Item 1. Financial Statements.
KISMET ACQUISITION TWO CORP.
CONDENSED BALANCE SHEETS
| |
September 30,
2022 | | |
December 31,
2021 | |
| |
(Unaudited) | | |
| |
Assets | |
| | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 986 | | |
$ | 63,676 | |
Prepaid expenses | |
| 121,837 | | |
| 315,652 | |
Total current assets | |
| 122,823 | | |
| 379,328 | |
Investments held in Trust Account | |
| 231,366,839 | | |
| 230,038,512 | |
Derivative assets - forward purchase agreement | |
| - | | |
| 88,970 | |
Total Assets | |
$ | 231,489,662 | | |
$ | 230,506,810 | |
| |
| | | |
| | |
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 62,932 | | |
$ | 39,315 | |
Accounts payable - related party | |
| - | | |
| 17,321 | |
Accrued expenses | |
| 11,760 | | |
| 130,094 | |
Note payable - related party | |
| 318,700 | | |
| - | |
Total current liabilities | |
| 393,392 | | |
| 186,730 | |
Derivative liabilities - warrants | |
| 603,333 | | |
| 6,033,334 | |
Derivative liabilities - forward purchase agreement | |
| 58,021 | | |
| - | |
Deferred underwriting commissions | |
| 2,817,500 | | |
| 8,050,000 | |
Total liabilities | |
| 3,872,246 | | |
| 14,270,064 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
| |
| | | |
| | |
Class A ordinary shares subject to possible redemption, $0.001 par value; 23,000,000 shares at approximately $10.06 and $10.00 per share redemption value as of September 30, 2022 and December 31, 2021, respectively | |
| 231,266,839 | | |
| 230,000,000 | |
| |
| | | |
| | |
Shareholders’ Deficit: | |
| | | |
| | |
Class A ordinary shares, $0.001 par value; 200,000,000 shares authorized; no non-redeemable shares issued or outstanding as of September 30, 2022 and December 31, 2021 | |
| - | | |
| - | |
Class B ordinary shares, $0.001 par value; 10,000,000 shares authorized; 6,250,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | |
| 6,250 | | |
| 6,250 | |
Accumulated deficit | |
| (3,655,673 | ) | |
| (13,769,504 | ) |
Total shareholders’ deficit | |
| (3,649,423 | ) | |
| (13,763,254 | ) |
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | |
$ | 231,489,662 | | |
$ | 230,506,810 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
KISMET ACQUISITION TWO CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For the Three Months Ended | | |
For the Nine Months Ended | |
| |
September 30,
2022 | | |
September 30,
2021 | | |
September 30,
2022 | | |
September 30,
2021 | |
Operating expenses | |
| | |
| | |
| | |
| |
General and administrative expenses | |
$ | 163,271 | | |
$ | 820,117 | | |
$ | 463,167 | | |
$ | 1,151,600 | |
Loss from Operations | |
| (163,271 | ) | |
| (820,117 | ) | |
| (463,167 | ) | |
| (1,151,600 | ) |
Change in fair value of derivative assets and liabilities | |
| 165,928 | | |
| 1,810,000 | | |
| 5,283,010 | | |
| 1,656,667 | |
Offering costs associated with issuance of warrants | |
| - | | |
| - | | |
| - | | |
| (395,355 | ) |
Forgiveness of deferred underwriting commissions | |
| 5,232,500 | | |
| - | | |
| 5,232,500 | | |
| - | |
Unrealized gain from investments held in Trust Account | |
| 1,015,575 | | |
| 7,530 | | |
| 1,328,327 | | |
| 16,578 | |
Net income | |
$ | 6,250,732 | | |
$ | 997,413 | | |
$ | 11,380,670 | | |
$ | 126,290 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A ordinary shares, basic and diluted | |
| 23,000,000 | | |
| 23,000,000 | | |
| 23,000,000 | | |
| 18,619,048 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income per share, Class A ordinary shares | |
$ | 0.21 | | |
$ | 0.03 | | |
$ | 0.39 | | |
$ | 0.01 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class B ordinary shares, basic | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,107,143 | |
Weighted average shares outstanding of Class B ordinary shares, diluted | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,250,000 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income per share, Class B ordinary shares | |
$ | 0.21 | | |
$ | 0.03 | | |
$ | 0.39 | | |
$ | 0.01 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
KISMET ACQUISITION TWO CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY (DEFICIT)
For the Three and Nine Months Ended September
30, 2022
| |
Ordinary Shares | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - December 31, 2021 | |
| - | | |
$ | - | | |
| 6,250,000 | | |
$ | 6,250 | | |
$ | - | | |
$ | (13,769,504 | ) | |
$ | (13,763,254 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,080,721 | | |
| 4,080,721 | |
Balance - March 31, 2022 (unaudited) | |
| - | | |
| - | | |
| 6,250,000 | | |
| 6,250 | | |
| - | | |
| (9,688,783 | ) | |
| (9,682,533 | ) |
Accretion on Class A ordinary shares subject to possible redemption amount | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (251,264 | ) | |
| (251,264 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,049,217 | | |
| 1,049,217 | |
Balance - June 30, 2022 (unaudited) | |
| - | | |
| - | | |
| 6,250,000 | | |
| 6,250 | | |
| - | | |
| (8,890,830 | ) | |
| (8,884,580 | ) |
Accretion on Class A ordinary shares subject to possible redemption amount | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,015,575 | ) | |
| (1,015,575 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6,250,732 | | |
| 6,250,732 | |
Balance - September 30, 2022 (unaudited) | |
| - | | |
$ | - | | |
| 6,250,000 | | |
$ | 6,250 | | |
$ | - | | |
$ | (3,655,673 | ) | |
$ | (3,649,423 | ) |
For the Three and Nine Months Ended September
