
of September 30, 2021, the Company had approximately $375,000 in its operating bank account and working capital deficit of approximately
$137,000.
The
Company’s liquidity needs to date have been satisfied through a contribution of $25,000 from the Sponsor to cover certain expenses
in exchange for the issuance of the Founder Shares, a loan of approximately $126,000 from the Sponsor pursuant to the Note (as defined
in Note 5), and a portion of the proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid
the Note in full on February 24, 2021. Subsequent to the repayment, the facility was no longer available to the Company. In addition,
in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined in
Note 5). As of September 30, 2021, and December 31, 2020, there were no amounts outstanding under any Working Capital Loan.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or
an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
2 - Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited
condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement
of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2021, are
not necessarily indicative of the results that may be expected through December 31, 2021.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited balance sheet and notes thereto
included in the Form 8-K and the final prospectus filed by the Company with the SEC on February 26, 2021 and February 19, 2021, respectively.
Restatement to Previously Reported Financial
Statements
In preparation of the Company’s unaudited
condensed financial statements as of and for the quarterly period ended September 30, 2021, the Company concluded it should restate its
previously issued financial statements to classify all Class A ordinary shares subject to possible redemption in temporary equity. In
accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480, 10-S99, redemption provisions not solely
within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company
had previously classified a portion of its Class A ordinary shares in permanent equity, or total shareholders’ equity. Although
the Company did not specify a maximum redemption threshold, its charter currently provides that, the Company will not redeem its Public
Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable
stock classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this
interpretation to include temporary equity in net tangible assets. As a result, the Company restated its previously filed financial statements
to present all redeemable temporary equity and recognizes accretion from the initial book value to redemption value at the time of its
Initial Public Offering. The Company’s previously filed financial statements that contained the error were reported in the Company’s
Form 8-K filed with the SEC on February 26, 2021 (the “Post-IPO Balance Sheet”) and the Company’s Form 10-Qs for the
quarterly periods ended March 31, 2021 and June 30, 2021 (the “Affected Quarterly Periods”). The change in the carrying value
of the redeemable shares of Class A ordinary shares of approximately $26.9 million to the Post-IPO Balance Sheet resulted in a decrease
of approximately $5.5 million in additional paid-in capital and a charge of approximately $21.3 million to accumulated deficit, as well
as a reclassification of 2,686,833 Class A ordinary shares from permanent equity to temporary equity as presented below.
|
|
As of February 22, 2021
|
|
|
|
As Previously
Reported (1)
|
|
|
Adjustment
|
|
|
As Restated
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
289,526,800
|
|
|
$
|
-
|
|
|
$
|
289,526,800
|
|
Total liabilities
|
|
$
|
23,895,123
|
|
|
$
|
-
|
|
|
$
|
23,895,123
|
|
Class A ordinary shares subject to possible redemption
|
|
|
260,631,670
|
|
|
|
26,868,330
|
|
|
|
287,500,000
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares
|
|
|
2,687
|
|
|
|
(2,687
|
)
|
|
|
-
|
|
Class B ordinary shares
|
|
|
7,688
|
|
|
|
-
|
|
|
|
7,688
|
|
Additional paid-in-capital
|
|
|
5,545,773
|
|
|
|
(5,545,773
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(556,141
|
)
|
|
|
(21,319,871
|
)
|
|
|
(21,876,011
|
)
|
Total shareholders’ equity (deficit)
|
|
|
5,000,007
|
|
|
|
(26,868,330
|
)
|
|
|
(21,868,323
|
)
|
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
|
|
$
|
289,526,800
|
|
|
$
|
-
|
|
|
$
|
289,526,800
|
|
|
(1)
|
As
previously reported in the Company's Form 10-Q for the period ended March 31, 2021.
|
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The previously issued financial statement included
as an exhibit to the Company’s Form 8-K filed with the SEC on February 26, 2021, and Form 10-Qs for the Affected Quarterly Periods,
will not be amended, but historical amounts are presented in the current filing and will be presented in future filings as restated in
order to be consistent with the current presentation.
