As filed with the Securities and Exchange Commission on July 7, 2021

Registration No. 333-257103​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-4

(Amendment No. 1)

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Nexters Inc.

(Exact name of registrant as specified in its charter)

Nexters Inc.
Ritter House, Wickhams Cay II
PO Box 3170, Road Town
Tortola VG110
British Virgin Islands
Telephone: +35722580040

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)​

Puglisi & Associates
850 Library Ave., Suite 204
Newark, DE 19711
Telephone: 302-738-6680

(Name, address, including zip code, and telephone number, including area code, of agent for service)​

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after the effective date of this registration statement and all other conditions to the Proposed Transactions described herein have been satisfied or waived.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

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(1)

All securities registered will be issued by Nexters Inc., a British Virgin Islands business company (“Pubco”). In connection with the business combination described in this registration statement and the proxy statement/prospectus included herein, (a) Kismet Acquisition One Corp, a publicly traded British Virgin Islands business company (“Kismet”) will merge with and into Pubco, with Pubco surviving the merger, and (b) Pubco will acquire all of the issued and outstanding share capital of Nexters Global Ltd., a private limited liability company incorporated under the laws of Cyprus (the “Company”), such that the Company will be a direct wholly owned subsidiary of Pubco. As a result of the foregoing transactions, Pubco will become the public company, and the current security holders of Kismet and the current security holders of the Company will become security holders of Pubco.

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(2)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of Kismet’s ordinary shares and Kismet’s warrants on June 7, 2021. This calculation is in accordance with Rule 457(f) (1) of the Securities Act.

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(3)

Consists of (a) Pubco ordinary shares issuable in exchange for outstanding Kismet ordinary shares, including (i) 6,750,000 Kismet ordinary shares issued to Kismet’s sponsor as founder shares, and (ii) 25,000,000 Kismet ordinary shares included in outstanding Kismet units (with each Kismet unit consisting of one Kismet ordinary share and one-half of one Kismet warrant) sold to the public in Kismet’s initial public offering; and (b) 120,000 Pubco ordinary shares issuable pursuant to options held by three of Kismet’s independent directors. In connection with the business combination described in this registration statement and the proxy statement/prospectus included herein, all Kismet units will be separated into their component securities.

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(4)

Consists of Pubco warrants issuable in exchange for outstanding Kismet warrants, including (a) 6,750,000 Kismet warrants sold to Kismet’s sponsor in a private placement in connection with Kismet’s initial public offering, and (b) 12,500,000 Kismet warrants included in outstanding Kismet units sold to the public in Kismet’s initial public offering.

​

(5)

Consists of Pubco ordinary shares issuable upon exercise of Pubco warrants. Each Pubco warrant will entitle the warrant holder to purchase one Pubco ordinary share at a price of $11.50 per share (subject to adjustment).

​

(6)

No separate registration fee is required pursuant to Rule 457(g).

​

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION, DATED JULY 7, 2021

KISMET ACQUISITION ONE CORP
850 Library Avenue, Suite 204
Newark, Delaware 19715

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF KISMET ACQUISITION ONE CORP
To Be Held On            , 2021

TO THE SHAREHOLDERS OF KISMET ACQUISITION ONE CORP:

NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Kismet Acquisition One Corp, a business company incorporated under the laws of the British Virgin Islands (“Kismet”), will be held on           , 2021, at           a.m., Eastern time, at           . You are cordially invited to attend the special meeting, which will be held for the following purposes:

(1)

The Business Combination Proposal: to consider and vote upon a proposal to approve and adopt the business combination described in this proxy statement/prospectus, which proposal shall include approval of each of (a) the merger pursuant to Section 170 of the BVI Business Companies Act, 2004 (as amended) of Kismet into Nexters Inc., a British Virgin Islands business company (“Pubco”) with Pubco surviving the merger and the security holders of Kismet (other than security holders of Kismet electing to redeem their Kismet ordinary shares) becoming security holders of Pubco (the “Merger”) pursuant to the terms of (i) the Business Combination Agreement, dated as of January 31, 2021, as it may be amended (the “Business Combination Agreement”), that Kismet has entered into with Pubco, Kismet Sponsor Limited, a British Virgin Islands business company (the “Sponsor”), solely in its capacity as Kismet’s representative, Nexters Global Ltd., a private limited liability company domiciled in Cyprus (the “Company”), Fantina Holdings Limited, a private limited liability company domiciled in Cyprus, solely in its capacity as the Company Shareholders representative, and the shareholders of the Company party thereto, and (ii) Section 170 of the BVI Business Companies Act, 2004 (as amended), (b) the Plan of Merger in respect of the Merger made in accordance with the provisions of section 170(5) of the BVI Business Companies Act, 2004 (as amended) and included as Annex B to this proxy statement/prospectus, (c) the acquisition by Pubco of all of the issued and outstanding share capital of the Company from the holders of the Company’s share capital for a combination of cash and Pubco ordinary shares, such that the Company will be a direct wholly owned subsidiary of Pubco (the “Share Acquisition”), and (d) the other transactions contemplated by the Business Combination Agreement (together with the Merger and Share Acquisition, the “Proposed Transactions”); and

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(2)

The Adjournment Proposal: to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote (the “Adjournment Proposal”).

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These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Kismet ordinary shares at the close of business on            , 2021 are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements of the special meeting. A complete list of our shareholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by shareholders during ordinary business hours for any purpose germane to the special meeting.

After careful consideration, our board of directors has determined that the Business Combination Proposal and the Adjournment Proposal are fair to and in the best interest of Kismet and its shareholders, and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal and “FOR” the Adjournment Proposal, if presented. When you consider the board of directors’ recommendation of these proposals, you should keep in mind that our directors and our officers have interests

 

 

in the Proposed Transactions that may conflict with your interests as a shareholder. See the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Proposed Transactions.”

The Proposed Transactions contemplated by the Business Combination Agreement will be consummated only if a majority of the outstanding Kismet ordinary shares that are voted at the special meeting are voted in favor of the Business Combination Proposal. If the Business Combination Proposal is approved, the Adjournment Proposal will not be presented to shareholders for a vote.

All Kismet shareholders are cordially invited to attend the special meeting in person. To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a shareholder of record of Kismet ordinary shares, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, at (800) 662-5200; banks and brokers may reach Morrow Sodali LLC at (203) 658-9400.

On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Proposed Transactions.

By Order of the Board of Directors,

 

Ivan Tavrin
Chief Executive Officer

               , 2021

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE KISMET REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO KISMET’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANKS OR BROKERS TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “SPECIAL MEETING OF KISMET SHAREHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

This proxy statement/prospectus is dated            , 2021 and is first being mailed to Kismet shareholders on or about that date.

 

The information in this preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not sell the securities described herein until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 7, 2021

PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS OF KISMET ACQUISITION ONE CORP

PROSPECTUS FOR
31,870,000 ORDINARY SHARES AND 19,250,000 WARRANTS TO PURCHASE ORDINARY
SHARES, IN EACH CASE, OF NEXTERS INC.

The board of directors of Kismet Acquisition One Corp, which we refer to as “we,” “us,” “our” or “Kismet,” has unanimously approved and adopted the Business Combination Agreement, dated as of January 31, 2021, as it may be amended (the “Business Combination Agreement”), that Kismet has entered into with Nexters Inc., a British Virgin Islands business company (“Pubco”), Kismet Sponsor Limited, a British Virgin Islands business company (the “Sponsor”), solely in its capacity as Kismet’s representative, Nexters Global Ltd., a private limited liability company domiciled in Cyprus (the “Company”), Fantina Holdings Limited, a private limited liability company domiciled in Cyprus, solely in its capacity as the Company Shareholders Representative, and the shareholders of the Company party thereto, and the transactions contemplated thereby (the “Proposed Transactions”) which, among other things, provides for (a) Kismet to be merged with and into Pubco, with Pubco surviving the merger and the security holders of Kismet (other than security holders of Kismet electing to redeem their Kismet ordinary shares) becoming security holders of Pubco (the “Merger”) and (b) Pubco to acquire all of the issued and outstanding share capital of the Company from the securities of the Company for a combination of cash and Pubco ordinary shares, such that the Company will be a direct wholly owned subsidiary of Pubco (the “Share Acquisition”).

During the period from January 1, 2021 to the closing of the Share Acquisition, as permitted by the Business Combination Agreement, the Company will distribute a cash dividend to the Company Shareholders in an aggregate amount of approximately $80 million, of which $46 million was distributed in April 2021. The remaining portion will be paid no later than the Relevant Date (as defined herein) . The final amount of the distribution will depend on the actual amount of cash inflows and outflows of the Company during the period from January 1, 2021 to the date of the closing of the Share Acquisition.

Concurrently with the execution of the Business Combination Agreement, Kismet, Pubco and the Sponsor entered into an amended and restated Forward Purchase Agreement (the “A&R Forward Purchase Agreement”). The A&R Forward Purchase Agreement amends the Forward Purchase Agreement, dated August 5, 2020, between Kismet and the Sponsor 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 Kismet units with a commitment to acquire 5,000,000 Pubco ordinary shares and 1,000,000 Pubco public warrants in a private placement to occur after, and subject to, the Merger Closing and prior to the Share Acquisition Closing.

Under the Business Combination Agreement, the closing of the Proposed Transactions is subject to a number of conditions, including (i) that Kismet shareholders approve the Business Combination Proposal and (ii) Kismet and Pubco having at least $100 million of cash either in or outside of the Trust Account (as defined herein), after taking into accounts payments by Kismet to Kismet public shareholders who exercise their redemption rights, as described herein, and any proceeds received by Pubco under the A&R Forward Purchase Agreement. If any of the conditions to Kismet’s, Pubco’s or the Company’s obligation to consummate the Proposed Transactions are not satisfied, then the parties to the Business Combination Agreement will not be required to consummate the Proposed Transactions.

Proposals to approve the Proposed Transactions and the other matters discussed in this proxy statement/​prospectus will be presented at the special meeting of shareholders of Kismet to be held on                 , 2021.

Kismet units, Kismet ordinary shares and Kismet warrants are currently listed on the Nasdaq Capital Market, or Nasdaq, under the symbols “KSMTU,” “KSMT” and “KSMTW,” respectively. Any outstanding Kismet units will be separated into Kismet ordinary shares and Kismet warrants to purchase Pubco ordinary shares in connection with the consummation of the Proposed Transactions. We intend to apply to list Pubco’s ordinary shares and Pubco’s warrants on Nasdaq under the symbols “GDEV” and “GDEVW,” respectively. We cannot assure you that Pubco’s ordinary shares and Pubco’s warrants will be approved for listing on Nasdaq.

Each of Kismet and Pubco is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirement.

This proxy statement/prospectus provides you with detailed information about the Proposed Transactions and other matters to be considered at the special meeting of Kismet’s shareholders. We encourage you to carefully read this entire document. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 40.

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the transactions described in this proxy statement/prospectus or any of the securities to be issued in the Proposed Transactions, passed upon the merits or fairness of the Proposed Transactions or related transactions or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary constitutes a criminal offense.

This proxy statement/prospectus is dated            , 2021 and is first being mailed to shareholders of Kismet on or about that date.

 

TABLE OF CONTENTS

 

i

 

ABOUT THIS PROXY STATEMENT/ PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or the “SEC,” by Pubco, constitutes a prospectus of Pubco under Section 5 of the U.S. Securities Act of 1933, as amended, or the “Securities Act,” with respect to the Pubco shares to be issued to Kismet shareholders, the Pubco warrants to be issued to Kismet warrant holders and the Pubco shares underlying such Kismet warrants, if the Proposed Transactions described herein are consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act,” with respect to the special meeting of Kismet shareholders at which Kismet shareholders will be asked to consider and vote upon a proposal to approve the Proposed Transactions by the adoption of the Business Combination Agreement, among other matters.

 

1

 

IMPORTANT INFORMATION ABOUT IFRS AND NON-IFRS MEASURES

The Company’s audited consolidated financial statements included in this proxy statement/prospectus have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and referred to in this proxy statement/prospectus as “IFRS.” We refer in various places within this proxy statement/prospectus to non-IFRS financial measures. The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for the Company’s audited consolidated financial results prepared in accordance with IFRS.

 

2

 

FINANCIAL STATEMENT PRESENTATION

Pubco

Pubco was incorporated on January 27, 2021 for the purpose of effectuating the transactions described herein. Pubco has no material assets and does not operate any businesses. Accordingly, no financial statements of Pubco have been included in this proxy statement/prospectus.

Pursuant to the terms of the Business Combination Agreement, upon completion of the Merger (i.e., the first step of the Proposed Transactions), the shareholders of Pubco will comprise the former shareholders of Kismet, subject to Kismet’s existing public shareholders exercising their redemption rights.

The Merger will be accounted for within the scope of IFRS 2 (Share-based Payment). Under this method of accounting, there is no acquisition accounting and no recognition of goodwill, as Kismet is not a business as defined by IFRS 3 (Business Combinations) given that it consists predominantly of cash in the Trust Account. Under this method of accounting, Kismet will be treated as the “acquired” company for financial reporting purposes.

Kismet

The financial statements of Kismet included in this proxy statement/prospectus have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

The Company

The financial statements of the Company included in this proxy statement/prospectus have been prepared in accordance with IFRS as issued by the International Accounting Standards Board as adopted by the IASB.

 

3

 

INDUSTRY AND MARKET DATA

In this proxy statement/prospectus, we present industry data, information and statistics regarding the markets in which the Company competes as well as publicly available information, industry and general publications and research and studies conducted by third parties. This information is supplemented where necessary with the Company’s own internal estimates and information obtained from discussions with its customers, taking into account publicly available information about other industry participants and the Company’s management’s judgment where information is not publicly available. This information appears in “Summary of the Proxy Statement/ Prospectus,” “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Information Related to the Company” and other sections of this proxy statement/prospectus.

Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any forecasts or estimates.

 

4

 

FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “Kismet” refer to Kismet Acquisition One Corp.

In this document, unless the context otherwise requires:

“A&R Forward Purchase Agreement” means the amended and restated Forward Purchase Agreement, dated as of January 31, 2021, by and among Kismet, Pubco and the Sponsor.

“Adjournment Proposal” means the proposal to adjourn the special meeting of shareholders of Kismet to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote.

“broker non-vote” means the failure of a Kismet shareholder, who holds his, her or its shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

“Business Combination Agreement” means the Business Combination Agreement, dated as of January 31, 2021, as it may be amended, by and among Kismet, Pubco, the Sponsor, solely in its capacity as Kismet’s representative, the Company, Fantina Holdings Limited, a private limited liability company domiciled in Cyprus, solely in its capacity as the Company Shareholders representative, and the shareholders of the Company party thereto.

“Business Combination Proposal” means the proposal to approve and adopt the Business Combination Agreement, and the transactions contemplated thereby, including the Proposed Transactions.

“Closing” means the Merger Closing and the Share Acquisition Closing, collectively.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Companies Act” means the BVI Business Companies Act, 2004 (as amended).

“Company” means Nexters Global Ltd., a private limited liability company domiciled in Cyprus, and its consolidated subsidiaries.

“Company Shareholders” means the shareholders of the Company prior to the Closing.

“Company Shareholders Lock-Up Agreement” means the Lock-Up Agreement to be entered into by the Key Company Shareholders at the Share Acquisition Closing in connection with the Proposed Transactions.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Forward Purchase Agreement” means the forward purchase agreement dated August 5, 2020, by and among Kismet and Sponsor.

“Founders” means, collectively, Andrey Fadeev and Boris Gertsovskiy.

“IFRS” means International Financial Reporting Standards as adopted by the International Accounting Standards Board.

“Incentive Plan” means the proposed incentive compensation plan that Pubco expects to adopt prior to or after the Closing.

“Initial Shareholders” means the Sponsor, as the holder of all of the Kismet founder shares prior to the IPO, and its permitted transferees (if any), as applicable.

