References to "we," "us," "our" or the "Company" are to Kismet Acquisition One
Corp, except where the context requires otherwise. The following discussion
should be read in conjunction with our unaudited condensed financial statements
and related notes thereto included elsewhere in this report.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Our forward-looking statements include, but are
not limited to, statements regarding our or our management team's expectations,
hopes, beliefs, intentions or strategies regarding the future, including the
proposed business combination and the PIPE transactions. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and similar expressions may
identify forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. These forward-looking statements
are subject to known and unknown risks, uncertainties and assumptions about us
that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K/A (defined below) filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
Kismet Acquisition One Corp was newly incorporated in the British Virgin Islands
on June 3, 2020 as a business company with limited liability and formed 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 ("Business
Combination"). Although we are not limited to a particular industry or
geographic region for purposes of consummating a Business Combination, we intend
to focus on companies in the telecommunications infrastructure, internet and
technology and consumer goods and services sectors operating in Russia. We are
an emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.
At June 30, 2021, we had not yet commenced operations. All activity for the
period from June 3, 2020 (inception) through June 30, 2021 relates to our
formation, our initial public offering (the "Initial Public Offering"), which is
described below, and since the Initial Public Offering, the search for a
potential target. We will not generate any operating revenues until after the
completion of our initial Business Combination, at the earliest. We generates
non-operating income in the form of net gain from investments held in a trust
account from the proceeds derived from the Initial Public Offering.
Our sponsor is Kismet Sponsor Limited, a business company incorporated in the
British Virgin Islands with limited liability (the "Sponsor"). The registration
statement for our Initial Public Offering was declared effective on August 5,
2020. On August 10, 2020, we consummated our Initial Public Offering of
25,000,000 Units, at $10.00 per Unit, generating gross proceeds of $250.0
million, and incurring offering costs of approximately $14.3 million, inclusive
of approximately $8.8 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated a
private placement (the "Private Placement") of 6,750,000 warrants (the "Private
Placement Warrants"), at a price of $1.00 per Private Placement Warrant, to our
Sponsor, generating gross proceeds of approximately $6.8 million, and incurring
offering costs of approximately $11,000.
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Upon the closing of the Initial Public Offering and the Private Placement in
August 2020, $250.0 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") initially invested in cash and subsequently
in U.S. "government securities" within the meaning of Section 2(a)(16) of the
Investment Company Act having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act which invest only in direct U.S. government treasury
obligations, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account as described below.
Our 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.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or August 10, 2022 (as may be extended
by approval of our shareholders, 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, if any (less up to $100,000 of interest to pay dissolution expenses),
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), subject to
applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the remaining shareholders and our board
of directors, commence a voluntary liquidation and thereby a formal dissolution
of us, subject in each case to our obligations under British Virgin Islands law
to provide for claims of creditors and the requirements of other applicable law.
Proposed Business Combination
On January 31, 2021, we entered into a Business Combination Agreement (the
"Business Combination Agreement") with Nexters Inc., a British Virgin Islands
business company ("Pubco"), our Sponsor, solely in its capacity as our
Representative, Nexters Global Ltd. ("Nexters Global"), a private limited
liability company domiciled in Cyprus, Fantina Holdings Limited, a private
limited liability company domiciled in Cyprus, solely in its capacity as Nexters
Global Shareholders Representative, and the shareholders of Nexters Global.
Pursuant to the Business Combination Agreement, among other things, we agreed to
combine with Nexters Global in a business combination whereby we will merge with
and into Pubco and Pubco will purchase all shares of Nexters Global, making
Nexters Global a direct wholly-owned subsidiary of Pubco (the "Transactions").
Pubco is a newly formed entity that was formed for the sole purpose of entering
into and consummating the transactions set forth in the Business Combination
Agreement. Nexters Global is one of the largest and most seasoned European
gaming unicorns with deep expertise in mobile game development and marketing. It
is a developer and publisher of Hero Wars mid-core RPG franchise, currently
available on mobile (iOS, Android) and PC (via web and Facebook) and is looking
to launch three new titles in 2021.