30, 2021
| |
| | |
| | |
| | |
Total | |
| |
Ordinary Shares | | |
Additional | | |
| | |
Shareholders’ | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(Deficit) | |
Balance - December 31, 2020 | |
| - | | |
$ | - | | |
| 6,250,000 | | |
$ | 6,250 | | |
$ | 18,750 | | |
$ | (13,401 | ) | |
$ | 11,599 | |
Excess cash received over the fair value of the private warrants | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,596,000 | | |
| - | | |
| 2,596,000 | |
Accretion on Class A ordinary shares subject to possible redemption amount | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,614,750 | ) | |
| (16,894,180 | ) | |
| (19,508,930 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (788,321 | ) | |
| (788,321 | ) |
Balance - March 31, 2021 (unaudited) | |
| - | | |
| - | | |
| 6,250,000 | | |
| 6,250 | | |
| - | | |
| (17,695,902 | ) | |
| (17,689,652 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (82,802 | ) | |
| (82,802 | ) |
Balance - June 30, 2021 (unaudited) | |
| - | | |
| - | | |
| 6,250,000 | | |
| 6,250 | | |
| - | | |
| (17,778,704 | ) | |
| (17,772,454 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 997,413 | | |
| 997,413 | |
Balance - September 30, 2021 (unaudited) | |
| - | | |
$ | - | | |
| 6,250,000 | | |
$ | 6,250 | | |
$ | - | | |
$ | (16,781,291 | ) | |
$ | (16,775,041 | ) |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
KISMET ACQUISITION TWO CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For the Nine Months Ended | |
| |
September 30, 2022 | | |
September 30, 2021 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net income | |
$ | 11,380,670 | | |
$ | 126,290 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Change in fair value of derivative assets and liabilities | |
| (5,283,010 | ) | |
| (1,656,667 | ) |
Offering costs associated with issuance of warrants | |
| - | | |
| 395,355 | |
Forgiveness of deferred underwriting commissions | |
| (5,232,500 | ) | |
| - | |
Unrealized gain from investments held in Trust Account | |
| (1,328,327 | ) | |
| (16,578 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 193,815 | | |
| (449,345 | ) |
Accounts payable | |
| 23,617 | | |
| 800,117 | |
Accounts payable - related party | |
| (17,321 | ) | |
| 36,964 | |
Accrued expenses | |
| (48,334 | ) | |
| 5,905 | |
Net cash used in operating activities | |
| (311,390 | ) | |
| (757,959 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Cash deposited in Trust Account | |
| - | | |
| (230,000,000 | ) |
Net cash used in investing activities | |
| - | | |
| (230,000,000 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from note payable to related party | |
| 318,700 | | |
| 52,143 | |
Repayment of note payable to related party | |
| - | | |
| (110,780 | ) |
Proceeds received from initial public offering, gross | |
| - | | |
| 230,000,000 | |
Proceeds received from private placement | |
| - | | |
| 6,600,000 | |
Offering costs paid | |
| (70,000 | ) | |
| (4,891,127 | ) |
Net cash provided by financing activities | |
| 248,700 | | |
| 231,650,236 | |
| |
| | | |
| | |
Net change in cash | |
| (62,690 | ) | |
| 892,277 | |
| |
| | | |
| | |
Cash - beginning of the period | |
| 63,676 | | |
| - | |
Cash - end of the period | |
$ | 986 | | |
$ | 892,277 | |
| |
| | | |
| | |
Supplemental disclosure of noncash activities: | |
| | | |
| | |
Offering costs included in accrued expenses | |
$ | - | | |
$ | 70,000 | |
Deferred underwriting commissions | |
$ | - | | |
$ | 8,050,000 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization, Business
Operations and Going Concern
Kismet Acquisition Two 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 acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing
all or substantially all of the assets of, or engaging in any other similar initial business combination with one or more businesses or
entities that the Company has not yet identified (“Business Combination”).
As of September 30, 2022, the Company had not
yet commenced operations. All activity for the period from September 15, 2020 (inception) through September 30, 2022, relates to the Company’s
formation and the initial public offering (the “Initial Public Offering” or “IPO”), 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 generates non-operating income in the form of interest
income on investments held in 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’s sponsor was Kismet Sponsor
Limited, a British Virgin Islands company (the “Prior Sponsor”). The Registration Statement for the Initial Public Offering
on Form S-1 initially filed with the U.S. Securities and Exchange Commission (“SEC”) on January 26, 2021, as amended (File
No. 333- 252419), was declared effective on February 17, 2021 (the “Registration Statement”). On February 22, 2021, the Company
consummated its Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A Ordinary Shares
included in the Units sold, the “Public Shares”), including 3,000,000 additional Units to cover over-allotments (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.1 million,
of which approximately $8.1 million was for deferred underwriting commissions (see Note 6).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 4,400,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant
with the Prior Sponsor, generating gross proceeds of $6.6 million, and incurring offering costs of approximately $7,000 (see Note 4).