“Insolvency Act” means the Insolvency Act, 2003 of the British Virgin Islands.

“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended.

“IPO” means Kismet’s initial public offering of Kismet units, consummated on August 10, 2020.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.

 

5

 

“Key Company Shareholders” means, collectively, the Founders and Everix Investments Limited, a private limited liability company domiciled in Cyprus.

“Kismet” means Kismet Acquisition One Corp, a company incorporated under the laws of the British Virgin Islands.

“Kismet founder shares” means the Kismet ordinary shares issued prior to the IPO.

“Kismet Warrant Agreement” means the warrant agreement governing Kismet’s outstanding warrants.

“Lock-Up Agreements” means, collectively, the Company Shareholders Lock-Up Agreement and the Sponsor Lock-Up Agreement.

“Merger” means the merger of Kismet with and into Pubco, as a result of which the separate corporate existence of Kismet will cease and Pubco will continue as the surviving company, and the security holders of Kismet (other than security holders of Kismet electing to redeem their Kismet ordinary shares) will become security holders of Pubco.

“Merger Closing” means the closing of the Merger.

“Merger Closing Date” means the date of the Merger Closing.

“Merger Effective Time” means the time at which the Merger shall become effective.

“Nasdaq” means the Nasdaq Capital Market.

“New Registration Rights Agreement” means the Registration Rights Agreement to be entered into by and among Pubco, the Key Company Shareholders and the Sponsor in connection with the Merger Closing.

“PCAOB” means the Public Company Accounting Oversight Board.

“Proposed Transactions” means the transactions contemplated by the Business Combination Agreement which, among other things, provides for the Merger and the Share Acquisition.

“proxy statement/prospectus” means the prospectus included in this registration statement on Form F-4 (Registration No. 333-257103) filed with the SEC.

“Pubco” means Nexters Inc., a British Virgin Islands business company.

“Pubco Warrant Agreement” means the warrant agreement governing Pubco’s outstanding warrants.

“Reference Time” means the close of business of the Company on the Relevant Date (but without giving effect to the transactions contemplated by the Business Combination Agreement, including any payments by Kismet under the Business Combination Agreement to occur at the Share Acquisition Closing, but treating any obligations in respect of indebtedness or other liabilities that are contingent upon the consummation of the Share Acquisition Closing as currently due and owing without contingency as of such time).

“Registration Rights Agreement” means the registration rights agreement dated as of August 5, 2020, among Kismet, the Sponsor and the other “Holders” named therein.

“Relevant Date” means (a) with respect to Company transaction expenses, at all times, the Share Acquisition Closing Date, and (b) with respect to all other items, (i) the Share Acquisition Closing Date, if the Share Acquisition Closing is occurring on the last day of a calendar month, or (ii) the date falling on the last day of the calendar month immediately prior to the Share Acquisition Closing Date, if the Share Acquisition Closing is not occurring on the last day of a calendar month.

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

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Share Acquisition” means the acquisition by Pubco all of the issued and outstanding share capital of the Company in exchange for the payment, issue and delivery to the Company Shareholders of a combination of cash and Pubco ordinary shares, such that the Company will be a direct wholly owned subsidiary of Pubco.

 

6

 

“Share Acquisition Closing” means the closing of the Share Acquisition.

“Share Acquisition Closing Date” means the date of the Share Acquisition Closing.

“Sponsor” means Kismet Sponsor Limited, a British Virgin Islands business company.

“Sponsor Lock-Up Agreement” means the Lock-Up Agreement to be entered into by the Sponsor at the Share Acquisition Closing in connection with, and as a condition to the consummation of, the Proposed Transactions.

“Trust Account” means the trust account that holds a portion of the proceeds of the IPO and the concurrent sale of the Kismet private placement warrants.

“U.S. GAAP” means United States generally accepted accounting principles.

 

7

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTIONS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting of shareholders, including with respect to the Proposed Transactions. The following questions and answers may not include all the information that is important to Kismet’s shareholders. Shareholders are urged to read carefully this entire proxy statement/prospectus, including the financial statements and annexes attached hereto and the other documents referred to herein.

Questions and Answers About the Special Meeting of Kismet’s Shareholders and the Related Proposals

Q.

Why am I receiving this proxy statement/prospectus?

​

A.

Kismet has entered into the Business Combination Agreement with Pubco, the Company, the Sponsor (solely in its capacity as Kismet’s representative), Fantina Holdings Limited (solely in its capacity as the Company Shareholders representative) and the Company Shareholders, which provides for the Proposed Transactions in which, among other transactions, Kismet will be merged with and into Pubco and the Company will be a directly wholly-owned subsidiary of Pubco. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

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As a result of the Proposed Transactions: (i) at the Merger Effective Time, among other things, (a) each issued and outstanding Kismet ordinary share will automatically be converted into and exchanged for the right to receive one Pubco ordinary share, except that Kismet public shareholders are entitled to elect instead to have their Kismet ordinary shares redeemed and receive a pro rata portion of Kismet’s Trust Account, as provided in Kismet’s memorandum and articles of association, and (b) each issued and outstanding Kismet public warrant will automatically be converted into and exchanged for the right to receive one Pubco public warrant, and (ii) at Share Acquisition Closing, Pubco will acquire all of the issued and outstanding share capital of the Company, such that the Company will be a direct wholly owned subsidiary of Pubco, and the Company Shareholders will receive a combination of cash and Pubco ordinary shares. Please see “Proposal No. 1 — The Business Combination Proposal,” “Beneficial Ownership of Securities,” and “Unaudited Pro Forma Financial Information” for further information.

Kismet shareholders are being asked to consider and vote upon the Business Combination Proposal to approve the adoption of the Business Combination Agreement and the Proposed Transactions, among other things.

The Kismet ordinary shares, Kismet warrants and Kismet units are currently listed on Nasdaq under the symbols “KSMT,” “KSMTW” and “KSMTU,” respectively. Pubco has applied to list its Pubco ordinary shares and Pubco warrants on Nasdaq under the symbols “GDEV” and “GDEVW,” respectively, in connection with the Closing. All outstanding Kismet units will be separated into their underlying securities immediately prior to the Merger Effective Time. Accordingly, Pubco will not have any units following consummation of the Proposed Transactions.

This proxy statement/prospectus and its annexes contain important information about the Proposed Transactions and the proposals to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of Pubco with respect to the Pubco ordinary shares issuable in connection with the Proposed Transactions.

Q.

When and where is the special meeting?

​

A.

The special meeting will be held on                 , 2021, at                 a.m., Eastern time, at                 .

​

Q.

What matters will shareholders consider at the special meeting of shareholders?

​

A.

At the special meeting of shareholders, Kismet will ask its shareholders to vote in favor of the following proposals:

​

 

8

 

The Business Combination Proposal — a proposal to approve each of (a) the merger pursuant to Section 170 of the BVI Business Companies Act, 2004 (as amended) of Kismet into Pubco, with Pubco surviving the merger and the security holders of Kismet (other than security holders of Kismet electing to redeem their Kismet ordinary shares) becoming security holders of Pubco (the “Merger”) pursuant to the terms of the Business Combination Agreement and Section 170 of the BVI Business Companies Act, 2004 (as amended), (b) the Plan of Merger in respect of the Merger made in accordance with the provisions of section 170(5) of the BVI Business Companies Act, 2004 (as amended) and included as Annex B to this proxy statement/prospectus, (c) the acquisition by Pubco of all of the issued and outstanding share capital of the Company from the holders of the Company’s share capital for a combination of cash and Pubco ordinary shares, such that the Company will be a direct wholly owned subsidiary of Pubco (the “Share Acquisition”), and (d) the other transactions contemplated by the Business Combination Agreement (together with the Merger and Share Acquisition, the “Proposed Transactions”).

The Adjournment Proposal — a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal or Kismet public shareholders have elected to redeem an amount of Kismet public shares such that the minimum available cash condition to the obligation to closing of the Proposed Transactions would not be satisfied.

Q.

Are the proposals conditioned on one another?

​

A.

No. Neither the Business Combination Proposal nor the Shareholder Adjournment Proposal requires the approval of the other proposal to be effective. If the Business Combination Proposal is approved, the Adjournment Proposal will not be presented to shareholders for a vote.

​

Q.

What will happen in the Proposed Transactions?

​

A.

Pursuant to the Business Combination Agreement, among other things: (i) Kismet will merge with and into Pubco, as a result of which the separate corporate existence of Kismet will cease and Pubco will continue as the surviving company, and each issued and outstanding security of Kismet immediately prior to the Merger Effective Time will no longer be outstanding and will automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco in accordance with the terms of the Business Combination Agreement (except that Kismet public shareholders will be entitled to elect instead to have their Kismet ordinary shares redeemed and receive a pro rata portion of the Trust Account, as provided in Kismet’s memorandum and articles of association); and (ii) Pubco will acquire all of the issued and outstanding share capital of the Company from the Company Shareholders in exchange for the payment, issue and delivery to the Company Shareholders of a combination of cash and Pubco ordinary shares, such that the Company will be a direct wholly owned subsidiary of Pubco. See the section entitled “Proposal No. 1 — The Business Combination Proposal” for more information.

​

In connection with the consummation of the Proposed Transactions, the following will occur:

•

before the Merger Effective Time, Pubco will amend its memorandum and articles of association to be substantially in the form attached hereto as Annex C;

​

•

after, and subject to, the closing of the Merger and prior to the closing of the Share Acquisition, the Sponsor will subscribe for and purchase 5,000,000 Pubco ordinary shares and 1,000,000 Pubco public warrants from Pubco for an aggregate purchase price of $50,000,000;

​

•

during the period from January 1, 2021 to the closing of the Share Acquisition, as permitted by the Business Combination Agreement, the Company will distribute a cash dividend to the Company Shareholders in an aggregate amount of approximately $80 million, of which $46 million was distributed in April 2021. The remaining portion will be paid no later than the Relevant Date. The final amount of the distribution will depend on the actual amounts of cash inflows and outflows of the Company during the period from January 1, 2021 to the date of the closing of the Share Acquisition; and

​

 

9

 

•

the Lock-Up Agreements and the New Registration Rights Agreement will be entered into, and the Registration Rights Agreement, dated as of August 5, 2020, among Kismet, the Sponsor and the other “Holders” named therein will terminate.

​

Q.

Why is Kismet proposing the Business Combination Proposal?

​

A.

Kismet was organized 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. Kismet is not limited to any particular industry, sector or region, though its intent is to focus on companies in the telecommunications infrastructure, internet and technology and consumer goods and services sectors operating in Russia.

​

Kismet received $256,750,000 from its IPO and sale of the Kismet private placement warrants, of which $250,000,000 was placed into the Trust Account immediately following the IPO. In accordance with Kismet’s amended and restated memorandum and articles of association, the funds held in the Trust Account will be released upon the consummation of the Proposed Transactions. See the question entitled “What happens to the funds held in the Trust Account upon consummation of the Proposed Transactions?”

There currently are 31,750,000 Kismet ordinary shares issued and outstanding, consisting of 25,000,000 Kismet public shares originally sold as part of the Kismet units in the IPO and 6,750,000 Kismet founder shares that were issued to the Sponsor prior to the IPO. In addition, there currently are 19,250,000 Kismet warrants issued and outstanding, including 6,750,000 Kismet private placement warrants that were sold by Kismet to the Sponsor in a private sale simultaneously with the IPO. Each whole Kismet warrant entitles the holder thereof to purchase one Kismet ordinary share at a price of $11.50 per share. The Kismet warrants will become exercisable on the later of 30 days after the completion of Kismet’s initial business combination and 12 months from the closing of the IPO, and expire at 5:00 p.m., New York City time, five years after the completion of Kismet’s initial business combination or earlier upon redemption or liquidation. The Kismet private placement warrants, however, are non-redeemable so long as they are held by their initial purchasers or their permitted transferees. There are no Kismet preferred shares issued and outstanding.

Under Kismet’s amended and restated memorandum and articles of association, Kismet must provide all holders of Kismet public shares with the opportunity to have their Kismet public shares redeemed upon the consummation of Kismet’s initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote.

Q.

Who is the Company?

​

A.

The Company is a developer of mobile, web, and social games. It is one of the top five independent game developers in Europe (excluding developers owned and controlled by other companies active in the gaming market) based on in-game purchases between January and November 2020, net of platform fees, according to data provided by AppMagic. The Company actively manages the games that it develops, which are all distributed through mobile, social, and web-based platforms and are free to play, generating revenue through in-game purchases and advertising. The Company is headquartered in Cyprus and, as of April 30, 2021, had 503 employees. The Company’s revenue for the year ended December 31, 2020 was $259.5 million and its Bookings were $443.0 million, with net cash flows generated from operating activities of $120.6 million. Income for the year net of tax for the year ended December 31, 2020 was $668 thousand, compared to a loss of $33.7 million in 2019. See the section entitled “Information Related to the Company” for more information.

​

Q.

What equity stake will current Kismet shareholders and the Company Shareholders have in Pubco after the Closing?

​

A.

It is anticipated that, upon completion of the Proposed Transactions, Kismet’s existing shareholders, including the Sponsor, will own approximately 17.9% of the issued and outstanding Pubco ordinary shares, including 11,750,000 Pubco shares held by the Sponsor (including 5,000,000 Pubco shares to be purchased pursuant to the terms of the A&R Forward Purchase Agreement), and the Company

​

 

10

 

Shareholders will own approximately 82.1% of the issued and outstanding Pubco ordinary shares. These relative percentages assume (i) that none of Kismet’s existing public shareholders exercise their redemption rights and (ii) that no additional equity securities of Kismet or Pubco are issued, other than the Pubco ordinary shares to be purchased by the Sponsor pursuant to the terms of the A&R Forward Purchase Agreement. If the facts are different from these assumptions, the percentage ownership retained by Kismet’s existing shareholders will be different.

Assuming that (i) Kismet existing public shareholders exercise their redemption rights with regard to 20,000,000 Kismet public shares and (ii) no additional equity securities of Kismet or Pubco are issued, other than the Pubco ordinary shares to be purchased by the Sponsor pursuant to the terms of the A&R Forward Purchase Agreement, Kismet’s existing shareholders, including the Sponsor, will own approximately 8.6% of the issued and outstanding Pubco ordinary shares and the Company Shareholders will own approximately 91.4% of the issued and outstanding Pubco ordinary shares upon completion of the Proposed Transactions. If the facts are different from these assumptions, the percentage ownership retained by Kismet’s existing shareholders will be different.

The following table illustrates two different redemption scenarios based on the assumptions described above: (1) no redemptions, which assumes that none of Kismet’s existing public shareholders exercise their redemption rights and (2) minimum cash, in which Kismet and Pubco has, in the aggregate, not less than $100.0 million of cash available for distribution upon the consummation of the Proposed Transactions after redemptions of 20,000,000 Kismet ordinary shares, satisfying the condition to Closing under the Business Combination Agreement:

(1)

Excludes (a) Pubco shares issuable upon the exercise of 20,250,000 Pubco warrants to be outstanding, including pursuant to the terms of the A&R Forward Purchase Agreement, upon completion of the Proposed Transactions, and (b) 120,000 Pubco shares issuable pursuant to options held by three of Kismet’s independent directors.

​

(2)

Includes 5,000,000 Pubco shares to be purchased pursuant to the terms of the A&R Forward Purchase Agreement.

​

(3)

Based on an estimated price of $10.00 per share.

​

Q.

Who will be the officers and directors of Pubco if the Proposed Transactions are consummated?

​

A.

At the consummation of the Proposed Transactions, the directors of Pubco will be Dmitrii Bukhman and Igor Bukhman (both designated by Everix Investments Limited), Ivan Tavrin (designated by Pubco’s current shareholder), and Andrey Fadeev and Boris Gertsovskiy (both jointly designated by Andrey Fadeev and Boris Gertsovskiy). Mr. Fadeev is expected to serve as chief executive officer and Alexander Karavaev is expected to serve as chief financial officer of Pubco. See the section entitled “Management of Pubco Following the Proposed Transactions.”