The impact of the restatement on the unaudited
condensed balance sheets as of March 31, 2021 and June 30, 2021 is presented below.
|
|
As of March 31, 2021
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Unaudited Condensed Balance Sheet
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
289,080,598
|
|
|
$
|
-
|
|
|
$
|
289,080,598
|
|
Total liabilities
|
|
$
|
23,377,589
|
|
|
$
|
-
|
|
|
$
|
23,377,589
|
|
Class A ordinary shares subject to possible redemption
|
|
|
260,703,000
|
|
|
|
26,797,000
|
|
|
|
287,500,000
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares
|
|
|
2,680
|
|
|
|
(2,680
|
)
|
|
|
-
|
|
Class B ordinary shares
|
|
|
7,688
|
|
|
|
-
|
|
|
|
7,688
|
|
Additional paid-in-capital
|
|
|
5,474,449
|
|
|
|
(5,474,449
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(484,808
|
)
|
|
|
(21,319,871
|
)
|
|
|
(21,804,679
|
)
|
Total shareholders’ equity (deficit)
|
|
|
5,000,009
|
|
|
|
(26,797,000
|
)
|
|
|
(21,796,991
|
)
|
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
|
|
$
|
289,080,598
|
|
|
$
|
-
|
|
|
$
|
289,080,598
|
|
|
|
As of June 30, 2021
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Unaudited Condensed Balance Sheet
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
288,986,750
|
|
|
$
|
-
|
|
|
$
|
288,986,750
|
|
Total liabilities
|
|
$
|
23,176,436
|
|
|
$
|
-
|
|
|
$
|
23,176,436
|
|
Class A ordinary shares subject to possible redemption
|
|
|
260,810,310
|
|
|
|
26,689,690
|
|
|
|
287,500,000
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares
|
|
|
2,669
|
|
|
|
(2,669
|
)
|
|
|
-
|
|
Class B ordinary shares
|
|
|
7,688
|
|
|
|
-
|
|
|
|
7,688
|
|
Additional paid-in-capital
|
|
|
5,367,150
|
|
|
|
(5,367,150
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(377,503
|
)
|
|
|
(21,319,871
|
)
|
|
|
(21,697,374
|
)
|
Total shareholders’ equity (deficit)
|
|
|
5,000,004
|
|
|
|
(26,689,690
|
)
|
|
|
(21,689,686
|
)
|
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
|
|
$
|
288,986,750
|
|
|
$
|
-
|
|
|
$
|
288,986,750
|
|
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In connection with the change in presentation of the Class A ordinary
shares subject to possible redemption, the Company has revised its earnings per share calculation to allocate income and losses shared
pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which
case, both classes of shares share pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average
shares outstanding and basic and diluted earnings per share is presented below for the Affected Quarterly Periods:
|
|
For the Three Months Ended
March 31, 2021
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Statement of Operations
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(472,150
|
)
|
|
$
|
-
|
|
|
$
|
(472,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
|
|
28,750,000
|
|
|
|
(16,611,111
|
)
|
|
|
12,138,889
|
|
Basic and diluted net loss per share, Class A ordinary shares
|
|
$
|
-
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
|
|
7,145,833
|
|
|
|
-
|
|
|
|
7,145,833
|
|
Basic and diluted net loss per share, Class B ordinary shares
|
|
$
|
(0.07
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.02
|
)
|
|
|
For the Three Months Ended
June 30, 2021
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Statement of Operations
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
107,305
|
|
|
$
|
-
|
|
|
$
|
107,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
|
|
28,750,000
|
|
|
|
-
|
|
|
|
28,750,000
|
|
Basic and diluted net loss per share, Class A ordinary shares
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.00
|
|
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
|
|
7,687,500
|
|
|
|
-
|
|
|
|
7,687,500
|
|
Basic and diluted net loss per share, Class B ordinary shares
|
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
|
|
For the Six Months Ended
June 30, 2021
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Statement of Operations
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(364,845
|
)
|
|
$
|
-
|
|
|
$
|
(364,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
|
|
28,750,000
|
|
|
|
(8,259,669
|
)
|
|
|
20,490,331
|
|
Basic and diluted net loss per share, Class A ordinary shares
|
|
$
|
-
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
|
|
7,418,163
|
|
|
|
-
|
|
|
|
7,418,163
|
|
Basic and diluted net loss per share, Class B ordinary shares
|
|
$
|
(0.05
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
There is no impact to the reported amounts for total assets, total
liabilities, cash flows or net income (loss). The impact of the restatement to the supplemental disclosures of noncash activities in the
previously reported statements of cash flow is presented below.