On June 15, 2022, the Prior Sponsor transferred
6,250,000 Class B Ordinary Shares and 4,400,000 Private Placement Warrants held by the Prior Sponsor to Quadro Sponsor LLC, a Delaware
limited liability company and wholly owned subsidiary of the Prior Sponsor (the “New Sponsor” or “Sponsor”). On
June 30, 2022, the Prior Sponsor transferred all the membership interests of the New Sponsor to Quadro IH DMCC (“Quadro”),
a company registered in Dubai Multi Commodities Centre in the United Arab Emirates (the “Sponsor Transaction”). In connection
with the Sponsor Transaction, the Prior Sponsor also assigned to the New Sponsor all of its rights and obligations under the (i) Letter
Agreement, dated as of February 17, 2021, (ii) Registration Rights Agreement (as defined in Note 5) and (iii) Promissory Note (as defined
below). In addition, the Company and Kismet Capital Group LLC (“Kismet LLC”) mutually terminated the Administrative Services
Agreement dated February 17, 2021 (the “Administrative Services Agreement”). As a result, the Company is no longer obligated
to pay a $10,000 monthly fee to Kismet LLC pursuant to the Administrative Services Agreement.
Upon the closing of the Initial Public Offering
and the Private Placement, $230.0 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
(“Continental”) 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 TWO 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 (see Note 6). These Public Shares were recorded at a redemption value and classified as temporary
equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”).
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 were adopted by the Company upon the consummation
of the Initial Public Offering (the “Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender
offer rules of 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 (as defined in Note 5) prior to the Initial Public Offering (the “Initial Shareholder”) agreed to vote its Founder
Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the
Initial Shareholder agreed to waive its redemption rights with respect to their Founder Shares and Public Shares in connection with the
completion of a Business Combination.
Notwithstanding the foregoing, the 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 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 Company’s
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 TWO 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 Shareholder 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 Shareholder 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 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 Going Concern
As of September 30, 2022, the Company had $986
in its operating bank account and working capital deficit of approximately $271,000.
The Company’s liquidity needs to date have
been satisfied through a contribution of $25,000 from the Prior Sponsor to cover certain expenses in exchange for the issuance of the
Founder Shares, a loan of approximately $111,000 from the Prior Sponsor pursuant to the IPO 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 IPO Note in full
on February 24, 2021. 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, 2022 and December 31, 2021, there were no amounts outstanding under
any Working Capital Loans.
On April 13, 2022, the Company issued an unsecured
promissory note in the amount of up to $200,000 to the Prior Sponsor (the “Promissory Note”). The Promissory Note bears no
interest and is due and payable on April 14, 2023. On May 25, 2022, the Company and the Prior Sponsor amended the Promissory Note agreement
and increased the principal amount to $400,000. On June 30, 2022, the Prior Sponsor assigned all of its rights and obligations under the
Promissory Note to the New Sponsor in connection with the Sponsor Transaction. As of September 30, 2022, the Company has drawn approximately
$319,000 under the Promissory Note.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company may need to raise additional capital
through loans or additional investments from its Sponsor, its officers or directors or their affiliates. The Company’s officers,
directors and Sponsor, or their affiliates, may, but are not obligated to, loan the Company funds, from time to time or at any time, in
whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company
may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction, reducing overhead expenses, and extending the terms and due dates of certain accrued expenses and other liabilities.
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In connection
with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial
Statements - Going Concern” (“ASC 205-40”), management has determined that the liquidity condition, mandatory liquidation
and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. Management continues to seek
to complete a Business Combination prior to the mandatory liquidation date. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after February 22, 2023. The accompanying unaudited condensed financial statements
do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
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, certain disclosures included in the annual
financial statements have been condensed or omitted from the accompanying unaudited condensed financial statements as they are not required
for interim financial statements under GAAP and the rules of the SEC. In the opinion of management, the accompanying 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, 2022 are not necessarily
indicative of the results that may be expected through December 31, 2022 or any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form
10-K for the fiscal year ended December 31, 2021, as filed by the Company with the SEC on March 31, 2022 (the “2021 Annual Report”).
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.
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 accompanying 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.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Use of Estimates
The preparation of the accompanying 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 accompanying 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 the accompanying unaudited condensed financial statements is the determination of the fair value of the derivative assets
and liabilities. 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, 2022 and December 31, 2021.
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 Corporation 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.
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 accompanying condensed 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 unrealized 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.
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, equals or approximates
the carrying amounts represented in the accompanying condensed balance sheets because of the short-term nature of the instruments or because
the instruments are recognized at fair value.
KISMET
ACQUISITION TWO CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 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.
Derivative Assets and Liabilities
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 warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to
ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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, the Private Placement Warrants and units that may be issued in connection with the Forward
Purchase Agreement (as defined in Note 5) (the “Forward Purchase Units”) as derivative assets/liabilities in accordance with
ASC 815. 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 accompanying unaudited condensed statements of operations. The fair value of warrants
issued in connection with the Initial Public Offering was initially measured using a 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 the Private
Placement Warrants was initially measured using a Black-Scholes Option Pricing Model and subsequently using the public market value of
the warrants issued in connection with its Initial Public Offering. The fair value of the Forward Purchase Units has been measured using
John C. Hull’s Options, Futures, and Other Derivatives model at each measurement date.
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 derivative warrant liabilities are expensed as incurred, presented
as non-operating expenses in the condensed 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.
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 480. 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 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, 2022 and December 31, 2021, 23,000,000 Class A Ordinary Shares subject to possible redemption are presented as temporary
equity, outside of the shareholders’ equity (deficit) section of the accompanying condensed balance sheets.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of the Class A Ordinary Shares subject to possible redemption to equal the redemption
value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date
for the security. 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 FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC 718”). 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 is recognized in general and administrative expense in the accompanying unaudited condensed
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, 2022.
Income Taxes
FASB ASC Topic 740, “Income Taxes,”
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, 2022 and December
31, 2021. 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 accompanying 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.
Net Income per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share” (“ASC 260”). 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 per Ordinary Share is calculated by dividing the net income by the weighted average number
of Ordinary Shares outstanding for the respective period. This presentation assumes a Business Combination as the most likely outcome.