​

Following the consummation of the Proposed Transactions, (1) Everix Investments Limited, and (2) Andrey Fadeev and Boris Gertsovskiy (acting jointly), will each have the right to appoint two directors to the board of directors (which number may decrease as those shareholders dispose of their shares in Pubco), with the balance being elected by all of the shareholders of the Company. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors who are not appointed by the named shareholders.

 

11

 

Q.

What conditions must be satisfied to complete the Proposed Transactions?

​

A.

There are a number of closing conditions in the Business Combination Agreement, including (i) that Kismet’s shareholders approve the Business Combination Proposal and (ii) Kismet and Pubco having at least $100.0 million of cash either in or outside of the Trust Account, after taking into accounts payments by Kismet to Kismet public shareholders who exercise their redemption rights, as described herein, and any proceeds received by Pubco under the A&R Forward Purchase Agreement. For a summary of the conditions that must be satisfied or waived prior to completion of the Proposed Transactions, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement.”

​

Q.

What happens if I sell my Kismet ordinary shares before the special meeting of shareholders?

​

A.

The record date for the special meeting of shareholders will be earlier than the date that the Proposed Transactions are expected to be completed. If you transfer your Kismet ordinary shares after the record date, but before the special meeting of shareholders, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting of shareholders. However, you will not be entitled to receive any Pubco ordinary shares following the Closing because only Kismet’s shareholders on the date of the Closing will be entitled to receive Pubco ordinary shares in connection with the Closing.

​

Q.

What vote is required to approve the proposals presented at the special meeting of shareholders?

​

A.

The approval of the Business Combination Proposal requires the affirmative vote of the holders of at least a majority of all then outstanding Kismet ordinary shares who are present or represented at the special meeting of shareholders. Accordingly, a Kismet shareholder who attends the special meeting (in person or by proxy) who fails to vote, or abstains from voting, will have the same effect as a vote “AGAINST” the Business Combination Proposal.

​

The approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the Kismet ordinary shares that are voted thereon at the special meeting of shareholders. Accordingly, a Kismet shareholder who attends the special meeting (in person or by proxy) who fails to vote, or abstains from voting, will have no effect on the outcome of any vote on the Adjournment Proposal.

Q.

Do the Company Shareholders need to approve the Proposed Transactions?

​

A.

Cypriot law does not require shareholder approval of the specific structure of the Proposed Transactions. Nevertheless, there are aspects of the Proposed Transactions that, under Cypriot law, require an approval by a majority exceeding 90% of the votes attached to all issued share capital of the company. On January 30, 2021, the Company’s shareholders unanimously approved, confirmed and ratified the terms of the Business Combination Agreement and the Company’s entry into the same in all respects. This proxy statement/prospectus is not directed at Company Shareholders.

​

Q.

May Kismet, the Sponsor or Kismet’s directors, officers or advisors, or their affiliates, purchase shares in connection with the Proposed Transactions?

​

A.

In connection with the shareholder vote to approve the Proposed Transactions, the Sponsor or Kismet’s directors, officers, advisors or any of their affiliates may purchase shares in privately negotiated transactions from shareholders who would have otherwise elected to have their shares redeemed in connection with the Proposed Transactions. None of the Sponsor or Kismet’s directors, officers or advisors, or their respective affiliates, will make any such purchases when they are in possession of any material non-public information not disclosed to the seller. Such a purchase would include a contractual acknowledgement that such shareholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor or Kismet’s directors, officers or advisors, or their affiliates, purchase shares in privately negotiated transactions from Kismet public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different from the amount per share a Kismet public shareholder would receive if it elected to redeem its shares in connection

​

 

12

 

with the Proposed Transactions. The purpose of these purchases would be to increase the amount of cash available to Kismet for use in the Proposed Transactions.

Q.

Will Kismet or Pubco issue additional equity securities in connection with the consummation of the Proposed Transactions?

​

A.

Pursuant to the terms of the A&R Forward Purchase Agreement, the Sponsor will purchase 5,000,000 Pubco ordinary shares and 1,000,000 Pubco public warrants for a purchase price of $50,000,000 in a private placement to occur after, and subject to, the Merger Closing and prior to the Share Acquisition Closing. In addition, Pubco or Kismet may enter into equity financing in connection with the Proposed Transactions with their respective affiliates or any third parties if the parties determine that the issuance of additional equity is necessary or desirable in connection with the consummation of the Proposed Transactions. The purpose of these purchases would be to increase the amount of cash available to Kismet for use in the Proposed Transactions. Any equity issuances could result in dilution of the relative ownership interest of the non-redeeming Kismet public shareholders or the former equity holders of the Company.

​

Q.

How many votes do I have at the special meeting of shareholders?

​

A.

Kismet’s shareholders are entitled to one vote at the special meeting for each Kismet ordinary share held of record as of the record date. As of the close of business on the record date, there were 31,750,000 outstanding Kismet ordinary shares.

​

Q.

How will the Sponsor vote?

​

A.

In connection with the IPO, Kismet entered into agreements with the Sponsor and Kismet’s officers and directors, pursuant to which each agreed to vote their Kismet founder shares and any other shares acquired during and after the IPO in favor of the Business Combination Proposal. Neither the Initial Shareholders nor Kismet’s directors or officers have purchased any shares during or after the IPO and neither Kismet, the Sponsor nor Kismet’s directors or officers have entered into agreements, and are not currently in negotiations, to purchase Kismet ordinary shares. Currently, the Sponsor holds all of the Kismet founder shares, which represent approximately 21.3% of the issued and outstanding Kismet ordinary shares.

​

Q.

What interests do Kismet’s current officers and directors have in the Proposed Transactions?

​

A.

Kismet’s directors and executive officers may have interests in the Proposed Transactions that are different from, in addition to or in conflict with, yours. These interests include:

​

•

the beneficial ownership of the Sponsor of 6,750,000 Kismet founder shares, which shares would become worthless if Kismet does not complete a business combination within the applicable time period, as the Sponsor waived any right to redemption with respect to these shares. Such shares have an aggregate market value of approximately $      based on the closing price of the Kismet ordinary shares of $      on Nasdaq on                 , 2021, the record date for the special meeting of shareholders;

​

•

the beneficial ownership of each of Kismet’s three independent directors of an option to purchase 40,000 Kismet ordinary shares at an exercise price of $10.00 per share, which will vest upon the consummation of the Proposed Transactions and will expire worthless if Kismet fails to complete a business combination within the required time period;

​

•

the Sponsor is expected to hold an aggregate of approximately 5.7% of the outstanding Pubco ordinary shares upon the consummation of the Proposed Transactions, assuming (ii) none of the options held by three of Kismet’s independent directors are exercised and (ii) none of Kismet’s existing public shareholders exercise their redemption rights;

​

•

Kismet’s directors and officers will not receive reimbursement for any out-of-pocket expenses incurred by them on Kismet’s behalf incident to identifying, investigating and consummating a business combination to the extent such expenses exceed the amount not required to be retained in the Trust Account, unless a business combination is consummated;

​

 

13

 

•

the potential continuation of Ivan Tavrin as a director of Pubco; and

​

•

the continued indemnification of current directors and officers of Kismet and the continuation of directors’ and officers’ liability insurance after the Proposed Transactions.

​

These interests may influence Kismet’s directors in making their recommendation to vote in favor of the approval of the Business Combination Proposal. Please read the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Proposed Transactions.”

Q:

What are the U.S. federal income tax consequences of the Proposed Transactions to U.S. Holders of Kismet ordinary shares and Kismet warrants?

​

A:

As discussed more fully under “Proposal No. 1 — The Business Combination Agreement Proposal — U.S. Federal Income Tax Considerations,” assuming that the Merger qualifies as a reorganization within the meaning of Section 368(a)(1)(F) of the Code (an “F Reorganization”), U.S. Holders (as defined in “Proposal No. 1 — The Business Combination Agreement Proposal — U.S. Federal Income Tax Considerations”) generally should not recognize gain or loss for U.S. federal income tax purposes on the Merger.

​

Although the obligations of the parties to the Business Combination Agreement to complete the Proposed Transactions are not conditioned on the receipt of an opinion from Latham & Watkins LLP or Skadden, Arps, Slate, Meagher & Flom LLP to the effect that the Merger will qualify as an F Reorganization, Skadden, Arps, Slate, Meagher & Flom LLP has delivered an opinion that the Merger will qualify as an F Reorganization.

All holders of Kismet ordinary shares or warrants are urged to consult their tax advisor regarding the tax consequences to them of the Merger, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Business Combination Proposal, see “Proposal No. 1 — The Business Combination Agreement Proposal — U.S. Federal Income Tax Considerations.”

Q.

Did Kismet’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Proposed Transactions?

​

A.

Kismet’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Proposed Transactions. Kismet’s board of directors believes that based upon the financial skills and background of its directors, it was qualified to conclude that the Proposed Transactions were fair from a financial perspective to its shareholders. The board of directors also determined, without seeking a valuation from a financial advisor, that the Company’s fair market value was at least 80% of Kismet’s net assets (excluding deferred underwriting discounts and commissions). Accordingly, investors will be relying on the judgment of Kismet’s board of directors as described above in valuing the Company business and assuming the risk that the board of directors may not have properly valued such business.

​

Q.

What happens if the Business Combination Proposal is not approved?

​

A.

If the Business Combination Proposal is not approved and Kismet does not consummate a business combination by August 10, 2022, or amend its amended and restated articles and memorandum of association to extend the date by which Kismet must consummate an initial business combination, Kismet will be required to dissolve and liquidate the Trust Account.

​

Q.

Do I have redemption rights?

​

A.

If you are a holder of Kismet public shares, you may redeem your Kismet public shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the IPO, as of two business days prior to the consummation of the Proposed Transactions, including interest earned on the funds held in the Trust Account and not previously released to Kismet to pay its franchise and income taxes, upon the consummation of the Proposed Transactions. The per-share amount Kismet will distribute to holders who properly redeem their shares will not be reduced by the deferred underwriting commissions Kismet will pay to the underwriters of its IPO if the Proposed

​

 

14

 

Transactions are consummated. Holders of the outstanding Kismet public warrants do not have redemption rights with respect to such Kismet warrants in connection with the Proposed Transactions. All of the Initial Shareholders have agreed to waive their redemption rights with respect to their Kismet founder shares and any Kismet public shares that they may have acquired during or after the IPO in connection with the completion of Kismet’s initial business combination. The Kismet founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on funds in the Trust Account of approximately $250.1 million on March 31, 2021, the estimated per share redemption price would have been approximately $10.00. Additionally, Kismet public shares properly tendered for redemption will only be redeemed in connection with the Proposed Transactions if the Proposed Transactions are consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to Kismet to pay franchise and income taxes (less $100,000 of interest to pay dissolution expenses), in connection with a shareholder vote (or tender offer) in connection with any alternative business combination Kismet may thereafter pursue or the liquidation of the Trust Account if Kismet fails to consummate a business combination by the applicable date.

Q.

Is there a limit on the number of shares I may redeem?

​

A.

A Kismet public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 20% or more of the Kismet public shares. Accordingly, all shares in excess of 20% of the Kismet public shares owned by a holder will not be redeemed. On the other hand, a Kismet public shareholder who holds less than 20% of the Kismet public shares may redeem all of the Kismet public shares held by him or her for cash.

​

Q.

Will how I vote affect my ability to exercise redemption rights?

​

A.

No. You may exercise your redemption rights whether you vote your Kismet public shares for or against the Business Combination Proposal or any other proposal described in this proxy statement/​prospectus, or do not vote your shares. As a result, the Business Combination Proposal can be approved by shareholders who will redeem their Kismet public shares and no longer remain shareholders, leaving shareholders who choose not to redeem their Kismet public shares holding shares in a company with a less liquid trading market, fewer shareholders, less cash and the potential inability to meet the listing standards of Nasdaq.

​

It is a condition to closing under the Business Combination Agreement, however, that Kismet and Pubco have, collectively, at least $100 million of cash either in or outside of the Trust Account, after taking into accounts payments by Kismet to Kismet public shareholders who exercise their redemption rights and any proceeds received by Pubco under the A&R Forward Purchase Agreement. If redemptions by Kismet public shareholders cause Kismet to be unable to meet this closing condition, then the parties to the Business Combination Agreement will not be required to consummate the Proposed Transactions.

Q.

How do I exercise my redemption rights?

​

A.

In order to exercise your redemption rights, you must, prior to 4:30 p.m. Eastern time on                 , 2021 (two business days before the special meeting), (i) submit a written request to Continental Stock Transfer & Trust Company, Kismet’s transfer agent, that Kismet redeem your Kismet public shares for cash, and (ii) deliver your shares to Kismet’s transfer agent physically or electronically through the Depository Trust Company (“DTC”). The address of Kismet’s transfer agent is listed under the question “Who can help answer my questions?” below. Kismet requests that any requests for redemption include the identity as to the beneficial owner making such request. Electronic delivery of your shares generally will be faster than delivery of physical share certificates.

​

A physical share certificate will not be needed if your shares are delivered to Kismet’s transfer agent electronically. In order to obtain a physical share certificate, a shareholder’s broker and/or clearing broker, DTC and Kismet’s transfer agent will need to act to facilitate the request. It is Kismet’s understanding that shareholders should generally allot at least one week to obtain physical certificates

 

15

 

from the transfer agent. However, because Kismet does not have any control over this process or over the brokers or DTC, it may take significantly longer than one week to obtain a physical share certificate. If it takes longer than anticipated to obtain a physical certificate, shareholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with Kismet’s consent, until the vote is taken with respect to the Proposed Transactions. If you delivered your shares for redemption to Kismet’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that Kismet’s transfer agent return the shares (physically or electronically). Such requests may be made by contacting Kismet’s transfer agent at the phone number or address listed under the question “Who can help answer my questions?”

Q.

What are the U.S. federal income tax consequences of exercising my redemption rights?

​

A.

The exercise of redemption rights will be a taxable transaction for a U.S. Holder (as defined in “Proposal No. 1 — The Business Combination Agreement Proposal — U.S. Federal Income Tax Considerations”). Subject to the application of the “passive foreign investment company” ​(“PFIC”) rules, it is expected that a redeeming U.S. Holder will generally be treated as selling its ordinary shares and will recognize capital gain or capital loss. There may be certain circumstances, however, in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of ordinary shares that such U.S. Holder owns or is deemed to own (including through the ownership of warrants). Notwithstanding the foregoing, under the PFIC rules, unless a redeeming U.S. Holder has made certain elections, the gain recognized or proceeds received in the redemption may be subject to tax at ordinary income rates and an interest charge under a complex set of computational rules. For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “Proposal No. 1 — The Business Combination Agreement Proposal — U.S. Federal Income Tax Considerations.”

​

All holders considering exercising redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws.

Q:

If I hold Kismet warrants, can I exercise redemption rights with respect to my Kismet warrants?

​

A:

No. There are no redemption rights with respect to the Kismet warrants.

​

Q:

Do I have appraisal rights if I object to the Proposed Transactions?

​

A:

Yes. See the section entitled “Appraisal Rights” for more information.

​

There are no appraisal rights with respect to Kismet warrants.

Q:

What happens to the funds held in the Trust Account upon consummation of the Proposed Transactions?

​

A:

If the Proposed Transactions are consummated, the funds held in the Trust Account will be released to pay (i) Kismet public shareholders who properly exercise their redemption rights, (ii) Kismet’s accrued expenses, including Kismet’s deferred expenses of the IPO, (iii) any loans owed by Kismet to the Sponsor for administrative costs and expenses (including deferred expenses) incurred by or on behalf of Kismet, and (iv) cash consideration pursuant to the Business Combination Agreement. Any additional funds available for release from the Trust Account will be used for general corporate purposes of Pubco and its subsidiaries following the Proposed Transactions.