The proposed business combination is subject to certain conditions, including:
(i) our shareholders having approved, among other things, the transactions
contemplated by the Business Combination Agreement; (ii) the absence of any law
or governmental order that would prohibit the proposed transactions; (iii) the
termination or expiration of all required waiting periods under the
Hart-Scott-Rodino Act; (iv) our company having at least $5,000,001 of net
tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Exchange Act) remaining after the closing; (v) our company and Pubco having at
least $100 million of cash either in or outside of the Trust Account, after
taking into accounts payments by us for the redemption and any proceeds received
by Pubco under the Amended and Restated Forward Purchase Agreement (the "A&R
Forward Purchase Agreement"); (vi) the Registration Statement having been
declared effective by the SEC and remaining effective; and (vii) the Pubco
ordinary shares and Pubco warrants having been approved for listing on Nasdaq,
subject only to official notice thereof. The proposed business combination is
more fully described in Note 1 to the financial statements included in Item 1 of
this Quarterly Report.
On July 17, 2021, we and certain of the other relevant parties to the Business
Combination Agreement entered into Amendment No. 1 to the Business Combination
Agreement (the "Amendment"). The Amendment, among other things, permits us and
Pubco to enter into the Subscription Agreements (defined below) and consummate
the PIPE (defined below), provides that the proceeds of the PIPE will count
toward the satisfaction of the $100 million minimum cash closing condition
contained in the Business Combination, and changes the "Outside Date" for the
parties to consummate the Transactions to September 30, 2021. The Amendment also
replaces (i) the form of Registration Rights Agreement to be entered into at the
Closing with a new form of such agreement, providing for shelf registration
rights to certain holders thereunder, and (ii) the form of Sponsor Lock-Up
Agreement to be entered into at the Closing with a new form of such agreement,
to permit the transfer of certain private placement warrants held by the Sponsor
to the Subscribers (defined below) pursuant to the terms of the Subscription
Agreements.
Private Placement and Subscription Agreements
On July 16, 2021, in support of the Transactions, we, Pubco and the Sponsor
entered into separate subscription agreements (each as amended, restated or
supplemented from time to time, a "Subscription Agreement") with certain
institutional investors with whom the Sponsor had prior business relationships
(each, a "Subscriber"), pursuant to which the Subscribers agreed to subscribe
for and purchase an aggregate of 5,000,000 shares of Pubco's ordinary shares for
a purchase price of $10.00 per share for an aggregate commitment of $50,000,000
in a private placement (the "PIPE") to be consummated substantially concurrently
with the closing of the transactions (the "Closing"). The PIPE is conditioned on
the substantially concurrent closing of the Transactions and other customary
closing conditions. Also pursuant to the Subscription Agreements, the Sponsor
agreed to transfer to the Subscribers, on the date of the Closing immediately
after the issuance by Pubco of ordinary shares pursuant to the PIPE, an
aggregate of 1,625,000 of the private placement warrants held by the Sponsor.
The Subscribers were also given registration rights in the Subscription
Agreements. The purpose of the PIPE is to raise additional capital for use in
connection with the Transactions, to meet the minimum cash requirement provided
in the Business Combination Agreement, and to otherwise provide working capital
and funds for corporate purposes for Pubco following the Closing.
22
Results of Operations
Our entire activity since inception up to June 30, 2021 was in preparation for
our formation and the preparation of the Initial Public Offering, and since our
Initial Public Offering, our activity has been limited to the search for and
completion of a prospective initial Business Combination. We will not be
generating any operating revenues until the closing and completion of our
initial Business Combination, at the earliest.
For the three months ended June 30, 2021, we had a net loss of approximately
$3.2 million, which consisted of approximately $528,000 in general and
administrative expenses and an increase in fair value of derivative warrant
liabilities of approximately $2.6 million offset by approximately $6,000 gain
from investments held in Trust Account.