The calculation of diluted net income per Ordinary
Share does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement Warrants
to purchase 12,066,667 Class A Ordinary Shares because their exercise is contingent upon future events and because inclusion would be
anti-dilutive under the treasury stock method. Accretion associated with the redeemable Class A Ordinary Shares is excluded from earnings
per share as the redemption value approximates fair value.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The table below presents a reconciliation of the
numerator and denominator used to compute basic and diluted net income per share for each class of Ordinary Shares:
| |
For the Three Months Ended | | |
For the Three Months Ended | |
| |
September 30, 2022 | | |
September 30, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 4,915,106 | | |
$ | 1,335,626 | | |
$ | 784,291 | | |
$ | 213,122 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average ordinary shares outstanding, basic and diluted | |
| 23,000,000 | | |
| 6,250,000 | | |
| 23,000,000 | | |
| 6,250,000 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income per ordinary share | |
$ | 0.21 | | |
$ | 0.21 | | |
$ | 0.03 | | |
$ | 0.03 | |
| |
For the Nine Months Ended | | |
For the Nine Months Ended | |
| |
September 30, 2022 | | |
September 30, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income - basic | |
$ | 8,948,903 | | |
$ | 2,431,767 | | |
$ | 95,098 | | |
$ | 31,192 | |
Allocation of net income - diluted | |
$ | 8,948,903 | | |
$ | 2,431,767 | | |
$ | 94,551 | | |
$ | 31,739 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average ordinary shares outstanding, basic | |
| 23,000,000 | | |
| 6,250,000 | | |
| 18,619,048 | | |
| 6,107,143 | |
Weighted average ordinary shares outstanding, diluted | |
| 23,000,000 | | |
| 6,250,000 | | |
| 18,619,048 | | |
| 6,250,000 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income per ordinary share | |
$ | 0.39 | | |
$ | 0.39 | | |
$ | 0.01 | | |
$ | 0.01 | |
Diluted net income per ordinary share | |
$ | 0.39 | | |
$ | 0.39 | | |
$ | 0.01 | | |
$ | 0.01 | |
Recent Accounting Pronouncements
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 unaudited condensed financial statements.
Note 3 - Initial Public Offering
On February 22, 2021, the Company consummated
its Initial Public Offering of 23,000,000 Units, including 3,000,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds
of $230.0 million, and incurring offering costs of approximately $13.1 million, of which approximately $8.1 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 7).
Note 4 - Private Placement
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 4,400,000 Private Placement Warrants, at a price of $1.50 per Private
Placement Warrant with the Prior Sponsor, generating gross proceeds of $6.6 million, and incurring offering costs of approximately $7,000.
On June 15, 2022, the Prior Sponsor transferred 4,400,000 Private Placement Warrants to the New Sponsor.
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 Prior 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.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
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 Prior Sponsor,
which provides for the purchase of $20.0 million Forward Purchase Units, which at the option of the Prior Sponsor, can be increased to
$50.0 million, with each Forward Purchase 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,” together
with the Forward Purchase Units and the Forward Purchase Shares, the “Forward Purchase Securities”), 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 derivative instruments on the accompanying condensed balance sheets. The
initial value of the Forward Purchase Units was insignificant, and the Company recognized a loss in the change in the fair value of the
derivative assets (liabilities) of approximately $196,000 and $147,000 for the three and nine months ended September 30, 2022.
Founder Shares
On September 21, 2020, the Company issued 4,812,500
Class B Ordinary Shares, par value $0.001 per share (the “Founder Shares”) to the Prior Sponsor. On September 23, 2020, the
Prior Sponsor paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange for issuance of the Founder Shares.
On January 25, 2021, the Company effected a stock dividend of 1,437,500 shares with respect to Class B Ordinary Shares, resulting in an
aggregate of 6,250,000 Founder Shares outstanding. The Prior Sponsor agreed to forfeit up to an aggregate of 750,000 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 Prior 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 750,000 Founder
Shares were no longer subject to forfeiture.
On June 15, 2022, the Prior Sponsor transferred
all 6,250,000 Founder Shares to the New Sponsor.
The New 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.
Related Party Loans
On September 23, 2020, the Prior 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 “IPO Note”). The IPO 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 $111,000 under the IPO Note. The Company repaid
the IPO Note in full on February 24, 2021. Subsequent to the repayment, the facility was no longer available to the Company.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
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, 2022 and December 31, 2021, the Company had no borrowings
under any Working Capital Loans.
On April 13, 2022, the Company issued the Promissory
Note to the Prior Sponsor for an aggregate of up to $200,000. On May 25, 2022, the Prior Sponsor amended the Promissory Note agreement
and increased the principal amount to $400,000. The Promissory Note bears no interest, may be prepaid at any time and is due and payable
on April 14, 2023. On June 30, 2022, the Prior Sponsor assigned all of its rights and obligations under the Promissory Note to the New
Sponsor in connection with the Sponsor Transaction. As of September 30, 2022, the Company has drawn approximately $319,000 under the Promissory
Note.
Administrative Services Agreement
Commencing on February 17, 2021, through the earlier
of consummation of the initial Business Combination and the liquidation, the Company agreed to pay Kismet LLC, an affiliate of the Prior
Sponsor, $10,000 per month for office space, utilities, secretarial support and administrative services. Fees for such services were waived
for the three and nine months ended September 30, 2022 and 2021.
On June 30, 2022, in connection with the Sponsor
Transaction, the Company and Kismet LLC mutually terminated the Administrative Services Agreement. As a result, the Company is no longer
obligated to pay a $10,000 monthly fee pursuant to the Administrative Services Agreement.