​

Q:

What happens if the Proposed Transactions are not consummated?

​

A:

There are certain circumstances under which the Business Combination Agreement may be terminated. See the section entitled “Proposal No. 1 — The Business Combination Proposal” for information regarding the parties’ specific termination rights.

​

 

16

 

If, as a result of the termination of the Business Combination Agreement or otherwise, Kismet is unable to complete a business combination by August 10, 2022, or amend its amended and restated memorandum and articles of association to extend the date by which Kismet must consummate an initial business combination, Kismet’s amended and restated certificate of incorporation provides that Kismet 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 Kismet 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 Kismet to pay its franchise and income taxes (less $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Kismet public shares, which redemption will completely extinguish Kismet 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 Kismet’s remaining shareholders and Kismet’s board of directors, dissolve and liquidate, subject in each case to Kismet’s obligations under BVI law to provide for claims of creditors and the requirements of other applicable law. See the section entitled “Risk Factors — Risks Related to Kismet and the Proposed Transactions — We may not be able to complete the Proposed Transactions or any other business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and thereafter commence a voluntary liquidation, in which case our public shareholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless” and “Risk Factors — Risks Related to Kismet and the Proposed Transactions — If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share.” Holders of Kismet founder shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to outstanding Kismet warrants. Accordingly, the Kismet warrants will expire worthless.

Q:

When are the Proposed Transactions expected to be completed?

​

A:

It is currently anticipated that the Proposed Transactions will be consummated promptly following the special meeting of shareholders, provided that all other conditions to the consummation of the Proposed Transactions have been satisfied or waived.

​

For a description of the conditions to the completion of the Proposed Transactions, see the section entitled “Proposal No. 1 — The Business Combination Proposal.”

Q:

What do I need to do now?

​

A:

You are urged to carefully read and consider the information contained in this proxy statement/​prospectus, including the financial statements and annexes attached hereto, and to consider how the Proposed Transactions will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

​

Q:

How do I vote?

​

A:

If you were a holder of record of Kismet ordinary shares on                 , 2021, the record date for the special meeting of shareholders, you may vote with respect to the applicable proposals in person at the special meeting of shareholders or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting of shareholders and vote in person, obtain a proxy from your broker, bank or nominee.

​

 

17

 

Q:

What will happen if I abstain from voting or fail to vote at the special meeting?

​

A:

At the special meeting of shareholders, Kismet will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have the same effect as a vote “AGAINST” the Business Combination Proposal and will have no effect on the Adjournment Proposal. If you sign and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the special meeting.

​

Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

​

A:

Signed and dated proxies received by Kismet without an indication of how the shareholder intends to vote on a proposal will be voted in favor of each proposal presented to the shareholders.

​

Q.

Do I need to attend the special meeting of shareholders to vote my shares?

​

A.

No. You are invited to attend the special meeting to vote on the proposals described in this proxy statement/prospectus. However, you do not need to attend the special meeting of shareholders to vote your shares. Instead, you may submit your proxy by signing, dating and returning the applicable enclosed proxy card(s) in the pre-addressed postage-paid envelope. Your vote is important. Kismet encourages you to vote as soon as possible after carefully reading this proxy statement/prospectus.

​

Q.

If I am not going to attend the special meeting of shareholders in person, should I return my proxy card instead?

​

A.

Yes. After carefully reading and considering the information contained in this proxy statement/​prospectus, please submit your proxy, as applicable, by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

​

Q.

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

​

A.

No. If your broker holds your shares in its name and you do not give the broker voting instructions, under the applicable stock exchange rules, your broker may not vote your shares on any of the proposals. If you do not give your broker voting instructions and the broker does not vote your shares, this is referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining the presence of a quorum at the special meeting of shareholders, and will have the same effect as a vote “AGAINST” the Business Combination Proposal and will have no effect on the Adjournment Proposal. However, in no event will a broker non-vote that has the effect of voting against the Business Combination Proposal also have the effect of exercising your redemption rights for a pro rata portion of the Trust Account, and therefore no shares as to which a broker non-vote occurs will be redeemed in connection with the Proposed Transactions.

​

Q.

May I change my vote after I have mailed my signed proxy card?

​

A.

Yes. You may change your vote by sending a later-dated, signed proxy card to Morrow Sodali LLC, at KSMT.info@investor.morrowsodali.com prior to the vote at the special meeting of shareholders, or attend the special meeting and vote in person. You also may revoke your proxy by sending a notice of revocation to Kismet at the address listed below, provided such revocation is received prior to the vote at the special meeting. If your shares are held in street name by a broker or other nominee, you must contact the broker or nominee to change your vote.

​

Q.

What should I do if I receive more than one set of voting materials?

​

A.

You may receive more than one set of voting materials, including multiple copies of this proxy statement/​prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

​

 

18

 

Q.

What is the quorum requirement for the special meeting of shareholders?

​

A.

A quorum will be present at the special meeting of shareholders if a majority of the Kismet ordinary shares outstanding and entitled to vote at the meeting is represented in person or by proxy. In the absence of a quorum, a majority of Kismet’s shareholders, present in person or represented by proxy, and voting thereon will have the power to adjourn the special meeting.

​

As of the record date for the special meeting, 15,875,001 Kismet ordinary shares would be required to achieve a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or your broker, bank or other nominee submits one on your behalf) or if you vote in person at the special meeting of shareholders. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares represented by shareholders present at the special meeting or by proxy may authorize adjournment of the special meeting to another date.

Q.

What happens to Kismet warrants I hold if I vote my Kismet ordinary shares against approval of the Business Combination Proposal and validly exercise my redemption rights?

​

A.

Properly exercising your redemption rights as a Kismet shareholder does not result in either a vote “FOR” or “AGAINST” the Business Combination Proposal or any other proposal described in this proxy statement/prospectus. If the Proposed Transactions are completed, all of your Kismet warrants will automatically convert into Pubco warrants to purchase Pubco ordinary shares as described in this proxy statement/prospectus. If the Proposed Transactions are not completed, you will continue to hold your Kismet warrants, and if Kismet does not otherwise consummate an initial business combination by August 10, 2022, or amend its amended and restated memorandum and articles of association to extend the date by which Kismet must consummate an initial business combination, Kismet will be required to dissolve and liquidate, and your Kismet warrants will expire worthless.

​

Q.

Who will solicit and pay the cost of soliciting proxies?

​

A.

Kismet will pay the cost of soliciting proxies for the special meeting. Kismet has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the special meeting. Kismet has agreed to pay Morrow Sodali LLC a fee of $27,500. Kismet will reimburse Morrow Sodali LLC for reasonable out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. Kismet also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Kismet ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Kismet ordinary shares and in obtaining voting instructions from those owners. Kismet’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

​

Q.

Who can help answer my questions?

​

A.

If you have questions about the shareholder proposals, or if you need additional copies of this proxy statement/prospectus, or the proxy cards you should contact Kismet’s proxy solicitor:

​

Morrow Sodali LLC
470 West Avenue
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: KSMT.info@investor.morrowsodali.com

You may also contact Kismet at:

Kismet Acquisition One Corp
850 Library Avenue
Suite 204
Newark, Delaware 19715
Attention: Ivan Tavrin

 

19

 

To obtain timely delivery, Kismet’s shareholders and Kismet warrant holders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about Kismet from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

The accompanying proxy statement/prospectus incorporates important business and financial information about Kismet and the Company from documents that are not included in or delivered with the accompanying proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain documents incorporated by reference into the accompanying proxy statement/prospectus (other than certain exhibits or schedules to these documents) by requesting them in writing or by telephone from the appropriate company at the addresses and telephone numbers listed above. Requests made to the Company should be directed to the address and telephone number noted below:

Nexters Inc.
Ritter House, Wickhams Cay II
PO Box 3170, Road Town
Tortola VG110
Telephone: +35722580040

If you intend to seek redemption of your Kismet public shares, you will need to send a letter demanding redemption and deliver your shares (either physically or electronically) to Kismet’s transfer agent prior to 4:30 p.m., New York time, on the second business day prior to the special meeting of shareholders. If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attention: Compliance Department

 

20

 

21

 

​

22

 

23

 

24

 

​

25

 

26

 

​

​

​

Assuming No Redemption

​

​

Assuming Maximum Redemption

​

​

​

​

Number of Shares(1)

​

​

% of Shares

​

​

Number of Shares(1)

​

​

% of Shares

​

Kismet’s existing public shareholders

​

​

​

​

25,000,000

​

​

​

​

​

12.2%

​

​

​

​

​

5,000,000

​

​

​

​

​

2.6%

​

​

The Sponsor

​

​

​

​

11,750,000(2)

​

​

​

​

​

5.7%

​

​

​

​

​

11,750,000(2)

​

​

​

​

​

6.0%

​

​

The Company Shareholders

​

​

​

​

168,250,000(3)

​

​

​

​

​

82.1%

​

​

​

​

​

178,250,000(3)

​

​

​

​

​

91.4%

​

​

Total

​

​

​

​

205,000,000

​

​

​

​

​

​

​

​

​

​

​

195,000,000

​

​

​

​

​

​

​

​

27

 

28

 

29

 

30

 

​

31

 

​

32

 

​

33

 

Income Statement Data:	​	​	For the Period from June 3, 2020 (inception) Through December 31, 2020				​
Revenue	​	​	​	$	—	​	​
Net loss	​	​	​	​	2,982,055	​	​
Basic and diluted net loss per share	​	​	​	​	0.00	​	​
Weighted average shares outstanding of ordinary shares – redeemable, basic and diluted	​	​	​	​	25,000,000	​	​

Balance Sheet Data:	​	​	As of December 31, 2020				​
Working capital	​	​	​	$	434,988	​	​
Investments held in trust account	​	​	​	​	250,064,076	​	​
Total assets	​	​	​	​	251,235,286	​	​
Total liabilities	​	​	​	​	16,978,722	​	​
Value of ordinary shares subject to possible redemption	​	​	​	​	229,256,560	​	​
Total shareholders’ equity	​	​	​	​	5,000,004	​	​

34

 

​

​

​

Year ended December 31,

​

​

​

​

2020

​

​

2019

​

​

​

​

(US$ in thousands, except share and per share data)

​

Revenue

​

​

​

​

259,516

​

​

​

​

​

93,811

​

​

Costs and expenses, excluding depreciation and amortization

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of revenue:

​

​

​

​

​

​

​

​

​

​

​

​

​

Platform commissions

​

​

​

​

(75,188)

​

​

​

​

​

(28,766)

​

​

Game operating cost

​

​

​

​

(16,402)

​

​

​

​

​

(14,817)

​

​

Selling and marketing expenses

​

​

​

​

(165,756)

​

​

​

​

​

(82,180)

​

​

General and administrative expenses

​

​

​

​

(2,701)

​

​

​

​

​

(1,701)

​

​

Total costs and expenses, excluding depreciation and amortization

​

​

​

​

(260,047)

​

​

​

​

​

(127,464)

​

​

Depreciation and amortization

​

​

​

​

(561)

​

​

​

​

​

(286)

​

​

Loss from operations

​

​

​

​

(1,092)

​

​

​

​

​

(33,939)

​

​

Net finance income

​

​

​

​

1,778

​

​

​

​

​

240

​

​

Income/(loss) before income tax

​

​

​

​

686

​

​

​

​

​

(33,699)

​

​

Income tax expense

​

​

​

​

(18)

​

​

​

​

​

(7)

​

​

Income/(loss) for the year net of tax

​

​

​

​

668

​

​

​

​

​

(33,706)

​

​

Other comprehensive income/(loss)

​

​

​

​

15

​

​

​

​

​

(3)

​

​

Total comprehensive income/(loss) for the year net of tax

​

​

​

​

683

​

​

​

​

​

(33,709)

​

​

Earnings/(loss) per share:

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic and diluted earnings/(loss) per share, US$(1)

​

​

​

​

33

​

​

​

​

​

(1,685)

​

​

​

35

 

​

​

​

Year ended December 31,

​

​

​

​

2020

​

​

2019

​

DAUs (in thousands)(1)

​

​

​

​

896

​

​

​

​

​

618

​

​

MAUs (in millions)(2)

​

​

​

​

5.7

​

​

​

​

​

4.1

​

​

MPUs (in thousands)(3)

​

​

​

​

284

​

​

​

​

​

183

​

​

Monthly Payer Conversion(4)

​

​

​

​

5.0%

​

​

​

​

​

4.4%

​

​

ABPPU (US$)(5)

​

​

​

​

125

​

​

​

​

​

75

​

​

Bookings (US$ in thousands)(6)

​

​

​

​

443,033

​

​

​

​

​

168,910

​

​

​

​

​

As of December 31,

​

​

​

​

2020

​

​

2019

​

​

​

​

(US$ in thousands)

​

Total assets

​

​

​

​

211,718

​

​

​

​

​

80,466

​

​

Total equity

​

​

​

​

(102,754)

​

​

​

​

​

(48,569)

​

​

Total liabilities

​

​

​

​

314,472

​

​

​

​

​

129,035

​

​

Total liabilities and shareholders’ equity

​

​

​

​

211,718

​

​

​

​

​

80,466

​

​

​

​

​

Year ended December 31,

​

​

​

​

2020

​

​

2019

​

​

​

​

(US$ in thousands)

​

Net cash flows generated from operating activities

​

​

​

​

120,623

​

​

​

​

​

14,955

​

​

Net cash flows generated from/(used) in investing activities

​

​

​

​

361

​

​

​

​

​

(345)

​

​

Net cash flows used in financing activities

​

​

​

​

(56,047)

​

​

​

​

​

(156)

​

​

36

 

​

​

​

Assuming No Redemption

​

​

Assuming Maximum Redemption

​

​

​

​

Number of Shares(1)

​

​

% of Shares

​

​

Number of Shares(1)

​

​

% of Shares

​

Kismet’s existing public shareholders

​

​

​

​

25,000,000

​

​

​

​

​

12.2%

​

​

​

​

​

5,000,000

​

​

​

​

​

2.6%

​

​

The Sponsor

​

​

​

​

11,750,000(2)

​

​

​

​

​

5.7%

​

​

​

​

​

11,750,000(2)

​

​

​

​

​

6.0%

​

​

The Company Shareholders

​

​

​

​

168,250,000(3)

​

​

​

​

​

82.1%

​

​

​

​

​

178,250,000(3)

​

​

​

​

​

91.4%

​

​

Total

​

​

​

​

205,000,000

​

​

​

​

​

​

​

​

​

​

​

195,000,000

​

​

​

​

​

​

​

​

(in thousands of US$, except as indicated otherwise)

​

​

Assuming No Redemption

​

​

Assuming Maximum Redemption

​

Summary Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2020

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenue

​

​

​

$

259,516

​

​

​

​

$

259,516

​

​

Total costs and expenses

​

​

​

​

(379,002)

​

​

​

​

​

(372,765)

​

​

Loss for the year net of tax

​

​

​

​

(148,759)

​

​

​

​

​

(142,386)

​

​

Total comprehensive loss for the year net of tax

​

​

​

​

(148,744)

​

​

​

​

​

(142,371)

​

​

Basic and diluted net loss per share

​

​

​

​

(0.7)

​

​

​

​

​

(0.7)

​

​

37

 

(in thousands of US$, except as indicated otherwise)

​

​

Assuming No Redemption

​

​

Assuming Maximum Redemption

​

Summary Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020

​

​

​

​

​

​

​

​

​

​

​

​

​

Total current assets

​

​

​

$

171,871

​

​

​

​

$

71,820

​

​

Total assets

​

​

​

​

262,724

​

​

​

​

​

162,673

​

​

Total current liabilities

​

​

​

​

234,803

​

​

​

​

​

234,803

​

​

Total liabilities

​

​

​

​

350,361

​

​

​

​

​

350,226

​

​

Total liabilities and shareholders’ equity

​

​

​

​

262,724

​

​

​

​

​

162,673

​

​

38

 

In thousands of US$ except as indicated otherwise

​

​

Nexters

​

​

Kismet

​

​

Pro Forma Combined (No Redemption)

​

​

Pro Forma Combined (Maximum Redemption)

​

Year ended December 31, 2020

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income (loss)

​

​

​

​

668

​

​

​

​

​

(2,982)

​

​

​

​

​

(148,759)

​

​

​

​

​

(142,386)

​

​

Weighted average shares outstanding – basic and diluted

​

​

​

​

20,000

​

​

​

​

​

31,750,000

​

​

​

​

​

205,220,000

​

​

​

​

​

195,220,000

​

​

Weighted average Nexters shares outstanding – basic and diluted

​

​

​

​

20,000

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average Pubco shares outstanding – basic and diluted

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

205,000,000

​

​

​

​

​

195,000,000

​

​

Options to be vested on the consummation of Business Combination

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

220,000

​

​

​

​

​

220,000

​

​

Weighted average shares outstanding of Kismet public shares – basic and diluted

​

​

​

​

​

​

​

​

​

​

25,000,000

​

​

​

​

​

—

​

​

​

​

​

​

​

​

Weighted average shares outstanding of Kismet sponsor shares – basic and diluted

​

​

​

​

​

​

​

​

​

​

6,750,000

​

​

​

​

​

—

​

​

​

​

​

​

​

​

Basic and diluted net income (loss) per share

​

​

​

$

33.4

​

​

​

​

$

(0.00)

​

​

​

​

$

(0.72)

​

​

​

​

$

(0.73)

​

​

39

 

RISK FACTORS

Kismet shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the relevant proposals described in this proxy statement/prospectus.

