Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
In light of recent comment letters issued by the U.S. Securities and Exchange
Commission (the "SEC"), the management of Kismet Acquisition Three Corp. (the
"Company") has re-evaluated the Company's application of ASC 480-10-S99-3A to
its accounting classification of its redeemable shares of Class A ordinary
shares, par value $0.001 per share (the "Public Shares"), issued as part of the
units sold in the Company's initial public offering (the "IPO") in February
2021. The Company has determined that, at the closing of its IPO, and in all of
its subsequent periodic reports filed with the SEC, through and including the
Form 10-Q for the quarterly period ended June 30, 2021, it had improperly valued
its Class A ordinary shares subject to possible redemption. The Company had
previously classified a portion of its Public Shares in permanent equity, or
total shareholders' equity to maintain shareholders' equity greater than $5
million on the basis that the Company will not redeem its Public Shares in an
amount that would cause its net tangible assets to be less than $5,000,001, as
described in the Company's amended and restated memorandum and articles of
association (the "Charter"). Previously, the Company did not consider redeemable
stock classified as temporary equity as part of net tangible assets. Following
its re-evaluation, the Company revised this interpretation to include temporary
equity in net tangible assets, regardless of the net tangible assets redemption
limitation contained in the Charter. As a result, the Company has restated its
previously filed financial statements to present all Public Shares as temporary
equity and to recognize accretion from the initial book value to redemption
value at the time of its IPO. In connection with the change in presentation of
the Class A ordinary shares subject to possible redemption, the Company has
revised its earnings per share calculation to allocate income and losses shared
pro rata between the Class A ordinary shares and Class B ordinary shares.
As a result of the foregoing, on November 22, 2021, the audit committee of the
Company's board of directors concluded, after discussion with the Company's
management and WithumSmith+Brown, PC, the Company's independent registered
public accounting firm, that the Company's previously issued (i) audited balance
sheet as of February 22, 2021, as previously restated in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with
SEC on June 25, 2021 (the "Q1 Form 10-Q"), (ii) unaudited interim financial
statements included in the Q1 Form 10-Q and (iii) unaudited interim financial
statements included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021
(collectively, the "Affected Periods"), should no longer be relied upon and
should be restated to report all Public Shares as temporary equity and to revise
its earnings per share calculation as described above. As such, the Company has
restated its financial statements for the Affected Periods in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021
(the "Q3 Form 10-Q"), which will be concurrently filed with the SEC.
The Company's management has concluded that in light of the errors described
above, a material weakness exists in the Company's internal control over
financial reporting and that, because of this and the additional material
weakness identified in the first and second quarters of 2021, the Company's
disclosure controls and procedures were not effective as of September 30, 2021.
The Company's remediation plan with respect to such material weaknesses is
described in more detail in the Q3 Form 10-Q.
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in the trust account established in connection with
the IPO.
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