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 reviews, on a quarterly
basis, all payments that are made to the Sponsor, officers or directors, or the Company’s or their affiliates.
On May 25, 2022, one of the directors waived his
right to receive a payment of $40,000 and the Company recorded approximately $10,000 and $13,000 of director compensation during the three
and nine months ended September 30, 2022, respectively. During the three and nine months ended September 30, 2021, the Company recorded
approximately $15,000 and $37,000 of director compensation, respectively. As of September 30, 2022 and December 31, 2021, the Company
has payables recognized of approximately $0 and $17,000, respectively, for director compensation, which is classified as accounts payable
- related party in the accompanying condensed balance sheets.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Departure and Appointment of Officers
On June 30, 2022, concurrently with the Sponsor
Transaction, Ivan Tavrin, Chief Executive Officer and Chairman of the Company’s board of directors, resigned as Chairman and Chief
Executive Officer of the Company, and as the Company’s principal financial and accounting officer.
Effective June 30, 2022, the Company’s board
of directors appointed Mr. Dimitri Elkin to serve as the Company’s Chief Executive Officer. Mr. Elkin is also serving as the Company’s
principal financial and accounting officer.
Note 6 - Commitments and Contingencies
Registration Rights
The holders of the Founder Shares and Private
Placement Warrants (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) were entitled to registration rights pursuant to a registration rights agreement dated
February 17, 2021 (the “Registration Rights Agreement”). 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. On June 30, 2022, in connection
with the Sponsor Transaction, the Prior Sponsor assigned to the New Sponsor all of its rights and obligations under the Registration Rights
Agreement.
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 Prior 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 3,000,000 additional Units at the Initial Public Offering price less the underwriting
discounts and commissions. On February 22, 2021, the underwriters fully exercised their over-allotment option.
The underwriters were entitled to an underwriting
discount of $0.20 per Unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35
per Unit, or approximately $8.1 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.
During the three and nine months ended September
30, 2022, two of the underwriters in the Company’s initial public offering waived their rights to receive the deferred underwriting
discount, as a result, the Company recognized a gain of approximately $5.2 million from extinguishment of deferred underwriting commissions
as reflected in the unaudited condensed statements of operations.
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 accompanying unaudited condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
In February 2022, a military conflict started
between Russia and Ukraine. The ongoing military conflict between Russia and Ukraine has provoked strong reactions from the United States,
the United Kingdom, the European Union and various other countries around the world, including the imposition of broad financial and economic
sanctions against Russia. Further, the precise effects of the ongoing military conflict and these sanctions on the global economies remain
uncertain as of the date of the accompanying unaudited condensed financial statements. The specific impact on the Company’s financial
condition, results of operations, and cash flows is also not determinable as of the date of the accompanying unaudited condensed financial
statements.
Note 7 - Warrants
As of September 30, 2022 and December 31, 2021,
7,666,667 Public Warrants and 4,400,000 Private Placement Warrants were outstanding.
Public Warrants may only be exercised for a whole
number of Class A Ordinary 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.
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.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
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 sellable 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-trading day redemption
period.
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.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 8 - Class A Ordinary Shares Subject to
Possible Redemption
The 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 Class A Ordinary Shares are
entitled to one vote for each share. As of September 30, 2022 and December 31, 2021, there were 23,000,000 Class A Ordinary Shares outstanding,
which were all subject to possible redemption and are classified outside of permanent equity in the accompanying condensed balance sheets.
The Class A Ordinary Shares subject to possible
redemption reflected on the accompanying condensed balance sheets are reconciled on the following table:
Gross proceeds received from Initial Public Offering | |
$ | 230,000,000 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (6,823,334 | ) |
Offering costs allocated to Class A ordinary shares | |
| (12,685,596 | ) |
Plus: | |
| | |
Accretion on Class A ordinary shares to redemption value | |
| 19,508,930 | |
Class A ordinary shares subject to possible redemption as of December 31, 2021 | |
| 230,000,000 | |
Accretion on Class A ordinary shares subject to possible redemption | |
| 1,266,839 | |
Class A ordinary shares subject to possible redemption as of September 30, 2022 | |
$ | 231,266,839 | |
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 Class A Ordinary Shares are entitled to one vote for each
share. As of September 30, 2022 and December 31, 2021, there were 23,000,000 Class A Ordinary Shares issued and outstanding, all of which
were subject to possible redemption and included as temporary equity (see Note 8).
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. As of September 30, 2022 and December 31, 2021, there were 6,250,000 Class
B Ordinary Shares issued and outstanding.
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 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.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 10 - Fair Value Measurements
The following tables present information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December
31, 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, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities | |
$ | 231,366,839 | | |
$ | - | | |
$ | - | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative liabilities - Public Warrants | |
$ | 383,333 | | |
$ | - | | |
$ | - | |
Derivative liabilities - Private Placement Warrants | |
$ | - | | |
$ | 220,000 | | |
$ | - | |
Derivative liabilities - Forward Purchase Agreement | |
$ | - | | |
$ | - | | |
$ | 58,021 | |
| |
Fair Value Measured as of
December 31, 2021 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities | |
$ | 230,038,512 | | |
$ | - | | |
$ | - | |
Derivative assets - Forward Purchase Agreement | |
$ | - | | |
$ | - | | |
$ | 88,970 | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative liabilities - Public Warrants | |
$ | 3,833,334 | | |
$ | - | | |
$ | - | |
Derivative liabilities - Private Placement Warrants | |
$ | - | | |
$ | 2,200,000 | | |
$ | - | |
Transfers to/from Levels 1, 2, and 3 are recognized
in the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to
a Level 1 fair value measurement in April 2021, when the Public Warrants were separately listed and traded. The estimated fair value of
the Private Placement Warrants was transferred from a Level 3 measurement to a Level 2 fair value measurement during the year ended December
31, 2021. There were no transfers to/from Levels 1, 2, and 3 during the nine months ended September 30, 2022.