|
|
For the Three Months Ended
March 31, 2021
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Statement of Cash Flows - Supplemental disclosure of noncash activities:
|
|
|
|
|
|
|
|
|
|
Initial value of Class A ordinary shares subject to possible redemption
|
|
$
|
260,631,670
|
|
|
$
|
(260,631,670
|
)
|
|
$
|
-
|
|
Change in fair value of Class A ordinary shares subject to possible redemption
|
|
$
|
71,330
|
|
|
$
|
(71,330
|
)
|
|
$
|
-
|
|
Accretion of Class A ordinary shares subject to redemption amount
|
|
$
|
-
|
|
|
$
|
24,385,516
|
|
|
$
|
24,385,516
|
|
|
|
For the Six Months Ended
June 30, 2021
|
|
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Statement of Cash Flows - Supplemental disclosure of noncash activities:
|
|
|
|
|
|
|
|
|
|
Initial value of Class A ordinary shares subject to possible redemption
|
|
$
|
260,631,670
|
|
|
$
|
(260,631,670
|
)
|
|
$
|
-
|
|
Change in fair value of Class A ordinary shares subject to possible redemption
|
|
$
|
178,640
|
|
|
$
|
(178,640
|
)
|
|
$
|
-
|
|
Accretion of Class A ordinary shares subject to redemption amount
|
|
$
|
-
|
|
|
$
|
24,385,516
|
|
|
$
|
24,385,516
|
|
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected
not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements
with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the
extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited
condensed financial statements and the reported amounts of revenues and expenses during the reporting periods. Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates
included in these financial statements is the determination of the fair value of the warrant liability and Forward Purchase Agreement
(as defined below). Accordingly, the actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had no cash equivalents as of September 30, 2021 and December 31, 2020.
Investments
Held in the Trust Account
The
Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that
invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s
investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities.
When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at
fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of
each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments
held in Trust Account in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Coverage limit of $250,000, and investments held in Trust Account. The Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair
Value Measurements,” equal or approximate the carrying amounts represented in the condensed balance sheets.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Warrant
Liabilities and Forward Purchase Agreement
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company accounts for its warrants issued in connection with its Initial Public Offering and Private Placement and Forward Purchase Units
(as defined below) as derivative assets/liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the instruments
as assets/liabilities at fair value and adjusts the instruments to fair value at the end of each reporting period. The assets/liabilities
are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s
statements of operations. The fair value of warrants issued in connection with the Initial Public Offering was initially measured using
Monte-Carlo simulation and has subsequently been measured on the market price of such warrants at each measurement date when separately
listed and traded. The fair value of warrants issued in connection with the Private Placement has been estimated using Black-Scholes
Option Pricing Model at each measurement date while the fair value of the Forward Purchase Units has been measured using the John C Hull’s
Options, Futures and Other Derivatives model.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public
Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities
are expensed as incurred, presented as non-operating expenses in the statements of operations. Offering costs associated with the Class
A ordinary shares were charged against the carrying value of the Class A ordinary shares upon the completion of the Initial Public Offering.
The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to
require the use of current assets or require the creation of current liabilities.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Class
A Ordinary Shares Subject to Possible Redemption
The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’
equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2021, 28,750,000 Class A ordinary
shares subject to possible redemption are presented as temporary equity, respectively, outside of the shareholders’ equity section
of the Company’s balance sheet. As of December 31, 2020, there were no Class A ordinary shares issued and outstanding.