Unless the context otherwise requires, all references in this subsection to the “Company,” “Nexters,” “we,” “us” or “our” refer to the business Nexters Global Ltd. (“Nexters”) and its subsidiaries prior to the consummation of the business combination, which will be the business of Pubco and its subsidiaries following the consummation of the business combination.

Risks Related to Nexters’ Business and Operations Following the Proposed Transactions

We rely on third-party platforms, such as the iOS App Store, Facebook, and Google Play Store, to distribute our games and collect revenues generated on such platforms and rely on third-party payment service providers to collect revenues generated on our own platforms.

Our games are primarily accessed and operated through Apple, Facebook and Google, which also serve as significant online distribution platforms for our games. Substantially all of the virtual items that we or our distributors sell to paying players are purchased using the payment processing systems of these platforms. Consequently, our prospects and expansion depend on our continued relationships with these providers, and any other emerging platform providers that are widely adopted by our target players. We and our distributors are subject to the standard terms and conditions of these platform providers for application developers, which govern the content, promotion, distribution, operation of games and other applications on their platforms, as well as the terms of the payment processing services provided by the platforms, and which the platform providers can change unilaterally with little or no notice. Our business would be harmed if:

•

the platform providers discontinue or limit our or our distributors’ access to their platforms;

​

•

governments or private parties, such as internet providers, impose bandwidth restrictions or increase charges or restrict or prohibit access to those platforms;

​

•

the platforms increase the fees they charge us or our distributors’;

​

•

the platforms modify their algorithms, communication channels available to developers, respective terms of service or other policies;

​

•

the platforms decline in popularity;

​

•

the platforms adopt changes or updates to their technology that impede integration with other software systems or otherwise require us to modify our technology or update our games in order to ensure players can continue to access our games and content with ease;

​

•

the platforms elect or are required to change how they label free-to-play games or take payment for in-game purchases;

​

•

the platforms block or limit access to the genres of games that we or our distributors provide in any jurisdiction;

​

•

the platforms impose restrictions or spending caps or make it more difficult for players to make in-game purchases of virtual items;

​

•

the platforms change how the personal information of players is made available to developers or develop or expand their own competitive offerings; or

​

•

we or our distributors are unable to comply with the platform providers’ terms of service.

​

If our platform providers do not perform their obligations in accordance with our platform agreements, we could be adversely impacted. For example, in the past, some of these platform providers have been unavailable for short periods of time, unexpectedly changed their terms and conditions, or experienced issues with their features that permit our players to purchase virtual items. Additionally, we rely on Xsolla, a third-party online payment service provider, to process any payments generated on games accessed and

 

40

 

operated on our own proprietary platform. If this third-party service provider is unable to process payments, even for a short period of time, our business would be harmed. These platforms and our third-party online payment service provider may also experience security breaches or other issues with their functionalities, which could expose us to data breaches and could result in negative publicity, loss of customer confidence, fines from regulators and exposure to litigation. In addition, if we do not adhere to the terms and conditions of our platform providers, the platform providers may take actions to limit the operations of, suspend or remove our games from the platform, and/or we may be exposed to liability or litigation. For example, in August 2020, Epic Games, Inc., or Epic Games, attempted to bypass Apple and Google’s payment systems for in-game purchases with an update that allowed users to make purchases directly through Epic Games in its game, Fortnite. Apple and Google promptly removed Fortnite from their respective app stores, and Apple filed a lawsuit seeking injunctive relief to block the use of Epic Games’ payment system and seeking monetary damages to recover funds made while the updated version of Fortnite was active.

If any events described above or similar to those described above were to occur on a short-term or long-term basis, or if these third-party platforms and our online payment service provider otherwise experience issues that impact the ability of players to download or access our games, access social features, or make in-game purchases, they could have a material adverse effect on our brands and reputation, as well as our business, financial condition and results of operations.

Our core game offering, Hero Wars, generates a substantial portion of our revenue. There can be no assurance as to the continued success of Hero Wars, and we may be unable to offset any declines in revenues from Hero Wars.

Our business is primarily dependent on the success of a single core game offering, Hero Wars, and on our ability to consistently enhance and improve it, as well as our other games that achieve popularity. Historically, we have depended on Hero Wars for a majority of our revenues and we expect that this dependency will continue for the foreseeable future. For the years ended December 31, 2019 and 2020, Hero Wars generated approximately 87% and 97%, respectively, of our revenues for each period. For a game to remain popular and to retain players, we must constantly enhance, expand and upgrade the game with new features, offers, and content that players find attractive. As a result, each of our games require significant product development, marketing and other resources to develop, launch and sustain popularity through regular upgrades, expansions and new content, and such costs on average have increased over time. Even with these investments, we may experience sudden declines in the popularity of Hero Wars or any of our other games and fluctuations in the number of daily average users and monthly average users.

A small percentage of total users have generated a majority of our revenues, and we may be unable to attract new paying or retain existing paying users and maintain their spending levels.

Revenues of free-to-play games typically rely on a small percentage of players who spend moderate or large amounts of money in games to receive special advantages, levels, access and other features, offers, or content. The vast majority of users play free of charge or only occasionally spend money in games. As a result, compared to all users who play our games in any period, only a small percentage of such users were paying users. For example, for the year ended December 31, 2020, our Monthly Payer Conversion was 5.0%. In addition, a large percentage of our revenues comes from a small subset of these paying users. For example, for the year ended December 31, 2020, 98 thousand, or 10% of our total number of the annual paying users generated 83% of our Bookings, while the same number and the same percentage of our total number of annual paying users generated 82% of our Bookings for the year ended December 31, 2019. The growth in the number of high paying users was generally flat over the same period. Because many users do not generate revenues, and each paying user does not generate an equal amount of revenues, it is particularly important for us to retain the small percentage of paying users and to maintain or increase their spending levels. There can be no assurance that we will be able to continue to retain paying users or that paying users will maintain or increase their spending. If we fail to attract and retain a significant number of new and existing players to our games or if we experience a reduction in the number of players of our most popular games or any other adverse developments relating to our most popular games occur, our market share and reputation could be harmed and there could be a material adverse effect on our business, financial condition and results of operations. It is possible that we could lose more paying users than we gain in the future, which would

 

41

 

cause a decrease in the monetization of our games and could have a material adverse effect on our business, financial condition and results of operations.

We invest in new user acquisition and rely on monetization strategies to convert users to paying users, retain our existing paying users and maintain or increase the spending levels of our paying users. If our investments on new user acquisition and monetization strategies do not produce the desired results, we may fail to attract, retain or monetize users and may experience a decrease in spending levels of existing paying users, any of which would result in lower revenues for our games and could have a material adverse effect on our business, financial condition and results of operations.

We believe that the key factors in attracting and retaining paying users include our ability to enhance existing games and game experiences in ways that are specifically appealing to paying users. These abilities are subject to various uncertainties, including but not limited to:

•

our ability to provide an enhanced experience for paying users without adversely affecting the gameplay experience for non-paying users;

​

•

our ability to continually anticipate and respond to changing user interests and preferences generally and to changes in the gaming industry;

​

•

our ability to timely and adequately react in case of general rise of user discontent with our games or any of their existing or new features, including any coordinated actions by paying users;

​

•

our ability to compete successfully against a large and growing number of industry participants with essentially no barriers to entry;

​

•

our ability to hire, integrate and retain skilled personnel;

​

•

our ability to increase penetration in, and enter into new, demographic markets;

​

•

our ability to achieve a positive return on our user acquisition and other marketing investments and to drive organic growth; and

​

•

our ability to minimize and quickly resolve bugs or outages.

​

Some of our users also depend on our customer support organization to answer questions relating to our games. Our ability to provide high-quality effective customer support is largely dependent on our ability to attract, resource, and retain employees who are not only qualified to support our users, but are also well versed in our games. Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could harm our reputation and adversely affect our ability to sell virtual items within our games to existing and prospective users.

If we are unable to maintain or increase our customer base or engagement, or effectively monetize our customer base’s use of our products and offerings, our revenue and financial results may be adversely affected. Any decrease in customer retention, growth or engagement, including player liquidity, could render our products less attractive to customers, which is likely to have a material and adverse impact on our revenue, business, financial condition and results of operations. If our active player growth rate slows, we will become increasingly dependent on our ability to maintain or increase levels of player engagement and monetization in order to drive revenue growth.

If we are unable to attract and retain users, especially paying users, it would have a material adverse effect on our business, financial condition and results of operations.

We utilize a free-to-play business model, which depends on players making optional in-game purchases, and the value of the virtual items sold in our games is highly dependent on how we manage the game revenues and pricing models.

Our games are available to players free of charge, and we generate the majority of our revenues from the sale of virtual items when players make voluntary in-game purchases. For example, in each of the years ended December 31, 2019 and 2020, we derived 95.1% and 94.2%, respectively, of our revenues from in-game purchases.

 

42

 

Paying users usually spend money in our games because of the perceived value of the virtual items that we offer for purchase. The perceived value of these virtual items can be impacted by various actions that we take in the games, such as offering discounts, giving away virtual items in promotions or providing easier non-paid means to secure such virtual items. If we fail to manage our game economies properly, players may be less likely to spend money in the games, which could have a material adverse effect on our business, financial condition and results of operations.

Unrelated third parties have developed, and may continue to develop, “cheats” or guides that enable players to advance in our games or result in other types of malfunction, which could reduce the demand for in-game virtual items. In particular, for our games where players play against each other, such as our Hero Wars game, there is a higher risk that these “cheats” will enable players to obtain unfair advantages over those players who play fairly, and harm the experience of those players. Additionally, these unrelated third parties may attempt to scam our players with fake offers for virtual items or other game benefits. These scams may harm the experience of our players, disrupt the economies of our games and reduce the demand for our virtual items, which may result in increased costs to combat such programs and scams, a loss of revenues from the sale of virtual items and a loss of players. As a result, players may have a negative gaming experience and be less likely to spend money in the games, which could have a material adverse effect on our business, financial condition and results of operations.

Our inability to complete acquisitions and integrate any acquired businesses successfully could limit our growth or disrupt our plans and operations.

We anticipate that acquisitions will continue to be an important source of growth in the near future. Our ability to succeed in implementing our strategy will depend to some degree upon our ability to identify quality games and businesses and complete commercially viable acquisitions. We cannot assure you that acquisition opportunities will be available on acceptable terms or at all, or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. In some cases, the costs of such acquisitions may be substantial and there is no assurance that the time and resources expended in pursuing a particular acquisition will result in a completed transaction, or that any completed transaction will ultimately be successful. Furthermore, our ability to successfully grow through these types of transactions also depends upon our ability to identify, negotiate, complete and integrate suitable target businesses, technologies and products and to obtain any necessary financing, and is subject to numerous risks, including:

•

failure to identify acquisition, investment or other strategic alliance opportunities that we deem suitable or available on favorable terms;

​

•

problems integrating acquired businesses, technologies or products, including issues maintaining uniform standards, procedures, controls and policies;

​

•

the availability of funding sufficient to meet increased capital needs;

​

•

unanticipated costs associated with acquisitions, investments or strategic alliances;

​

•

adverse impacts on our overall margins;

​

•

diversion of management’s attention from the day-to-day operations of our existing business;

​

•

the ability to retain or hire qualified personnel for expanded operations and the potential loss of key employees of acquired businesses; and

​

•

increased legal and accounting compliance costs.

​

In addition, the expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes, which could result in increased costs and have an adverse effect on our prospects, results of operations, cash flows and financial condition. We would expect to incur incremental costs and capital expenditures related to integration activities. Acquisition transactions may also disrupt our ongoing business, as the integration of acquisitions would require significant time and focus from management and might delay the achievement of our strategic objectives.

For example, on February 4, 2021, we acquired Nexters Online (formerly known as NX Online LLC) and Nexters Studio (formerly known as NX Studio LLC), two Russian game development studios. In order

 

43

 

to successfully integrate these companies’ operations into ours, we will need to align their accounting, corporate governance and other policies with our own internal structures, consistent with those of a public company. To the extent that we are unable to efficiently integrate these companies into ours, there may be a material adverse effect on our business, financial condition and result of operations. Furthermore, we are currently in the process of development of our production center, where we will leverage our expertise to search for and potentially make monetary investments in new projects of other game developers. If we are unable to identify or adequately assess the quality of potential new projects, or properly manage the cost of our investments, or if our investments do not prove to be successful due to various reasons outside of our control (including without limitation, due to market conditions, actions of our counterparties or regulatory requirements), we may not realize the expected benefit, incur increased costs or suffer reputational damage, which may lead to a material adverse effect on our business, financial condition and result of operations.

If we are unable to identify suitable target businesses, technologies or products, or if we are unable to successfully integrate any acquired businesses, technologies and products effectively, we may not realize the expected benefits, and our business, financial condition and results of operations could be materially and adversely affected, and we can provide no assurances that we will be able to adequately supplement any such inability to successfully acquire and integrate with organic growth. Also, while we employ several different methodologies to assess potential business opportunities, the businesses we may acquire may not meet or exceed our expectations.

If we fail to develop or acquire new games that achieve broad popularity, we may be unable to attract new players or retain existing players, which could negatively impact our business.

Developing or acquiring new games that achieve broad popularity is vital to our continued growth and success. Our ability to successfully develop or acquire new games and their ability to achieve broad popularity and commercial success depends on a number of factors, including our ability to:

•

attract, retain and motivate talented game designers, product managers and engineers;

​

•

identify, acquire or develop, sustain and expand games that are fun, interesting and compelling to play over long periods of time;

​

•

effectively market new games and enhancements to our new and existing players;

​

•

achieve viral organic growth and gain customer interest in our games;

​

•

minimize launch delays and cost overruns on new games and game expansions;

​

•

minimize downtime and other technical difficulties;

​

•

adapt to player preferences;

​

•

expand and enhance games after their initial release;

​

•

partner with mobile platforms;

​

•

maintain a quality social game experience; and

​

•

accurately forecast the timing and expense of our operations.

​

These and other uncertainties make it difficult to know whether we will succeed in continuing to develop or acquire successful games and launch new games that achieve broad popularity. If we are unable to successfully acquire new games or develop new games in-house, it could have a material effect on our pipeline and negatively affect our growth and results of operations.