Level 1 assets include investments in mutual funds
that invest solely in U.S. government securities. The Company uses inputs such as actual trade data, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments.
The fair value of the Public Warrants was initially
measured using a Monte-Carlo simulation and has subsequently been measured based on the market price of such warrants at each measurement
date when separately listed and traded. The fair value of the Private Placement Warrants was initially measured using a Black-Scholes
Option Pricing Model and subsequently using the market value of the Public Warrants. For the three months ended September 30, 2022 and
2021, the Company recognized a decrease in the fair value of derivative warrant liabilities of approximately $362,000 and $1.8 million,
and approximately $5.4 million and $1.7 million for the nine months ended September 30, 2022 and 2021, respectively, presented on the
accompanying condensed statements of operations.
The Company utilizes John C. Hull’s Options,
Futures, and Other Derivatives model to estimate the fair value of the Forward Purchase Units at each measurement date. The Company determined
that the initial fair value of the Forward Purchase Units was insignificant and recognized expense in the change in fair value of the
Forward Purchase Units for the three and nine months ended September 30, 2022 was approximately $196,000 and $147,000, respectively.
KISMET ACQUISITION TWO CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The change in the fair value of the Level 3 derivative
assets (liabilities) for three and nine months ended September 30, 2022 is summarized as follows:
Derivative assets (liabilities) as of January 1, 2022 | |
$ | 88,970 | |
Change in fair value of derivative assets and liabilities | |
| 30,204 | |
Derivative assets (liabilities) as of March 31, 2022 | |
| 119,174 | |
Change in fair value of derivative assets and liabilities | |
| 18,877 | |
Derivative assets (liabilities) as of June 30, 2022 | |
| 138,051 | |
Change in fair value of derivative assets and liabilities | |
| (196,072 | ) |
Derivative assets (liabilities) as of September 30, 2022 | |
$ | (58,021 | ) |
The change in the fair value of the Level
3 derivative warrant liabilities for three and nine months ended September 30, 2021 is summarized as follows:
Warrant liabilities at January 1, 2021 | |
$ | - | |
Issuance of Public and Private Warrants | |
| 10,827,334 | |
Change in fair value of warrant liabilities | |
| 318,000 | |
Warrant liabilities at March 31, 2021 | |
| 11,145,334 | |
Public Warrants transfer to Level 1 | |
| (7,053,334 | ) |
Change in fair value of warrant liabilities | |
| (88,000 | ) |
Warrant liabilities at June 30, 2021 | |
| 4,004,000 | |
Change in fair value of warrant liabilities | |
| (660,000 | ) |
Warrant liabilities at September 30, 2021 | |
$ | 3,344,000 | |
The estimated fair value 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 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 of the Forward Purchase Units at each measurement date:
| |
As of September 30, 2022 | | |
As of December 31, 2021 | |
Stock price | |
$ | 9.93 | | |
$ | 9.75 | |
Warrant price | |
$ | 0.05 | | |
$ | 0.50 | |
Term (in years) | |
| 0.25 | | |
| 1.00 | |
Risk-free interest rate | |
| 3.28 | % | |
| 0.39 | % |
Note 11 - Subsequent Events
Management has evaluated subsequent events
to determine if events or transactions occurring after the balance sheet date through the date the accompanying unaudited condensed
financial statements were issued. Based upon this review, other than as described herein, the Company did not identify any
subsequent event that would have required adjustment or disclosure in the accompanying unaudited condensed financial statements.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “Kismet Acquisition Two Corp.,” “Kismet Two,” “our,” “us”
or “we” refer to Kismet Acquisition Two Corp. The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto under “Item
1. Financial Statements”. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact included in this Quarterly Report on Form 10-Q for the quarter ended September 30,
2022 (this “Report”) including, without limitation, statements under this “Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and
objectives of management for future operations, are forward- looking statements. When used in this Report, words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to
us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as
well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent
written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this
paragraph.
Overview
We
are a blank check company incorporated as a Cayman Islands exempted company on September 15, 2020. We were incorporated for the purpose
of consummating a Business Combination with one or more businesses or entities. We are an emerging growth company and, as such, we are
subject to all of the risks associated with emerging growth companies.
Our
Prior Sponsor was Kismet Sponsor Limited, a British Virgin Islands company. On February 22, 2021, we consummated our Initial Public Offering
of 23,000,000 Units, including 3,000,000 additional Over-Allotment Units to cover the over-allotment option, at $10.00 per Over-Allotment
Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.1 million, of which approximately
$8.1 million was for deferred underwriting commissions.
Simultaneously
with the closing of the Initial Public Offering, we consummated the Private Placement of 4,400,000 Private Placement Warrants at a price
of $1.50 per Private Placement Warrant with the Prior Sponsor, generating gross proceeds of $6.6 million, and incurring offering costs
of approximately $7,000.
Upon
the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of a portion of the proceeds of the Private Placement were placed in the Trust Account with Continental 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, 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.