Effective
with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which
resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Share-based
Compensation
The
Company complies with the accounting and disclosure requirement of ASC Topic 718, “Compensation - Stock Compensation.” Share-based
compensation to employees and non-employees is recognized over the requisite service period based on the estimated grant-date fair value
of the awards. Share-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period
for each separately vesting portion of the award. The Company recognizes the expense for share-based compensation awards subject to performance-based
milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management
evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions
at each reporting date. Share-based compensation will be recognized in general and administrative expense in the statements of operations.
The Company issued option awards that contain both a performance condition and service condition. The option awards vest upon the consummation
of the initial business combination and will expire in five years after the date on which they first become exercisable. The Company
has determined that the consummation of an initial business combination is a performance condition subject to significant uncertainty.
As such, the achievement of the performance is not deemed to be probable of achievement until the consummation of the event, and therefore
no compensation has been recognized for the period from inception to September 30, 2021.
Income
Taxes
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December
31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position.
There
is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial
statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change
over the next twelve months.
KISMET
ACQUISITION THREE CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net
Income (Loss) per Ordinary Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has
two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro
rata between the two classes of shares. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted
average ordinary shares outstanding for the respective period.
The
calculation of diluted net income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the
Initial Public Offering and Private Placement to purchase 14,750,000 Class A ordinary shares because their exercise is contingent upon
future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per share is
the same as basic net income per share for the three and nine months ended September 30, 2021. Accretion associated with the redeemable
Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The
following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per ordinary
share:
|
|
For
the Three Months Ended
|
|
|
For
the Nine Months Ended
|
|
|
|
September
30,
2021
|
|
|
September
30,
2021
|
|
|
|
Class
A
|
|
|
Class
B
|
|
|
Class
A
|
|
|
Class
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation
of net income
|
|
$
|
3,030,551
|
|
|
$
|
810,343
|
|
|
$
|
2,648,414
|
|
|
$
|
827,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average ordinary shares outstanding, basic and diluted
|
|
|
28,750,000
|
|
|
|
7,687,500
|
|
|
|
24,116,300
|
|
|
|
7,536,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net income per ordinary share
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
|
For
the Period from September 15,
2020
(Inception) through
|
|
|
|
September
30,
2020
|
|
|
|
Class
A
|
|
|
Class
B
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
Allocation
of net loss
|
|
$
|
-
|
|
|
$
|
(5,470
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted
average ordinary shares outstanding, basic and diluted
|
|
|
-
|
|
|
|
6,750,000
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per ordinary share
|
|
$
|
-
|
|
|
$
|
(0.00
|
)
|
Recent
Accounting Pronouncements
In
August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
(“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required
under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the
derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06
on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The
Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently
adopted, would have a material effect on the accompanying financial statements.
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 3 - Initial Public Offering
On February 22, 2021, the Company consummated
its Initial Public Offering of 28,750,000 Units, including 3,750,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds
of $287.5 million, and incurring offering costs of approximately $16.2 million, of which approximately $10.1 million was for deferred
underwriting commissions.
Each Unit consists of one Class A ordinary share
and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase
one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 9).
Note 4 - Private Placement
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 5,166,667 Private Placement Warrants, at a price of $1.50 per Private
Placement Warrant with the Sponsor, generating gross proceeds of approximately $7.8 million, and incurring offering costs of approximately
$7,000.
Each whole Private Placement Warrant is exercisable
for one whole Class A ordinary share at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement
Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not
complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement
Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted
transferees.