We operate in a highly competitive industry with low barriers to entry, and our success depends on our ability to effectively compete.

The mobile gaming industry is a rapidly evolving industry with low barriers to entry, and we expect more companies to enter the industry and a wider range of competing games to be introduced. As a result, we are dependent on our ability to successfully compete against a large and growing number of industry participants. In addition, the market for our games is characterized by rapid technological developments, frequent launches of new games and enhancements to current games, changes in player needs and behavior,

 

44

 

disruption by innovative entrants and evolving business models and industry standards. As a result, our industry is constantly changing games and business models in order to adopt and optimize new technologies, increase cost efficiency and adapt to player preferences. Our competitors may adapt to an emerging technology or business model more quickly or effectively, developing products and games or business models that are technologically superior to ours, more appealing to consumers, or both. Potential new competitors could have significant resources for developing, enhancing or acquiring games and gaming companies, and may also be able to incorporate their own strong brands and assets into their games or distribution of their games. We also face competition from a vast number of small companies and individuals who may be successful in creating and launching games and other content for these devices and platforms using relatively limited resources and with relatively limited start-up time or expertise. New game developers enter the gaming market continuously, some of which experience significant success in a short period of time. A significant number of new titles are introduced each day.

In addition, the high ratings of our games on the platforms on which we operate are important as they help drive users to find our games. If the ratings of any of our games decline or if we receive significant negative reviews that result in a decrease in our ratings, our games could be more difficult for players to find or recommend. In addition, we may be subject to negative review campaigns or defamation campaigns intended to harm our ratings. This could lead to loss of users and revenues, additional advertising and marketing costs, and reputation harm.

Additionally, if our platform providers were to develop competitive offerings, either on their own or in cooperation with one or more competitors, our growth prospects could be negatively impacted. For example, Apple recently developed its own video game subscription service, Apple Arcade, which may compete further with our games. Increased competition and success of other brands, genres, business models and games could result in, among other things, a loss of players, or negatively impact our ability to acquire new players cost-effectively, which could have a material adverse effect on our business, financial condition and results of operations.

Moreover, current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others, including our current or future business partners or third-party software providers. By doing so, these competitors may increase their scale, their ability to meet the needs of existing or prospective players and compete for similar human resources. If we are unable to compete effectively, successfully and at a reasonable cost against our existing and future competitors, our results of operations, cash flows and financial condition would be adversely impacted.

Our ability to successfully attract in-game advertisers depends on our ability to design an attractive advertising model that retains players.

While the vast majority of our revenues are generated by in-game purchases, a portion of our revenues are generated from the sale of in-game advertisements. For example, in each of the years ended December 31, 2019 and 2020, we derived 4.9% and 5.8%, respectively, of our revenues from in-game advertising. If we are unable to attract and maintain a sufficient player base or otherwise fail to offer attractive in-game advertising models, advertisers may not be interested in purchasing such advertisements in our games, which could adversely affect our revenues from in-game advertising. Alternatively, if our advertising inventory is unavailable and the demand exceeds the supply, this limits our ability to generate further revenues from in-game advertising, particularly during peak hours and in key geographies. Further, a full inventory may divert advertisers from seeking to obtain advertising inventory from us in the future, and thus deprive us of potential future in-game advertising revenues. This could have a material adverse effect on our reputation and our business, financial condition and results of operations.

In addition, if we include in-game advertising in our games that players view as excessive, such advertising may materially detract from players’ gaming experiences, thereby creating player dissatisfaction, which may cause us to lose players and revenues, and negatively affect the in-game experience for players making purchases of virtual items in our games.

If we develop new games that achieve success, it is possible that these games could divert players of our other games without growing the overall size of our network, which could harm our results of operations.

As we develop new games, it is possible that these games could cause players to reduce their playing time and purchases in our other existing games without increasing their overall playing time or purchases.

 

45

 

In addition, we also may cross-promote our new games in our other games, which could further encourage players of existing games to divert some of their playing time and spending on existing games. If new games do not grow or generate sufficient additional revenues to offset any declines in purchases from our other games, our revenues could be materially and adversely affected.

Changes to digital platforms’ rules, including those relating to “loot boxes,” or the potential adoption of regulations or legislation impacting loot boxes, could require us to make changes to some of our games’ economies or design, which could negatively impact the monetization of these games, thereby reducing our revenues.

In December 2017, Apple updated its terms of service to require publishers of applications that include “loot boxes” to disclose the odds of receiving each type of item within each loot box to customers prior to purchase. Google similarly updated its terms of service in May 2019. Loot boxes are a commonly used monetization technique in free-to-play mobile games in which a player can acquire a virtual loot box, but the player does not know which virtual item(s) he or she will receive (which may be a common, rare or extremely rare item, and may be a duplicate of an item the player already has in his or her inventory) until the loot box is opened. The player will always receive one or more virtual items when he or she opens the loot box. In the event that Apple, Google, or any of our other platform providers changes its developer terms of service to include more onerous requirements or if any of our platform providers were to prohibit the use of loot boxes in games distributed on its digital platform, we would be required to redesign the economies of the affected games in order to continue distribution on the impacted platforms, which would likely cause a decline in the revenues generated from these games and require us to incur additional costs.

In addition, there are ongoing academic, political and regulatory discussions in the United States, Europe, Australia and other jurisdictions regarding whether certain game mechanics, such as loot boxes, should be subject to a higher level or different type of regulation than other game genres or mechanics to protect consumers, in particular minors and persons susceptible to addiction, and, if so, what such regulation should include. Additionally, loot box game mechanics have been the subject of increased public discussion — for example, the Federal Trade Commission, or FTC, held a public workshop on loot boxes in August 2019, and at least one bill has been introduced in the U.S. Senate that would regulate loot boxes in games marketed toward players under the age of 18. In addition, the United Kingdom’s Department for Digital, Culture, Media and Sport in September 2020 launched a call for evidence into the impact of loot boxes on in-game spending and gambling-like behavior later this year, and politicians have cited loot boxes as an example of recent technology innovation where government regulation is needed. In October 2020, a Netherlands district administrative court upheld an administrative order by the Dutch gambling authority demanding that Electronic Arts remove certain loots boxes from one of its games because they violated Dutch gambling laws and recommended a maximum fine of 10 million euros for non-compliance with the administrative order. For the first time, the Dutch district administrative court ruled that virtual items can constitute a prize for purposes of gambling legislation. While no other court has adopted a similar definition of prize and there has been opposition to the idea that virtual items can be prizes under gambling laws from the European Parliament and others, it is possible that other courts or regulatory agencies will adopt similarly broad definitions of prize. Additionally, after being restricted in Belgium and the Netherlands, the United Kingdom House of Lords has recently issued a report recommending that loot boxes be regulated within the remit of gambling legislation and regulation.

In some of our games, certain mechanics may be deemed to be loot boxes. New regulations by the FTC, U.S. states or other international jurisdictions, which may vary significantly across jurisdictions and with which we may be required to comply, could require that these game mechanics be modified or removed from games, increase the costs of operating our games due to disclosure or other regulatory requirements, impact player engagement and monetization, or otherwise harm our business performance. It is difficult to predict how existing or new laws may be applied to these or similar game mechanics. If we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to modify our games, which would harm our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business, financial condition or results of operations.

 

46

 

Our online offerings are part of new and evolving industries, which presents significant uncertainty and business risks.

The online gaming and interactive entertainment industries are relatively new and continue to evolve. Whether these industries grow and whether our online business will ultimately succeed, will be affected by, among other things, developments in social networks, mobile platforms, legal and regulatory developments (such as the passage of new laws or regulations or the extension of existing laws or regulations to online gaming and related activities), taxation of gaming activities, data and information privacy and payment processing laws and regulations, and other factors that we are unable to predict and which are beyond our control. Given the dynamic evolution of these industries, it can be difficult to plan strategically, including as it relates to product launches in new or existing jurisdictions that may be delayed or denied, and it is possible that competitors will be more successful than we are at adapting to change and pursuing business opportunities. Additionally, as the online gaming industry advances, including with respect to regulation in new and existing jurisdictions, we may become subject to additional compliance-related costs, including as it relates to licensing and taxes. Consequently, we cannot provide assurance that our online and interactive offerings will grow at the rates expected, or be successful in the long term. If our products do not obtain popularity or maintain popularity, or if they fail to grow in a manner that meets its expectations, or if we cannot offer our product offerings in particular jurisdictions that may be material to our business, our business, results of operations and financial condition could be harmed.

The recent COVID-19 pandemic and similar health epidemics, contagious disease outbreaks and public perception thereof, could significantly disrupt our operations and adversely affect our business, results of operations, cash flows or financial condition.

The recent COVID-19 pandemic, epidemics, medical emergencies and other public health crises outside of our control could have a negative impact on our business. Large-scale medical emergencies can take many forms and can cause widespread illness and death. In December 2019, a strain of coronavirus was reported to have surfaced in Wuhan, China, and spread so quickly throughout other parts of the world that, by March 11, 2020, the World Health Organization characterized the outbreak as a pandemic. While a number of vaccines have been developed and approved, with administration having recently begun in various countries, supply limitations have prevented a more wide-spread administration of these vaccines and the severity of COVID-19 pandemic has continued unabated.

Although the full extent of the impact from the COVID-19 pandemic on our business is unknown at this time, it could affect the health of our employees, or otherwise impact the productivity of our employees, third-party organizations with which we partner, or regulatory agencies we rely on, which may prevent us from delivering content in a timely manner or otherwise executing our business strategies. We have followed guidance by the Cypriot government and the governments of other relevant jurisdictions in which we operate to protect our employees and our operations during the pandemic and have implemented a remote environment for certain of our employees, and, as a result, may experience inefficiencies in our employees’ ability to collaborate.

The COVID-19 pandemic could also affect the health of our consumers, which may affect sales of our virtual items in our games. In addition, the COVID-19 pandemic has caused an economic recession, high unemployment rates and other disruptions, both in the United States and the rest of the world. Any of these impacts, including the prolonged continuation of these impacts, could adversely affect our business.

We cannot predict the other potential impacts of the COVID-19 pandemic on our business or operations, and there is no guarantee that any near-term trends in our results of operations will continue, particularly if the COVID-19 pandemic and the adverse consequences thereof continue for a long period of time. A continuation of the current environment, or any further adverse impacts caused by the COVID-19 pandemic could further deteriorate employment rates and the economy, detrimentally affecting our consumer base and divert player discretionary income to other uses, including for essential items. These events could adversely impact our cash flows, results of operations and financial conditions and heighten many of the other risks described in these “Risk Factors.” Furthermore, while we saw increased consumer interest and engagement in online gaming during the year ended December 31, 2020, which we in part attribute to the travel restrictions, lockdowns and other social distancing measures implemented by governments to combat the COVID-19 pandemic, there can be no assurance that interest or engagement will continue, or that once restrictions ease,

 

47

 

it will be sustained. Any resulting decrease in user activity or spending could adversely impact our cash flows, operating results, and financial condition. In addition, while we may take actions as may be required to reduce the risks posed by COVID-19, there is no certainty that such measures will be sufficient to mitigate the risks posed by COVID 19.

Legal or regulatory restrictions could adversely impact our business and limit the growth of our operations.

There is significant opposition in some jurisdictions to interactive social gaming. In September 2018, the World Health Organization added “gaming disorder” to the International Classification of Diseases, defining the disorder as a pattern of behavior characterized by impaired control over gaming and an increase in the priority of gaming over other interests and daily activities. Additionally, the public has become increasingly concerned with the amount of time spent using phones, tablets and computers per day, and these concerns have increased as people spend more time at home and on their devices over the course of the stay-at-home orders caused by the COVID-19 pandemic. Such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming specifically. These could result in a prohibition on interactive social gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations, all of which could have an adverse effect on our results of operations, cash flows and financial condition. We cannot predict the likelihood, timing, scope or terms of any such legislation or regulation or the extent to which they may affect our business.

Consumer protection concerns regarding games such as ours have been raised in the past and may again be raised in the future. These concerns include: (i) methods to limit the ability of children to make in-game purchases, and (ii) a concern that mobile game companies are using big data and advanced technology to predict and target “vulnerable” users who may spend significant time and money on mobile games in lieu of other activities. Such concerns could lead to increased scrutiny over the manner in which our games are designed, developed, distributed and presented. We cannot predict the likelihood, timing or scope of any concern reaching a level that will impact our business, or whether we would suffer any adverse impacts to our results of operations, cash flows and financial condition.

Legal proceedings may materially adversely affect our business and our results of operations, cash flows and financial condition.

We have been party to, are currently party to, and in the future may become subject to additional legal proceedings in the operation of our business, including, but not limited to, with respect to advertising, consumer protection, employee matters, tax matters, alleged service and system malfunctions, alleged intellectual property infringement and claims relating to our contracts, licenses and strategic investments, as well as claims by or against our shareholders (present or past), directors, officers and employees.

Legal proceedings targeting our games and claiming violations of laws could occur, based on the unique and particular laws of each jurisdiction, particularly as litigation claims and regulations continue to evolve. Litigation to defend ourselves against claims by third parties, or to enforce any rights that we may have against third parties, could result in substantial costs and diversion of our resources, causing a material adverse effect on our business, financial condition and results of operations.

Given the nature of our business, we may from time to time be party to various legal, administrative and regulatory inquiries, investigations, proceedings and claims that arise in the ordinary course of business. Because the outcome of such legal matters is inherently uncertain, they could have a material adverse effect on our results of operations, cash flows or financial condition.

We rely on a limited number of geographies for a significant portion of our revenues.

Although we have players across the globe, we derive a significant portion of our revenues from a limited number of countries and are dependent on access to those markets. For example, for the year ended December 31, 2020, 37% of our revenues were derived from users located in the United States, and 24% from users located in Europe. Our ability to retain paying players depends on our success in these geographies, and if we were to lose access to these markets or experience a decline in players in these geographies for any reason, it would have a material adverse effect on our business, financial condition and results of operations.

 

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If general economic conditions decline, demand for our games could decline. In addition, our business is vulnerable to changing economic conditions and to other factors that adversely affect the gaming industry, which could negatively impact our business.

In-game purchases involve discretionary spending on the part of consumers. Consumers are generally more willing to make discretionary purchases, including purchases of games and services like ours, during periods in which favorable economic conditions prevail. As a result, our games may be sensitive to general economic conditions and economic cycles. A reduction or shift in domestic or international consumer spending could result in an increase in our marketing and promotional expenses, in an effort to offset that reduction, and could negatively impact our business. Discretionary spending on entertainment activities could further decline for reasons beyond our control, such as natural disasters, acts of war, pandemics, terrorism, transportation disruptions or the results of adverse weather conditions. Additionally, disposable income available for discretionary spending may be reduced by unemployment, higher housing, energy, interest, or other costs, or where the actual or perceived wealth of customers has decreased because of circumstances such as lower residential real estate values, increased foreclosure rates, inflation, increased tax rates, or other economic disruptions. Any prolonged or significant decrease in consumer spending on entertainment activities could result in reduced play levels in decreased spending on our games, and could adversely impact our results of operations, cash flows and financial condition.

Our systems and operations are vulnerable to damage or interruption from natural disasters, power losses, telecommunications failures, cyber-attacks, terrorist attacks, acts of war, human errors, break-ins and similar events.

We may experience disruption as a result of catastrophic events such as natural disasters, power losses, telecommunications failures, cyber-attacks, terrorist attacks, acts of war, human errors, break-ins and similar events. In the occurrence of a catastrophic event, including a global pandemic like the ongoing COVID-19 pandemic, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in application development, lengthy interruptions in our services, breaches of data security and loss of critical data, such as player, customer and billing data as well as trade secret or other confidential information, software versions or other relevant data regarding operations, and we do not maintain insurance policies to compensate us for any resulting losses, which could have a material adverse effect on our business, financial condition and results of operations. The COVID-19 pandemic has caused us to require employees to work remotely for an indefinite period of time. If a natural disaster, power outage, connectivity issue or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

We primarily rely on skilled employees with creative and technical backgrounds. The loss of one or more of our key employees, or our failure to attract and retain other highly qualified employees in the future, could significantly harm our business.