On
June 15, 2022, the Prior Sponsor transferred to New Sponsor, 6,250,000 Founder Shares and 4,400,000 Private Placement Warrants to purchase
our Class A Ordinary Shares held by the Prior Sponsor. On June 30, 2022, the Prior Sponsor transferred all the membership interests of
the New Sponsor to Quadro in the Sponsor Transaction. In connection with the Sponsor Transaction, the Prior Sponsor also assigned to
the New Sponsor all of its rights and obligations under the (i) Letter Agreement dated as of February 17, 2021, (ii) Registration Rights
Agreement and (iii) Promissory Note. In addition, we and Kismet LLC mutually terminated the Administrative Services Agreement. As a result,
we are no longer be obligated to pay a $10,000 monthly fee to Kismet pursuant to the Administrative Services Agreement.
Following
the Sponsor Transaction, we plan to continue to focus on companies in the internet and other technology enabled sectors operating internationally,
including the wider area of Europe, the Middle East and Africa, but will not consider companies operating in Russia or Belarus or any
other country that may adversely affect our Nasdaq listing
Our
management has broad discretion with respect to the specific application of the net proceeds of our 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. Our 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, we 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.
If
we are unable to complete a Business Combination in the Combination Period, we 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 the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account and not previously released to us to pay our taxes that were paid by us or are payable by us, if any (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of the 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 our 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.
Liquidity
and Capital Resources
As
of September 30, 2022, we had $986 in our operating bank account and working capital deficit of approximately $271,000.
Our
liquidity needs to date have been satisfied through a contribution of $25,000 from the Prior Sponsor to cover certain expenses in exchange
for the issuance of the Founder Shares, a loan of approximately $111,000 from the Prior Sponsor pursuant to the IPO Note originally issued
on September 23, 2020 and amended on January 22, 2021, and a portion of the proceeds from the consummation of the Private Placement not
held in the Trust Account. We repaid the IPO Note in full on February 24, 2021. Subsequent to the repayment, the facility was no longer
available to us. 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 our officers and directors may, but are not obligated to, provide us Working Capital Loans in order to
finance transaction costs in connection with a Business Combination. As of September 30, 2022 and December 31, 2021, there were no amounts
outstanding under any Working Capital Loans.
On
April 13, 2022, we issued the Promissory Note in the amount of up to $200,000 to the Prior Sponsor. The Promissory Note bears no interest
and is due and payable on April 14, 2023. On May 25, 2022, we and the Prior Sponsor amended the Promissory Note agreement and increased
the principal amount to $400,000. On June 30, 2022, the Prior Sponsor assigned all of its rights and obligations under the Promissory
Note to the New Sponsor in connection with the Sponsor Transaction. As of September 30, 2022, we have drawn approximately $319,000 under
the Promissory Note.
Going
Concern
We
may need to raise additional capital through loans or additional investments from our Sponsor, our officers or directors or their affiliates.
Our Sponsor, officers, directors and or their affiliates, may, but are not obligated to, loan our Company funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures
to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential
transaction, reducing overhead expenses, and extending the terms and due dates of certain accrued expenses and other liabilities. We
cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In connection with
our assessment of going concern considerations in accordance with ASC 205-40, we have determined that the liquidity condition, mandatory
liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. Management continues to seek to
complete a Business Combination prior to the mandatory liquidation date. No adjustments have been made to the carrying amounts of assets
or liabilities should we be required to liquidate after February 22, 2023. The unaudited condensed financial statements and the notes
thereto under “Item 1. Financial Statements” do not include any adjustment that might be necessary if we are unable to continue
as a going concern.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, except that, commencing
on February 17, 2021, through the earlier of consummation of the initial Business Combination and the liquidation, we agreed to pay Kismet,
LLC, an affiliate of the Prior Sponsor, $10,000 per month for office space, utilities, secretarial support and administrative services
pursuant to the Administrative Services Agreement. Fees for such services for the three and nine months ended September 30, 2022 and
2021 were waived.
On
June 30, 2022, in connection with the Sponsor Transaction, we and Kismet LLC mutually terminated the Administrative Services Agreement.
As a result, we are no longer be obligated to pay a $10,000 monthly fee pursuant to the Administrative Services Agreement.
Results
of Operations
Our
entire activity since inception up to September 30, 2022, was in preparation for our formation and the Initial Public Offering, and since
the completion of the Initial Public Offering, the search for Business Combination candidates. We will not be generating any operating
revenues until the closing and completion of our initial Business Combination.
For
the three months ended September 30, 2022, we had net income of approximately $6.3 million, which consisted of a non-operating gain of
approximately $166,000 resulting from the change in fair value of derivative assets and liabilities, approximately $5.2 million forgiveness of deferred underwriting commissions and approximately $1.0 million of net gain on the investments held in the Trust
Account, partially offset by approximately $163,000 general and administrative expenses.
For
the three months ended September 30, 2021, we had net income of approximately $997,000, which consisted of approximately $1.8 million
in change in the fair value of warrant liabilities and approximately $8,000 of net gain on the investments held in Trust Account, partially
offset by approximately $820,000 general and administrative expenses.
For
the nine months ended September 30, 2022, we had net income of approximately $11.4 million, which consisted of a non-operating gain of
approximately $5.3 million resulting from the change in fair value of derivative assets and liabilities, approximately $5.2 million forgiveness of deferred underwriting commissions and approximately $1.3 million of net gain on the investments held in the Trust
Account, partially offset by approximately $463,000 general and administrative expenses.
For
the nine months ended September 30, 2021, we had net income of approximately $126,000, which consisted of approximately $1.7 million
in change in the fair value of warrant liabilities and approximately $17,000 of net gain on the investments held in Trust Account, partially
offset by approximately $1.2 million general and administrative expenses and approximately $395,000 in offering costs associated with
issuance of warrants.