The Sponsor agreed, subject to limited exceptions,
not to transfer, assign or sell any of its Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Note 5 - Related Party Transactions
Forward Purchase Agreement
In connection with the consummation of the Initial
Public Offering, the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”) with the Sponsor,
which provides for the purchase of $20.0 million of units (the “Forward Purchase Units”), which at the option of the Sponsor
can be increased to $50.0 million, with each unit consisting of one Class A ordinary share (the “Forward Purchase Shares”)
and one-third of one warrant to purchase one Class A ordinary share at $11.50 per share (the “Forward Purchase Warrants”),
for a purchase price of $10.00 per Forward Purchase Unit, in a private placement to occur concurrently with the closing of the initial
Business Combination. The purchase under the Forward Purchase Agreement is required to be made regardless of whether any Class A ordinary
shares are redeemed by the Public Shareholders. The forward purchase securities will be issued only in connection with the closing of
the initial Business Combination. The proceeds from the sale of forward purchase securities may be used as part of the consideration to
the sellers in the initial Business Combination, expenses in connection with the initial Business Combination or for working capital in
the post-transaction company. The Company classified the Forward Purchase Units as liabilities on its balance sheets.
Founder Shares
On September 21, 2020, the Company issued 7,687,500
Class B ordinary shares, par value $0.001 per share (the “Founder Shares”) to the Sponsor. On September 23, 2020, the Sponsor
paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange for issuance of the Founder Shares. The Sponsor
agreed to forfeit up to an aggregate of 937,500 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional
Units was not exercised in full by the underwriters, so that the Founder Shares would represent 20% of the Company’s issued and
outstanding shares after the Initial Public Offering plus the 2,000,000 Forward Purchase Shares underlying the Forward Purchase Units
(which at the option of the Sponsor can be increased to up to 5,000,000 Forward Purchase Shares). On February 22, 2021, the underwriter
fully exercised its over-allotment option; thus, these 937,500 Founder Shares were no longer subject to forfeiture.
The Sponsor agreed not to transfer, assign or
sell any of its Founder Shares until the earlier to occur of (i) one year after the date of the consummation of the initial Business Combination,
or earlier if, subsequent to the initial Business Combination, (x) the last reported sale price of the Class A ordinary shares equals
or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading
days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (y) the Company consummates
a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders having the right
to exchange their ordinary shares for cash, securities or other property.
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Related Party Loans
On September 23, 2020, the Sponsor agreed to loan
the Company up to $250,000 to cover costs related to the Initial Public Offering pursuant to a promissory note, which was later amended
on January 22, 2021 (the “Note”). The Note was non-interest bearing, unsecured and due upon the closing of the Initial Public
Offering. As of February 22, 2021, the Company borrowed approximately $126,000 under the Note. The Company repaid the Note in full on
February 24, 2021. Subsequent to the repayment, the facility was no longer available to the Company.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their affiliates may, but
are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business
Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise,
the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does
not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lenders’ discretion, up to $1.5 million of such Working Capital Loans may
be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical
to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined
and no written agreements exist with respect to such loans. As of September 30, 2021 and December 31, 2020, the Company had no borrowings
under the Working Capital Loans.
Administrative Services Agreement
Commencing on February 18, 2021, through the earlier
of consummation of the initial Business Combination and the liquidation, the Company agreed to pay an affiliate of the Sponsor $10,000
per month for office space, utilities, secretarial support and administrative services. For the three and nine months ended September
30, 2021, the Sponsor waived the fees and as such, the Company did not incur any expense for these services.
Director Compensation
Commencing on February 18, 2021, through the earlier
of consummation of the initial Business Combination and the Company’s liquidation, the Company agreed to pay its directors $40,000
each and granted each of the independent directors an option to purchase 40,000 Class A ordinary shares at an exercise price of $10.00
per share, which will vest upon the consummation of the initial Business Combination and will expire five years after the date on which
it first became exercisable. In addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be
reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential
target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a
quarterly basis all payments that were made to the Sponsor, officers or directors, or the Company’s or their affiliates. During
the three and nine months ended September 30, 2021, the Company recorded approximately $15,000 and $37,000 of director compensation, respectively.
Note 6 - Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement
Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the
exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration
rights pursuant to a registration rights agreement dated February 17, 2021. The holders of these securities are entitled to make up to
three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The
Company will bear the expenses incurred in connection with the filing of any such registration statements.