We primarily rely on our highly skilled, technically trained and creative employees to develop new technologies and create innovative games. Such employees, particularly game designers, engineers and project managers with desirable skill sets are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating and retaining these employees. The loss of employees or the inability to hire additional skilled employees as necessary could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business.

We are highly dependent on the continued services and performance of our key personnel, including, in particular Andrey Fadeev and Boris Gertsovskiy, our co-founders, and our other executive officers and senior management team. Moreover, our success is highly dependent on the abilities of our co-founders’ decision making process with respect to the day-to-day and ongoing needs of our business, as well as their understanding of our company as the co-founders of Nexters. Although we have entered into employment agreements with our co-founders, either co-founder can terminate his employment, subject to certain agreed notice periods and post-termination restrictive covenants. We do not maintain key-man insurance for any executive officer or member of our senior management team.

 

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In addition, our games are created, developed, enhanced and supported in our in-house game studios. The loss of key game studio personnel, including members of management as well as key engineering, game development, artists, product, marketing and sales personnel, could disrupt our current games, delay new game development or game enhancements, and decrease player retention, which would have an adverse effect on our business.

As we continue to grow, we cannot guarantee we will continue to attract the personnel we need to maintain our competitive position. In particular, we expect to face significant competition from other companies in hiring such personnel as well as recruiting well-qualified staff in multiple international jurisdictions. Furthermore, our competitors may lure away our existing personnel by offering them employment terms that our personnel view as more favorable. As we mature, the incentives to attract, retain and motivate our staff provided by our equity awards or by future arrangements, such as through cash bonuses, may not be as effective as in the past. If we do not succeed in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.

We track certain performance metrics with internal and third-party tools and do not independently verify such metrics. Certain of our performance metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and adversely affect our business.

We track certain performance metrics, including the number of active and paying players of our games using a combination of internal and third-party analytics tools, including such tools provided by Apple, Facebook and Google. Our performance metrics tools have a number of limitations, including limitations placed on third-party tools, such as (i) the complicated and time consuming process of the validation of our data by comparison to the third-party data due to (a) differences between calendar periods used in our systems and billing periods used in the third-party tools and (b) differences in foreign exchange rates applied in our systems, which use the rates at the date of each in-game purchase, and certain third-party tools that use the exchange rates as at the date of the invoice; (ii) incomplete data in our system that was used prior to mid-2018; (iii) inconsistencies of definitions of metrics in our current system compared with the system that we used prior to mid-2018; and (iv) untimely updates of the master data in our system regarding the platform commission fees and indirect taxes, due to numerous changes of these parameters that we may not always be able to identify and process. Such tools are subject to change unilaterally by the relevant third parties and our methodologies for tracking these metrics or access to these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we report. If the internal or external tools we use to track these metrics under-count or over-count performance or contain technical errors, the data we report may not be accurate, and we may not be able to detect such inaccuracies, particularly with respect to third-party analytics tools. In addition, limitations or errors with respect to how we measure data (or how third parties present that data to us) may affect our understanding of certain details of our business, which could affect our long-term strategies. We also may not have access to comparable quality data for games we acquire with respect to periods before integration, which may impact our ability to rely on such data. Furthermore, such limitations or errors could cause players, analysts or business partners to view our performance metrics as unreliable or inaccurate. If our performance metrics are not accurate representations of our business, player base or traffic levels, if we discover material inaccuracies in our metrics or if the metrics we rely on to track our performance do not provide an accurate measurement of our business or otherwise change, our reputation may be harmed and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our business depends on our ability to collect and use data to deliver relevant content and advertisements, and any limitation on the collection and use of this data could cause us to lose revenues.

When our players use our games, we may collect both personally identifiable and non-personally identifiable data about the player. Often we use some of this data to provide a better experience for the player by delivering relevant content and advertisements. Our players may decide not to allow us to collect some or all of this data or may limit our use of this data. Any limitation on our ability to collect data about players and game interactions would likely make it more difficult for us to deliver targeted content and advertisements to our players. Furthermore, evolving data protection laws could impact our ability to collect data and to deliver targeted content and advertisements. See “— Data privacy and security laws and regulations in the jurisdictions in which we do business could increase the cost of our operations and subject us

 

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to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties; such laws and regulations are continually evolving. Our or our platform and service providers’ actual or perceived failure to comply with these laws and regulations could harm our business.” Interruptions, failures or defects in our data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection of data, could also limit our ability to aggregate and analyze player data. If that happens, we may not be able to successfully adapt to player preferences to improve and enhance our games, retain existing players and maintain the popularity of our games, which could cause our business, financial condition, or results of operations to suffer.

Additionally, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the delivery of advertising on their devices, including through Apple’s Identifier for Advertising, or IDFA, or Google’s Advertising ID for Android devices, or AAID. Device and browser manufacturers may include or expand these features as part of their standard device specifications. For example, the release of iOS 14 brought with it a number of new changes, including the need for app users to opt-in before their IDFA can be accessed by an app (which is currently expected to come into effect in 2021). Further changes could include the removal of such mobile advertising IDs from operating systems altogether. As a consequence, the ability of advertisers to accurately target and measure their advertising campaigns at the user level may become significantly limited and developers may experience a significant increase in costs. If players elect to not opt-in once these changes are in effect, if they utilize the current opt-out mechanisms in greater numbers, or if mobile advertising IDs are phased out, our ability to deliver effective advertisements would suffer, which could adversely affect our revenues from in-game advertising. Furthermore, our ability to efficiently target users will be impacted, which would lead to less efficient user acquisition and make it more difficult for us to attract paying users, which could cause our business, financial condition, or results of operations to suffer.

We compete with other forms of leisure activities, and a failure to successfully compete with such activities could have a material adverse effect on our business, financial condition and results of operations.

We face competition for leisure time, attention and discretionary spending of our players. Other forms of entertainment, such as offline, traditional online, personal computer and console games, television, movies, sports and the internet, together represent much larger or more well-established markets and may be perceived by our players to offer greater variety, affordability, interactivity and enjoyment. Consumer tastes and preferences for leisure time activities are also subject to sudden or unpredictable change on account of new innovations, developments or product launches. If consumers do not find our games to be compelling or if other existing or new leisure time activities are perceived by our players to offer greater variety, affordability, interactivity and overall enjoyment, our business could be materially and adversely affected.

Our revenue growth rate and financial performance in recent periods may not be indicative of future performance, and our revenue growth rates may decline in the future compared to prior periods.

We have experienced rapid revenue growth in recent periods, with revenue of $93.8 million and $259.5 million, for the years ended December 31, 2019 and 2020, respectively. As we continue to grow our business, our revenue growth rates may decline compared to prior fiscal years due to a number of reasons, which may include more challenging comparisons to prior periods, a decrease in the growth of our overall market or market saturation, slowing demand for our games, our inability to continue to acquire games or game studios, and our inability to capitalize on growth opportunities. In addition, our growth rates may experience increased volatility due to global societal and economic disruption, such as those related to the COVID-19 pandemic and related government responses thereto.

Our business may suffer if we do not successfully manage our current and potential future growth.

We have grown significantly in recent years and we intend to continue to expand the scope of the games we provide. Our revenues increased to $259.5 million in 2020, from $93.8 million in 2019. Our anticipated future growth, particularly to the extent that we experience rapid growth, will likely place significant demands on our management and operations. Our success in managing our growth will depend, to a significant degree, on the ability of our executive officers and other members of senior management to operate effectively, and on our ability to improve and develop our financial and management information

 

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systems, controls and procedures. In addition, we will likely have to successfully adapt our existing systems and introduce new systems, expand, train and manage our employees and improve and expand our marketing capabilities. Further, we have grown our business in part by acquiring and integrating complementary businesses and our continued growth will depend to some degree on our continuing ability to find additional commercially viable strategic acquisitions, or expanding our internal development.

If we are unable to properly and prudently manage our operations as and to the extent they continue to grow, or if the quality of our games deteriorates due to mismanagement, our brand name and reputation could be severely harmed, and our business, prospects, financial condition and results of operations could be adversely affected.

We may require additional capital to meet our financial obligations and support business growth, and this capital may not be available on acceptable terms or at all.

Based on our current plans and market conditions, we believe that cash flows generated from the consummation of the Proposed Transactions and our operations will be sufficient to satisfy our anticipated cash requirements in the ordinary course of business for the foreseeable future. However, we intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing we secure in the future could include restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

Our insurance may not provide adequate levels of coverage against claims.

We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition.

Changes in tax laws or approach to their enforcement, new tax rulings, and audits or examinations of our filing positions, including withholding taxes, could materially affect our financial condition and results of operations

Tax laws are dynamic and therefore subject to regular change as new laws are passed and new interpretations of existing laws are issued or applied. Our existing corporate structure and intercompany arrangements have been implemented in a manner which we consider to be in compliance with current prevailing tax laws. However, the tax treatment of our structure and any transactions between entities in our group, both in Cyprus and in other applicable jurisdictions, could be subject to material adjustment. In addition, we expect taxing authorities in the jurisdictions where we do business, or are deemed to do business, for tax purposes, to audit or examine our income and transactions. The ultimate outcome of any such review processes, and any engagement we have with the relevant tax authorities, are difficult to predict.

Pubco and Nexters Global Ltd. may be exposed to taxation in jurisdictions other than Cyprus if they are treated as having a permanent establishment or as being a tax resident in any of those jurisdictions. While we do not believe that Pubco or Nexters Global Ltd. will be treated as having a tax residence or a permanent establishment elsewhere outside of Cyprus, we cannot assure you that foreign tax authorities will not attempt to claim that our entities have permanent establishment or tax residence in their jurisdictions.

 

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If any of the foregoing occurs, additional taxes, as well as related penalties, may be imposed on us and our business, prospects, financial condition and results of operations could be materially and adversely affected.

We could be required to collect sales taxes or be subject to other use-based tax liabilities in relation to past sales.

One or more countries or U.S. states or localities may seek to collect what they view as past or existing, or impose additional, sales, value added taxes or use or similar taxes on us by reference to the location of the users of our games. While we generally are not responsible for taxes generated on games accessed and operated through third-party platforms, we are responsible for collecting and remitting applicable sales, value added, use or similar taxes for revenue generated on games accessed and operated on our own platforms and/or in countries where the law requires the game publishers to collect and pay such taxes even if games are made available for users through third-party platforms. Furthermore, an increasing number of U.S. states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. This is also the case in respect of the European Union, where value added taxes or digital services taxes may be imposed on companies making digital sales to consumers within the European Union. Additionally, on June 21, 2018, the Supreme Court of the United States ruled in South Dakota v. Wayfair, Inc. et al, or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the state of the customer. In response to Wayfair, or otherwise, most U.S. states impose such obligations, and other U.S. states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect and remit taxes on sales in their jurisdictions. As a result of the above, we are in the process of evaluating whether our activities give rise to sales, use, value added taxes and any other taxes in states or jurisdictions in which we historically have not registered to collect and remit taxes. A successful assertion by one or more U.S. states or other countries or jurisdictions requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently collect some taxes, could result in substantial liabilities, including taxes on past sales, as well as interest and penalties, and could create significant administrative burdens for us or otherwise harm our business.

As a result of the above, we are in the process of evaluating whether our activities give rise to sales, use, value added taxes and any other taxes in jurisdictions in which we historically have not registered to collect and remit taxes. In addition, we are monitoring indirect tax developments globally to confirm the impact of future anticipated indirect taxes on our business and services. A successful assertion by one or more of the countries or jurisdictions requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently collect some taxes, could result in substantial liabilities, including taxes on past sales, as well as interest and penalties, and could create significant administrative burdens for us or otherwise harm our business.

Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of an investment in our securities.

We have a limited operating history on which investors can base an evaluation of our potential future performance. Any forecasts we make about our operations may prove to be inaccurate. We must, among other things, determine appropriate risks, rewards, and level of investment in our games, respond to economic and market variables outside of our control, respond to competitive developments and continue to attract, retain, and motivate qualified employees. There can be no assurance that we will be successful in meeting these challenges and addressing such risks and the failure to do so could have a materially adverse effect on our business, results of operations, and financial condition. As a result of these risks, challenges, and uncertainties, the value of your investment could be significantly reduced or completely lost.

Risks Related to Nexters’ Information Technology and Data Security

Our success depends upon our ability to adapt to, and keep pace with, changes in technology, platforms and devices, and evolving industry standards.

Our success depends upon our ability to attract and retain players, which is largely driven by maintaining and increasing the quality and content of our games. To satisfy players, we need to continue to improve their experience and innovate and introduce games that players find useful and that cause them to return to our

 

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suite of games more frequently. This includes continuing to improve our technology to tailor our game offerings to the preferences and requirements of additional geographic and market segments, and adapt to the release of new devices and platforms and to improve the user-friendliness and overall availability of our games, all of which can be costly and generate risk. Our ability to anticipate or respond to changing technology and evolving industry standards and to develop and introduce improvements and enhancements to games on a timely basis is a significant factor affecting our ability to remain competitive, expand and attract new players and retain existing players. We cannot assure you that we will achieve the necessary technological advances or have the financial or other resources needed to introduce new games or improvements and enhancements to games on a timely basis or at all. In addition, our ability to increase the number of players of our games will depend on continued player adoption of such games. Accordingly, our failure to develop or adjust to changes in technology, platforms, devices and operating models and evolving industry standards could adversely impact our business. Even where we are able to successfully adapt to changing technology, platforms, devices and operating models and evolving industry standards, we may require substantial expenditures to do so, which could adversely impact our business, financial condition and results of operations.

Our games and other software applications and systems, and the third-party platforms upon which they are made available, could contain undetected errors.

Our games and other software applications and systems, as well as the third-party platforms upon which they are made available, could contain undetected errors, bugs, flaws, corrupted data, defects and other vulnerabilities that could adversely affect the performance of our games. These defects may only become apparent after we launch a new game or publish an update to an existing game, particularly as we launch new games or updates and rapidly release new features to existing games under tight time constraints. For example, these errors could prevent a player from making in-game purchases of virtual items, which could harm our reputation or results of operations. These errors could also be exploited by cheating programs and other forms of misappropriation, thus harming the overall game-playing experience for our players. This could cause players to reduce their playing time or in-game purchases, discontinue playing our games altogether, or not recommend our games to other players, which could result in further harm to our reputation or results of operations. Such errors could also result in our games being non-compliant with applicable laws or create legal liability for us. Resolving such errors could disrupt our operations, cause us to divert resources from other projects, or harm our results of operations.

Any failure or significant interruption in our network could impact our operations and harm our business.

Our technology infrastructure is critical to the performance of our games and to player satisfaction. Most of our games run on public cloud computing systems run through AWS in Ireland and, in addition, certain games run through traditional rented servers in Webzilla in Amsterdam. The servers that host our systems located in these data centers are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes and similar events. The occurrence of any of these events could cause our games to become unavailable for a short or long period of time. We have experienced, and may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, malicious attempts to cause platform unavailability, and capacity constraints. If a particular game is unavailable when players attempt to access it or navigation through a game is slower than they expect, players may stop playing the game and may be less likely to return to the game as often, if at all. Similarly, certain games rely on third-party data centers, which may have similar risks over which we would have less control. A failure or significant interruption in our game service would harm our reputation and operations. We expect to continue to make significant investments in our technology infrastructure to maintain and improve all aspects of player experience and game performance. To the extent that our disaster recovery systems are not adequate, or we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate increasing traffic, our business and results of operations may suffer. We do not maintain insurance policies covering losses relating to our systems and we do not have business interruption insurance, which may increase any potential harms that the business may suffer from systems failure or business interruptions.