For the six months ended June 30, 2021, we had a net loss of approximately $3.3
million, which consisted of approximately $2.8 million in general and
administrative expenses and an increase in fair value of derivative warrant
liabilities of approximately $608,000 offset by approximately $24,000 gain from
investments held in Trust Account.
For the period from June 3, 2020 (inception) through June 30, 2020, we had a net
loss of approximately $10,000 consisting solely of general and administrative
expenses.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $9,000 in our operating bank account,
and working capital deficit of approximately $2.3 million.
Through June 30, 2021, our liquidity needs have been satisfied through a payment
of $25,000 from our Sponsor to cover certain offering costs in exchange for the
issuance of the Founder Shares, a loan from our Sponsor pursuant to a promissory
note (the "Note") of $191,000, and the net proceeds from the consummation of the
Private Placement not held in the Trust Account. We fully repaid the Note
balance of approximately $191,000 on August 12, 2020. In addition, in order to
finance transaction costs in connection with a Business Combination, our Sponsor
or an affiliate of our Sponsor, or certain of our officers and directors may,
but are not obligated to, provide us with loans (the "Working Capital Loans").
As of June 30, 2021 and December 31, 2020, there were no amounts outstanding
under the Working Capital Loans.
On July 7, 2021, the Sponsor agreed to loan us an aggregate of $400,000 pursuant
to a promissory note in order to finance our working capital needs. The note is
non-interest bearing and up to $1,500,000 of such loan may be convertible into
Private Placement Warrants at a price of $1.00 per warrant at the option of the
Sponsor.
On July 16, 2021, we, Pubco and the Sponsor entered into separate Subscription
Agreements with certain Subscribers, pursuant to which the Subscribers agreed to
subscribe for and purchase an aggregate of 5,000,000 shares of Pubco's ordinary
shares for a purchase price of $10.00 per share for an aggregate commitment of
$50,000,000 in a PIPE to be consummated substantially concurrently with the
Closing.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity from our Sponsor or an affiliate of our
Sponsor, or certain of our officers and directors to meet our needs through the
earlier of the consummation of a Business Combination or one year from this
filing. Over this time period, we will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business
Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Related Party Transactions
Founder Shares
On June 8, 2020, we issued 6,250,000 ordinary shares to our Sponsor (the
"Founder Shares"). Our Sponsor paid for certain offering costs of $25,000 on
behalf of the Company in exchange for issuance of the Founder Shares. In July
2020, we performed a 1.23 share split resulting in our Sponsor holding an
aggregate of 7,687,500 Founder Shares. All shares and associated amounts have
been retroactively restated to reflect the share capitalization. The Sponsor had
agreed to forfeit up to an aggregate of 937,500 Founder Shares, on a pro rata
basis, to the extent that the option to purchase additional units is 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 number of ordinary shares to be sold pursuant to the Forward
Purchase Agreement (as defined below). On September 17, 2020, the underwriters
notified us that the over-allotment option was not exercised; as a result, these
Founder Shares were forfeited, effective as of September 19, 2020.
23
Our Sponsor agreed, subject to limited exceptions, not to transfer, assign or
sell any of its Founder Shares until the earlier to occur of: (x) one year after
the date of the completion of the initial Business Combination or earlier if,
subsequent to the initial Business Combination, the last reported sale price of
the 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) we consummate a subsequent liquidation,
merger, stock exchange or other similar transaction which results in all of our
shareholders having the right to exchange their ordinary shares for cash,
securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, we consummated a
Private Placement of 6,750,000 Private Placement Warrants, at a price of $1.00
per Private Placement Warrant, to our Sponsor, generating gross proceeds of
approximately $6.8 million, and incurring offering costs of approximately
$11,000.
Each whole Private Placement Warrant is exercisable for one whole ordinary share
at a price of $11.50 per share. A portion of the proceeds from the Private
Placement Warrants was added to the proceeds from the Initial Public Offering
held in the Trust Account. If we do not complete a Business Combination within
the Combination Period, the Private Placement Warrants will expire worthless.