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Pursuant to the Forward Purchase Agreement, the
Company agreed to use its commercially reasonable efforts (i) to file within 30 days after the closing of the initial Business Combination
a registration statement with the SEC for a secondary offering of the Forward Purchase Shares and the Forward Purchase Warrants (and underlying
Class A ordinary shares), (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later
than sixty (60) days after the initial filing and (iii) to maintain the effectiveness of such registration statement until the earliest
of (A) the date on the Sponsor or its assignees cease to hold the securities covered thereby and (B) the date all of the securities covered
thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act. In addition, the Forward Purchase
Agreement provides for “piggy-back” registration rights to the holders of forward purchase securities to include their securities
in other registration statements filed by the Company.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from February 17, 2021 to purchase up to 3,750,000 additional Units at the Initial Public Offering price less the underwriting
discounts and commissions. On February 22, 2021, the underwriter fully exercised its over-allotment option.
The underwriters were entitled to an underwriting
discount of $0.20 per Unit, or approximately $5.8 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition,
$0.35 per Unit, or approximately $10.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions.
The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company
completes a Business Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Note 7 - Warrants
As of September 30, 2021, the Company had 9,583,333
Public Warrants and 5,166,667 Private Placement Warrants outstanding. There were no warrants outstanding at December 31, 2020.
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under
the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating
to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of
the state of residence of the holder (or the Company permits holders to exercise their warrants on a cashless basis under certain circumstances).
The Company agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business
Combination, the Company will use commercially reasonable efforts to file with the SEC and have an effective registration statement covering
the Class A ordinary shares issuable upon exercise of the warrants and to maintain a current prospectus relating to those Class A ordinary
shares until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class
A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial
Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when
the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A ordinary shares are at the
time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise
their warrants to do so on a “cashless basis” and, in the event the Company so elects, the Company will not be required to
file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
KISMET ACQUISITION THREE
CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising
purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20
per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board
of directors and, in the case of any such issuance to the Sponsor or an affiliate of the Sponsor, without taking into account any Founder
Shares held by the Sponsor or an affiliate of the Sponsor, as applicable, prior to such issuance) (the “Newly Issued Price”),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of the initial Business Combination on the date of the completion of the initial Business Combination (net of redemptions),
and (z) the volume-weighted average trading price of the Class A ordinary shares during the 20 trading day period starting on the trading
day prior to the day on which the Company completes its initial Business Combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices described under “Redemption of warrants
when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants when the price per Class A
ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the
Market Value and the Newly Issued Price, respectively.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class
A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days
after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will
be non-redeemable so long as they are held by the initial purchaser or such purchaser’s permitted transferees. If the Private Placement
Warrants are held by someone other than the Initial Shareholder or its permitted transferees, the Private Placement Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption of warrants when the price per Class
A ordinary share equals or exceeds $18.00:
Once the warrants become exercisable, the Company
may call the outstanding warrants (excluding the Private Placement Warrants), in whole and not in part, at a price of $0.01 per warrant:
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30 trading day period ending three business days before the Company sends the notice of redemption to the warrant holders (the “Reference Value”).
|
The Company will not redeem the warrants as described
above unless a registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants
is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period.
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Redemption of warrants when the price per Class A ordinary share
equals or exceeds $10.00:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants, in whole and not in part, at a price of $0.10 per warrant:
|
●
|
upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of Class A ordinary shares to be determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares; and
|
|
●
|
if, and only if, and only if, the Reference Value equals or exceeds $10.00 per Public Share (as adjusted), and
|
|
●
|
if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
The “fair market value” of Class A
ordinary shares for the above purpose shall mean the volume-weighted average price of the Class A ordinary shares for the 10 trading days
immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be
exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
In no event will the Company be required to net
cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
Note 8 – Class A Ordinary Shares Subject
to Possible Redemption
The Company’s Class A ordinary shares feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.001 per share. Holders of the Company’s
Class A ordinary shares are entitled to one vote for each share. As of September 30, 2021, there were 28,750,000 Class A ordinary shares
outstanding, which were all subject to possible redemption and are classified outside of permanent equity in the condensed balance sheet.