Commitments
and Contingencies
Registration
Rights
The holders of the Founder Shares and Private Placement
Warrants (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 the Registration Rights Agreement. The holders
of these securities are entitled to make up to three demands, excluding short form demands, that we 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. We will bear the expenses incurred in connection with the filing of any such registration
statements. On September 30, 2022, in connection with the Sponsor Transaction, the Prior Sponsor assigned to the New Sponsor all of its
rights and obligations under the Registration Rights Agreement.
Pursuant
to the Forward Purchase Agreement, we agreed to use our 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 (defined
below) and the Forward Purchase Warrants (defined below) (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 which the Prior 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 the Forward Purchase Securities to include their securities in other registration statements filed
by us.
Forward
Purchase Agreement
In
connection with the consummation of the Initial Public Offering, we entered into the Forward Purchase Agreement with the Prior Sponsor,
which provides for the purchase of $20.0 million Forward Purchase Units, which at the option of the Prior Sponsor can be increased to
$50.0 million, with each Forward Purchase Unit consisting of one Forward Purchase Shares and one-third of one Forward Purchase Warrant
to purchase one Class A Ordinary Share at $11.50 per share, 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 the 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.
Underwriting
Agreement
We
granted the underwriters a 45-day option from February 17, 2021 to purchase up to 3,000,000 additional Units at the Initial Public Offering
price less the underwriting discounts and commissions. On February 22, 2021, the underwriters fully exercised their over-allotment option.
The
underwriters were entitled to an underwriting discount of $0.20 per Unit, or $4.6 million in the aggregate, paid upon the closing of
the Initial Public Offering. In addition, $0.35 per Unit, or approximately $8.1 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 we complete a Business Combination, subject to the terms of the underwriting agreement.
During
the three and nine months ended September 30, 2022, two of our underwriters waived their rights to receive the deferred underwriting
discount, as a result, we recognized a gain of approximately $5.2 million from extinguishment of deferred underwriting commissions as
reflected in the unaudited condensed statements of operations.
Critical
Accounting Policies
The
preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. Certain of our accounting policies are considered critical, as these policies
are the most important to the depiction of our financial statements and require significant, difficult or complex judgments, often employing
the use of estimates about the effects of matters that are inherently uncertain. Our critical accounting policies and estimates are presented
below:
Derivative
Assets and Liabilities
We
do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our 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 FASB ASC Subtopic 815-15, “Derivatives and Hedging – Embedded Derivatives”.
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.
We
account for our warrants issued in connection with our Initial Public Offering and the Private Placement and Forward Purchase Units as
derivative assets/liabilities in accordance with FASB ASC Subtopic 815-40 “Derivatives and Hedging – Contracts in Equity’s
Own Equity”. Accordingly, we recognize the warrant and Forward Purchase Units as assets/liabilities at fair value and adjust the
instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised,
and any change in fair value is recognized in our condensed statements of operations. 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 when separately listed and traded at each measurement date. The fair value of warrants issued in connection with the
Private Placement was initially measured using Black-Scholes Option Pricing Model and subsequently using the market value of the Public
Warrants. The fair value of the Forward Purchase Units has been measured using John C. Hull’s Options, Futures, and Other Derivatives
model at each measurement date.
Class
A Ordinary Shares Subject to Possible Redemption
We
account for the Class A Ordinary Shares subject to possible redemption in accordance with the guidance in ASC 480. 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 our control) are classified as temporary equity. At
all other times, Class A Ordinary Shares are classified as shareholders’ equity (deficit). Our Class A Ordinary Shares feature
certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
Accordingly, as of September 30, 2022 and December 31, 2021, 23,000,000 Class A Ordinary Shares subject to possible redemption are presented
as temporary equity, outside of the shareholders’ equity (deficit) section of the condensed balance sheets under “Item 1.
Financial Statements”.
We
recognize changes in redemption value immediately as they occur and adjust the carrying value of the Class A Ordinary Shares subject
to possible redemption to equal the redemption value at the end of each reporting period. Effective with the closing of the Initial Public
Offering, we 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.
Net
Income per Ordinary Share
We
comply with accounting and disclosure requirements of ASC 260. We have 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 per Ordinary
Share is calculated by dividing the net income by the weighted average number of Ordinary Shares outstanding for the respective period.
The
calculation of diluted net income per Ordinary Share does not consider the effect of the warrants issued in connection with the Initial
Public Offering and Private Placement to purchase an aggregate of 12,066,667 Class A Ordinary Shares because their exercise is contingent
upon future events. Accretion associated with the redeemable Class A Ordinary Shares is excluded from earnings per share as the redemption
value approximates fair value.
Share-Based
Compensation
We
comply with the accounting and disclosure requirement of ASC 718. We record share- based compensation to employees and non-employees
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.
We recognize 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
is recognized in general and administrative expense in the unaudited condensed statements of operations under “Item 1. Financial
Statements”. We 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.
We have 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, 2022.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on the unaudited condensed financial statements under “Item 1. Financial Statements”.
Status
as an Emerging Growth Company
The
JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify
as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements
based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, the unaudited condensed financial statements under “Item
1. Financial Statements” may not be comparable to companies that comply with new or revised accounting pronouncements as of public
company effective dates.
Additionally,
we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions
we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted
by the Public Company Accounting Oversight Board (United States) regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of
the Company’s Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply for a period
of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,”
whichever is earlier.
Off-Balance
Sheet Arrangements
As
of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Factors
That May Adversely Affect our Results of Operations
Our
results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could
cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted
by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in
interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic,
including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine.
We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to
which they may negatively impact our business and our ability to complete an initial Business Combination.