The Private Placement Warrants will be non-redeemable and exercisable on a
cashless basis so long as they are held by the Sponsor or its permitted
transferees.
Related Party Loans
On June 10, 2020, our Sponsor agreed to loan us up to $200,000 to be used for
the payment of costs related to the Initial Public Offering pursuant to the
Note. The Note was non-interest bearing, unsecured and due upon the date the
Company consummated the Initial Public Offering. The Company repaid the balance
of the Note of approximately $191,000 in full on August 12, 2020.
In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or certain of our
officers and directors may, but are not obligated to, loan us funds pursuant to
the Working Capital Loans. If we complete a Business Combination, we would repay
the Working Capital Loans out of the proceeds of the Trust Account released to
us. 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, we 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. 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. The Working Capital Loans would
either be repaid upon consummation of a Business Combination, without interest,
or, at the lender's 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 $1.00 per warrant. The warrants would be identical to the Private
Placement Warrants. As of June 30, 2021 and December 31, 2020, there were no
amounts outstanding under the Working Capital Loans.
On July 7, 2021, the Sponsor agreed to loan us an aggregate of $400,000 pursuant
to a promissory note in order to finance our working capital needs. The note is
non-interest bearing and up to $1,500,000 of such loan may be convertible into
Private Placement Warrants at a price of $1.00 per warrant at the option of the
Sponsor.
Administrative Services Agreement
Commencing on the date of the final prospectus for the Initial Public Offering,
we agreed to pay an affiliate of our Sponsor a total of up to $10,000 per month
for office space, administrative and support services. For the three and six
months ended June 30, 2021, we did not incur any expense for these services.
Upon completion of the Initial Business Combination or our liquidation, we will
cease paying these monthly fees.
Forward Purchase Agreement
On August 5, 2020, we entered into a forward purchase agreement (the "Forward
Purchase Agreement") with our Sponsor, which provides for the purchase of $20.0
million of units, with each unit consisting of one ordinary share (the "Forward
Purchase Shares") and one half of one warrant (the "Forward Purchase Warrants"),
for a purchase price of $10.00 per 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 ordinary shares are redeemed by the Public Shareholders. The Forward
Purchase Shares and Forward Purchase Warrants will be issued only in connection
with the closing of the initial Business Combination. The proceeds from the sale
of Forward Purchase Shares and Forward Purchase Warrants 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.
24
Amended and Restated Forward Purchase Agreement
On January 31, 2021, we, Pubco and our sponsor entered into the A&R Forward
Purchase Agreement. The A&R Forward Purchase Agreement amends the forward
purchase agreement by, among other things, increasing the sponsor's purchase
commitment thereunder from $20.0 million to $50.0 million and replacing the
sponsor's commitment to acquire our public units with a commitment to acquire
Pubco ordinary shares and Pubco public warrants in a private placement to occur
after, and subject to, the Merger closing and prior to the Share Acquisition
closing.
Commitments and Contingencies
Registration Rights Agreement
The holders of the Founder Shares, Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans (and any ordinary shares
issuable upon the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans) are entitled to
registration rights pursuant to a registration rights agreement, requiring us to
register such securities for resale. The holders of the majority 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 and rights to
require us to register for resale such securities pursuant to Rule 415 under the
Securities Act.
In connection with the Transactions, Pubco, our sponsor and three of Holders
will enter into the New Registration Rights Agreement, pursuant to which, among
other things, subject to certain requirements and customary conditions,
including with regard to the number of demand rights that may be exercised, the
Holders may demand at any time or from time to time, that Pubco file a
registration statement with the SEC to register the securities of Pubco held by
such Holders. The New Registration Rights Agreement will also provide the
Holders with "piggy-back" registration rights, subject to certain requirements
and customary conditions.