There has been no change in the redemption value of Class A ordinary shares since the IPO date.
The Class A ordinary shares subject to possible
redemption reflected on the condensed balance sheets is reconciled on the following table:
Gross proceeds received from Initial Public Offering
|
|
$
|
287,500,000
|
|
Less:
|
|
|
|
|
Fair value of Public Warrants at issuance
|
|
|
(8,625,000
|
)
|
Offering costs allocated to Class A ordinary shares
|
|
|
(15,760,516
|
)
|
Plus:
|
|
|
|
|
Accretion on Class A ordinary shares to redemption value
|
|
|
24,385,516
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
287,500,000
|
|
Note 9 - Shareholders’ Equity (Deficit)
Class A Ordinary Shares - The Company
is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.001 per share. Holders of the Company’s Class
A ordinary shares are entitled to one vote for each share. At September 30, 2021, there were 28,750,000 Class A ordinary shares outstanding,
and all of which were subject to possible redemption and classified as temporary equity. At December 31, 2020, there were no Class A ordinary
shares issued and outstanding (See Note 8).
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Class B Ordinary Shares - The Company
is authorized to issue 10,000,000 Class B ordinary shares with a par value of $0.001 per share. On September 23, 2020, the Company issued
7,687,500 Class B ordinary shares. Of the 7,687,500 shares outstanding, up to 937,500 Class B ordinary shares were subject to forfeiture,
to the Company by the Initial Shareholder for no consideration to the extent that the underwriters’ over-allotment option was not
exercised in full or in part, so that the Initial Shareholders would collectively own 20% of the Company’s issued and outstanding
ordinary shares after the Initial Public Offering plus the potential Forward Purchase Shares. On February 22, 2021, the underwriters fully
exercised their over-allotment option; thus, these 937,500 Class B ordinary shares were no longer subject to forfeiture.
Ordinary shareholders of record are entitled to
one vote for each share held on all matters to be voted on by shareholders. Except as described below, holders of Class A ordinary shares
and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholders except
as required by law.
The Class B ordinary shares will automatically
convert into Class A ordinary shares at the time of the initial Business Combination or earlier at the option of the holders thereof at
a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on
an as-converted basis, 20% of the sum of (i) the total number of the ordinary shares issued and outstanding upon completion of the Initial
Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise
of any equity-linked securities or rights issued or deemed issued by the Company in connection with or in relation to the completion of
the initial Business Combination (including the Forward Purchase Shares, but not the Forward Purchase Warrants), excluding any Class A
ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be
issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor or any of its affiliates
or any member of the Company’s management team upon conversion of Working Capital Loans. In no event will the Class B ordinary shares
convert into Class A ordinary shares at a rate of less than one-to-one.
Note 10 - Fair Value Measurements
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021, and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
|
|
Fair Value Measured as of September 30, 2021
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
$
|
287,520,749
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
287,520,749
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities - public warrants
|
|
$
|
4,983,333
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,983,333
|
|
Warrant liabilities - private warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,686,667
|
|
|
$
|
2,686,667
|
|
As of December 31, 2020, there were no assets
or liabilities that were measured at fair value on a recurring basis.
Transfers to/from Levels 1, 2, and 3 are recognized
at the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 fair value measurement
to a Level 1 fair value measurement when the Public Warrants were separately listed and traded in April 2021.
The fair value of warrants issued in connection
with the Initial Public Offering was initially measured using Monte-Carlo simulation and subsequently been measured on the market price
of such warrants at each measurement date when separately listed and traded. The fair value of warrants issued in connection with the
Private Placement has been estimated using Black-Scholes Option Pricing Model at each measurement date. For the three and nine months
ended September 30, 2021, the Company recognized a decrease in the fair value of warrant liabilities of approximately $4.3 million and
$5.7 million, respectively, presented as change in fair value of derivative warrant liabilities on the accompanying statements of operations.
KISMET ACQUISITION THREE CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The fair value of the Forward Purchase Units has
been measured using the John C Hull’s Options, Futures and Other Derivatives model at each measurement date. The Company determined
the fair value of the Forward Purchase Units was insignificant as of September 30, 2021.
The fair value of marketable securities held in
Trust Account is determined using quoted prices in active markets.
The change in the fair value of the Level 3 warrant
liabilities for the three and nine months ended September 30, 2021, is summarized as follows:
Warrant liabilities at January 1, 2021
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
13,326,666
|
|
Change in fair value of warrant liabilities
|
|
|
(95,833
|
)
|
Warrant liabilities at March 31, 2021
|
|
|
13,230,833
|
|
Public Warrants transfer to Level 1
|
|
|
(8,529,166
|
)
|
Change in fair value of warrant liabilities
|
|
|
(516,667
|
)
|
Warrant liabilities at June 30, 2021
|
|
|
4,185,000
|
|
Change in fair value of warrant liabilities
|
|
|
(1,498,333
|
)
|
Warrant liabilities at September 30, 2021
|
|
$
|
2,686,667
|
|
The change in the fair value of the derivative liabilities of the forward
purchase agreement for the three and nine months ended September 30, 2021, is summarized as follows:
Derivative liabilities at January 1, 2021
|
|
$
|
-
|
|
Initial fair value of forward purchase agreement
|
|
|
30,908
|
|
Change in fair value of derivative liabilities
|
|
|
(30,908
|
)
|
Derivative liabilities at September 30, 2021
|
|
$
|
-
|
|
The estimated fair value of the derivative warrant
liabilities is determined using Level 3 inputs. However, inherent uncertainties are involved. If factors or assumptions change, the estimated
fair values could be materially different. Inherent in a Monte-Carlo simulation and Black-Scholes Option Pricing model are assumptions
related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility
of its ordinary shares based on historical volatility of select peer companies that matches the expected remaining life of the warrants.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected
remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The
dividend rate is based on the historical rate, which the Company anticipates remaining at zero. Any changes in these assumptions can change
the valuation significantly.
KISMET ACQUISITION THREE
CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table provides quantitative information
regarding Level 3 fair value measurements inputs for warrant liabilities at their measurement dates:
|
|
As of
February 22,
2021
|
|
|
As of
September 30,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.70
|
|
|
$
|
9.73
|
|
Term (in years)
|
|
|
6.00
|
|
|
|
5.39
|
|
Volatility
|
|
|
15.90
|
%
|
|
|
10.50
|
%
|
Risk-free interest rate
|
|
|
0.76
|
%
|
|
|
1.04
|
%
|
Dividend yield
|
|
|
-
|
|
|
|
-
|
|
The estimated fair value of the derivative assets/liabilities
of the Forward Purchase Units is determined using Level 3 inputs. However, inherent uncertainties are involved. If factors or assumptions
change, the estimated fair values could be materially different. Inherent in the John C Hull’s Options, Futures and Other Derivatives
model are assumptions related to expected, expected life, risk-free interest rate and probability of completing a business combination.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected
remaining life of the Forward Purchase Units. The expected life of the Forward Purchase Units is assumed to be equivalent to their remaining
contractual term.
The following table provides quantitative information
regarding Level 3 fair value measurements inputs for derivative assets/liabilities of the Forward Purchase Units at their measurement
dates:
|
|
As of
February 22,
2021
|
|
|
As of
September 30,
2021
|
|
Stock price
|
|
$
|
9.70
|
|
|
$
|
9.73
|
|
Warrant price
|
|
$
|
0.90
|
|
|
$
|
0.52
|
|
Term (in years)
|
|
|
1.00
|
|
|
|
0.38
|
|
Risk-free interest rate
|
|
|
0.07
|
%
|
|
|
0.05
|
%
|
Note 11 - Subsequent Events
Management has evaluated subsequent events to
determine if events or transactions occurring through the date the financial statements were issued. Based upon this review, the Company
did not identify any subsequent event that would have required adjustment or disclosure in the condensed financial statements.