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the prospectus for
the Initial Public Offering to purchase up to 3,750,000 additional Units at the
Initial Public Offering price less the underwriting discounts and commissions.
On September 17, 2020, the underwriters notified us that the over-allotment
option was not exercised; as a result, 937,500 Founder Shares were forfeited,
effective as of September 19, 2020.
The underwriters were entitled to an underwriting commission of $0.20 per unit,
or $5.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, the underwriters were entitled to a deferred underwriting
commission of $0.35 per unit, or approximately $8.8 million in the aggregate.
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.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities in our
financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. We have identified the following as our critical
accounting policies:
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Investments Held in Trust Account
Our 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 our
investments held in the Trust Account are comprised of U.S. government
securities, the investment are classified as trading securities. When our
investments held in the Trust Account are comprised of money market funds, the
investments are recognized at fair value. Trading securities and investments in
money market funds are presented on the balance sheets at fair value at the end
of each reporting period. Gains and losses resulting from the change in fair
value of these securities is included in net gain on 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.
Derivative Warrant 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 and forward purchase agreements, to determine if
such instruments are derivatives or contain features that qualify as embedded
derivatives, pursuant to ASC 480 and ASC 815-40. 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.
Simultaneously with the closing of the initial public offering, we consummated a
Private Placement of 6,750,000 Private Placement Warrants, at a price of $1.00
per Private Placement Warrant, to our sponsor, which are recognized as
derivative warrant liabilities in accordance with ASC 815-40. Accordingly, we
recognize the Private Placement Warrants as 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 statements of operations. The fair
value of our Private Placement Warrants is measured using Black-Scholes Option
Pricing model at each balance sheet date. The determination of the fair value of
the warrant liabilities may be subject to change as more current information
becomes available and accordingly the actual results could differ significantly.
Derivative warrant liabilities are classified 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.
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity."
Ordinary shares subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable
ordinary shares (including 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, ordinary shares are classified as
stockholders' equity. Our 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, at June 30, 2021 and December 31, 2020,
22,591,546 and 22,925,656 ordinary shares subject to possible redemption are
presented as temporary equity, respectively, outside of the stockholders' equity
section of the accompanying unaudited condensed balance sheets.
Net Income (Loss) per Ordinary Share
Our unaudited condensed statements of operations includes a presentation of
income (loss) per ordinary share subject to redemption in a manner similar to
the two-class method of income (loss) per share. Net income per ordinary share,
basic and diluted, is calculated by dividing the investment income earned on the
Trust Account by the weighted average number of redeemable ordinary shares
outstanding for the periods. Net loss per Founder Share, basic and diluted, is
calculated by dividing the net loss, less income attributable to redeemable
ordinary shares, by the weighted average number of Founder Shares outstanding
for the periods.
The calculation of diluted net income (loss) per ordinary share does not
consider the effect of the warrants issued in connection with the (i) IPO, (ii)
exercise of over-allotment and (iii) Private Placement since the exercise price
of the warrants is in excess of the average ordinary shares price for the period
and therefore the inclusion of such warrants would be anti-dilutive.
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Share-based Compensation
We comply with the accounting and disclosure requirement of ASC Topic 718,
"Compensation - Stock Compensation." 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 will be recognized in general and
administrative expense in the condensed statements of operations. In August
2020, the Company has 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 three and six months ended
June 30, 2021.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current generally accepted accounting principles. The ASU also
removes certain settlement conditions that are required for equity-linked
contracts to qualify for the derivative scope exception, and it simplifies the
diluted earnings per share calculation in certain areas. We adopted ASU 2020-06
on January 1, 2021. Adoption of the ASU did not impact our financial position,
results of operations or cash flows.
Our management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material impact on
our unaudited condensed financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K. No unaudited quarterly
operating data is included in this quarterly report 10-Q, as we have conducted
no operations to date.
JOBS Act
The Jumpstart Our Business Startups Act of 2012, or 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 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 PCAOB
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 CEO'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.
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