 

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Our success depends on the security and integrity of the games we offer, and security breaches or other disruptions could compromise our information or the information of our players and expose us to liability, which would cause our business and reputation to suffer.

We believe that our success depends in large part on providing secure games to our players. Our business sometimes involves the collection, storage, processing and transmission of players’ proprietary, confidential and personal information. We also maintain certain other proprietary and confidential information relating to our business and personal information of our personnel. Despite our security measures, our games may be vulnerable to attacks by hackers, players, vendors or employees or breaches due to malfeasance or other disruptions. Any security breach or incident that we experience could result in unauthorized access to, misuse of, or unauthorized acquisition of our or our players’ data, the loss, corruption or alteration of this data, interruptions in our operations, or damage to our computers or systems or those of our players or third-party platforms. Any of these could expose us to claims, litigation, fines and potential liability.

An increasing number of online services have disclosed security breaches, some of which have involved sophisticated and highly targeted attacks on portions of their services. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, public perception of the effectiveness of our security measures and brand could be harmed, and we could lose players. Data security breaches and other data security incidents may also result from non-technical means, such as actions by employees or contractors. Any compromise of our security could result in a violation of applicable privacy and other laws, regulatory or other governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability that is not always limited to the amounts covered by our insurance. Any such compromise could also result in damage to our reputation and a loss of confidence in our security measures. Any of these effects could have a material adverse impact on our results of operations, cash flows and financial condition.

Our ability to prevent anomalies and monitor and ensure the quality and integrity of our games and software is periodically reviewed and enhanced, but may not be sufficient to prevent future attacks, breaches or disruptions. Similarly, we assess the adequacy of our security systems, including the security of our games and software to protect against any material loss to any of our players and the integrity of our games to players. However, we cannot provide assurances that our business will not be affected by a security breach or lapse.

If we sustain cyber-attacks or other privacy or data security incidents that result in security breaches, we could suffer a loss of sales and increased costs, exposure to significant liability, reputational harm and other negative consequences.

Our information technology may be subject to cyber-attacks, viruses, malicious software, break-ins, theft, computer hacking, employee error or malfeasance or other security breaches. Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Experienced computer programmers and hackers may be able to penetrate our security controls and misappropriate or compromise sensitive personal, proprietary or confidential information, create system disruptions or cause shutdowns. They also may be able to develop and deploy malicious software programs that attack our systems, such as spyware and ransomware, or otherwise exploit any security vulnerabilities. Our systems and the data stored on those systems may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and the data stored on those systems, and the data of our business partners. Further, third parties, such as hosted solution providers, that provide services to us could also be a source of security risks in the event of a failure of their own security systems and infrastructure.

The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber-incident could be significant. Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers or players. As threats related to cyber-attacks develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact our results of operations. We may be unable to cover all possible

 

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claims stemming from security breaches, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events, and we may suffer losses that could have a material adverse effect on our business. We do not maintain insurance policies covering losses relating to cybersecurity incidents, which may increase any potential harms that the business may suffer from a cyber-attack. We could also be negatively impacted by existing and proposed laws and regulations in the United States, Cyprus, Russia, and other jurisdictions in which we operate, as well as government policies and practices related to cybersecurity, data privacy, data localization and data protection. In addition, the platforms on which we distribute games may encourage, or require, compliance with certain security standards, such as the voluntary cybersecurity framework released by the National Institute of Standards and Technology, or NIST, which consists of controls designed to identify and manage cyber-security risks, and we could be negatively impacted to the extent we are unable to comply with such standards.

We rely on information technology and other systems, and any failures in our systems or errors, defects or disruptions in our games could diminish our brand and reputation, subject us to liability and disrupt our business and adversely impact our results of operations.

We rely on information technology systems that are important to the operation of our business, some of which are managed by third parties. These third parties are typically under no obligation to renew agreements and there is no guarantee that we will be able to renew these agreements on commercially reasonable terms, or at all. These systems are used to process, transmit and store electronic information, to manage and support our business operations and to maintain internal control over our financial reporting. In addition, we collect and store certain data, including proprietary business information, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws and regulations. We could encounter difficulties in developing new systems, maintaining and upgrading current systems and preventing security breaches. Among other things, our systems are susceptible to damage, outages, disruptions or shutdowns due to fire, floods, power loss, break-ins, cyber-attacks, network penetration, denial of service attacks and similar events. Any failures in our computer systems or telecommunications services could affect our ability to operate our games or otherwise conduct business.

Portions of our information technology infrastructure, including those operated by third parties, may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive and resource-intensive. We have no control over third parties that provide services to us and those parties could suffer problems or make decisions adverse to our business. We have contingency plans in place to prevent or mitigate the impact of these events. However, such disruptions could materially and adversely impact our ability to deliver games to players and interrupt other processes. If our information systems do not allow us to transmit accurate information, even for a short period of time, to key decision-makers, the ability to manage our business could be disrupted and our results of operations, cash flows and financial condition could be materially and adversely affected. Failure to properly or adequately address these issues could impact our ability to perform necessary business operations, which could materially and adversely affect our reputation, competitive position, results of operations, cash flows and financial condition.

Substantially all of our games rely on data transferred over the internet, including wireless internet. Access to the internet in a timely fashion is necessary to provide a satisfactory player experience to the players of our games. Third parties, such as telecommunications companies, could prevent access to the internet or limit the speed of our data transmissions, with or without reason, causing an adverse impact on our player experience that may materially and adversely affect our reputation, competitive position, results of operations, cash flows and financial condition. In addition, telecommunications companies may implement certain measures, such as increased cost or restrictions based on the type or amount of data transmitted, that would impact consumers’ ability to access our games, which could in turn materially and adversely affect our reputation, competitive position, results of operations, cash flows and financial condition. Furthermore, internet penetration may be adversely affected by difficult global economic conditions or the cancellation of government programs to expand broadband access.

 

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Our business depends on the growth and maintenance of wireless communications infrastructure.

Our success depends on the continued growth and maintenance of wireless communications infrastructure in the United States and internationally. This includes deployment and maintenance of reliable next-generation digital networks with the speed, data capacity and security necessary to provide reliable wireless communications services. Wireless communications infrastructure may be unable to support the demands placed on it if the number of subscribers continues to increase, or if existing or future subscribers increase their bandwidth requirements. Wireless communications have experienced a variety of outages and other delays as a result of infrastructure and equipment failures, and could face outages and delays in the future. These outages and delays could reduce the level of wireless communications usage as well as our ability to distribute our games successfully. In addition, changes by a wireless carrier to network infrastructure may interfere with downloads of our games and may cause players to lose functionality in our games that they have already downloaded. This could harm our reputation, business, financial condition and results of operations.

Data privacy and security laws and regulations in the jurisdictions in which we do business could increase the cost of our operations and subject us to possible sanctions, civil lawsuits (including class action or similar representative lawsuits) and other penalties; such laws and regulations are continually evolving. Our or our platform and service providers’ actual or perceived failure to comply with these laws and regulations could harm our business.

We collect, process, store, use and share data, some of which contains personal information, including the personal information of our players. Our business is therefore subject to a number of federal, state, local and foreign laws, regulations, regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage, use, processing, transmission, sharing and protection of personal information. Such laws, regulations, regulatory codes and guidelines may be inconsistent across jurisdictions or conflict with other rules.

The scope of data privacy and security regulations worldwide continues to evolve, and we believe that the adoption of increasingly restrictive regulations in this area is likely within the United States and other jurisdictions. For example, in June 2018, California enacted the California Consumer Privacy Act, or the CCPA, which went into effect on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020, along with related regulations that came into force on August 14, 2020. The CCPA gives California residents new rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches, which may increase security breach litigation. Given that CCPA enforcement began on July 1, 2020, it remains unclear what, if any, modifications will be made to the regulations implementing the CCPA or how the CCPA and its implementing regulations will be interpreted. Varied interpretations of or modifications to the CCPA and its implementing regulations may have a significant effect on our business and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply. Further, there currently are a number of proposals related to data privacy or security pending before federal, state, and foreign legislative and regulatory bodies, including in a number of states considering consumer protection laws similar to the CCPA. This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. Additionally, a new California ballot initiative, the California Privacy Rights Act, or the CPRA, recently passed in California. The CPRA will impose additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and changes to business processes may be required.

Further, the European Union, Cyprus, and United Kingdom have adopted comprehensive data protection and security laws. The European Union’s Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data

 

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Protection Regulation), or the GDPR, which became effective in May 2018, and the U.K. GDPR, each as supplemented by national laws, (collectively, Applicable Data Protection Laws) impose strict requirements on controllers and processors of personal data in the European Economic Area, or EEA, and the United Kingdom, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, and shortened timelines for data breach notifications. Applicable Data Protection Laws create new compliance obligations applicable to our business and some of our players, which could require us to self-determine how to interpret and implement these obligations, change our business practices and expose us to lawsuits (including class action or similar representative lawsuits) by consumers or consumer organizations for alleged breach of data protection laws and the risk of significant reputational damage. Applicable Data Protection Laws increase financial penalties for noncompliance (including possible fines of up to 4% of global annual revenues for the preceding financial year or €20 million, or £17.5 million in the United Kingdom, (whichever is higher) for the most serious violations). Data privacy laws in the European Union are developing rapidly and, in July 2020, the Court of Justice of the European Union limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the Privacy Shield. The Privacy Shield enabled the transfer of personal data from the EEA to the United States for companies that had self-certified for the Privacy Shield. To the extent that we rely on the Privacy Shield, we will not be able to do so in the future, which could increase our costs and our ability to efficiently process personal data from the EEA. Further, data privacy laws in the United Kingdom are also not static and, as a consequence of Brexit, the United Kingdom will be free to diverge from European Union data privacy laws. We may therefore be subject in the future to separate and additional data protection obligations to those that we are already subject to. This may result in substantial costs and may necessitate changes to our business practices, which in turn may compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations. We are also subject to data privacy laws in Russia. For further information, see “— Risks Relating to the Russian Federation and Nexters operations in Russia — The legal framework governing data protection and related internet services in Russia is not well developed, and we may be subject to the newly adopted legislation, as well as the changes to the existing legislation, which may be costly to comply with or may limit our flexibility to run our business.”

Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to players or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection, or information security may result in governmental investigations or enforcement actions, litigation, claims (including class actions), or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our players to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to us may limit the adoption and use of, and reduce the overall demand for, our games. Additionally, if third parties we work with, such as our service providers or data sharing partners, violate applicable laws, regulations, or agreements, such violations may put our players’ and/or employees’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims (including class action claims) or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our players to lose trust in us and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

In addition, in some cases, we are dependent upon our platform providers to solicit, collect and provide us with information regarding our players that is necessary for compliance with these various types of regulations. Our business, including our ability to operate and expand internationally, could be adversely affected if laws or regulations are adopted, interpreted or implemented in a manner that is inconsistent with our current business practices and that require changes to these practices, the design of our games, features or our privacy policy. These platform providers may dictate rules, conduct or technical features that do not properly comply with federal, state, local and foreign laws, regulations and regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage, use,

 

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processing, transmission, sharing and protection of personal information and other consumer data. In addition, these platforms may dictate rules, conduct or technical features relating to the collection, storage, use, transmission, sharing and protection of personal information and other consumer data, which may result in substantial costs and may necessitate changes to our business practices, which in turn may compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations. Any failure or perceived failure by us to comply with these platform-dictated rules, conduct or technical features may result in platform-led investigations or enforcement actions, litigation, or public statements against us, which in turn could result in significant liability or temporary or permanent suspension of our business activities with these platforms, cause our players to lose trust in us, and otherwise compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations.

Player interaction with our games is subject to our privacy policy and terms of service. If we fail to comply with our posted privacy policy or terms of service or if we fail to comply with existing privacy-related or data protection laws and regulations, it could result in complaints by data subjects or proceedings or litigation against us by governmental authorities or others, which could result in fines or judgments against us, damage our reputation, impact our financial condition and harm our business. If regulators, the media or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, and negatively impact our financial condition and damage our business.

In the area of information security and data protection, many jurisdictions have passed laws requiring notification when there is a security breach for personal data or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to implement. Our security measures and standards may not be sufficient to protect personal information and we cannot guarantee that our security measures will prevent security breaches. A security breach that compromises personal information could harm our reputation and result in a loss of player and/or employee confidence in our games and ultimately in a loss of players, which could adversely affect our business and impact our financial condition. A security breach could also involve loss or unavailability of business-critical data, and could require us to spend significant resources to mitigate and repair the breach, which in turn could compromise our growth and adversely affect our ability to attract, monetize or retain players. These risks could also subject us to liability under applicable security breach-related laws and regulations and could result in additional compliance costs, costs related to regulatory inquiries and investigations, and an inability to conduct our business.

Our business could be adversely impacted by changes relating to electronic marketing or the restriction of the use of third-party cookies.

In recent years, the United States and European lawmakers and regulators have expressed concern over electronic marketing and the use of third-party cookies, web beacons and similar technology for online behavioral advertising. In the European Union, marketing is defined broadly to include any promotional material and the rules specifically on e-marketing are currently set out in the ePrivacy Directive which will be replaced by a new ePrivacy Regulation. While the ePrivacy Regulation was originally intended to be adopted on May 25, 2018 (alongside the GDPR), it is still going through the European legislative process. The current draft of the ePrivacy Regulation imposes strict opt-in e-marketing rules with limited exceptions for business to business communications and significantly increases fining powers to the same levels as the GDPR.

Regulation of cookies and web beacons may lead to broader restrictions on our online activities, including efforts to understand followers’ internet usage and promote ourselves to them. The United Kingdom has implemented the ePrivacy Directive into national law through the U.K. Privacy and Electronic Communications Regulation 2003, however it is unclear whether the United Kingdom will align itself to the ePrivacy Regulation, once implemented. This again introduces the possibility we will be subject to, and required to comply with, a separate and additional legal regime with respect to data privacy, which may result in substantial costs and may necessitate changes to our business practices, which in turn may compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations.

 

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Efforts to comply with these and other privacy, data protection, and security restrictions that may be enacted could require us to modify our data processing practices and policies and increase the cost of our operations. Failure to comply with such restrictions could subject us to criminal and civil sanctions and other penalties and the risk of significant reputational damage. In part due to the uncertainty of the legal climate, complying with regulations, and any applicable rules or guidance from regulatory authorities or self-regulatory organizations relating to privacy, data protection, information security and consumer protection, may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to attract or retain players, and otherwise adversely affect our business, reputation, legal exposure, financial condition and results of operations.

Our business, products, and distribution are subject to increasing regulation of content. If we do not successfully respond to these regulations, our business, financial condition and results of operations could be materially adversely affected.

The video game industry has come under increased scrutiny from regulators and consumer advocacy groups, many of which are calling for increased regulation/oversight of the content of video games. While none of our games target children under 13 years of age as their primary audience, the FTC, as well as consumer organizations, may consider that the characteristics of several of our games attract children under 13 years of age. The U.S. Children’s Online Privacy Protection Act, or COPPA, regulates the collection, use and disclosure of personal information from children under 13 years of age. While none of our games are directed at children under 13 years of age, if COPPA were to apply to us, failure to comply with COPPA may increase our costs, subject us to expensive and distracting government investigations and could result in substantial fines. Although we have taken certain measures to identify which of our games are subject to COPPA due to their child-appealing nature and to comply with COPPA with respect to those games, if COPPA were to apply to us in a manner other than we have assessed or prepared for, our actual or alleged failure to comply with COPPA may increase our costs, subject us to expensive and distracting lawsuits or government investigations, could result in substantial fines or civil damages and could cause us to temporarily or permanently discontinue certain games or certain features and functions in games.

The United Kingdom recently enacted the “Age Appropriate Design Code,” a statutory code of practice pursuant to the United Kingdom Data Protection Act 2018. This code came into force on September 2, 2020, with a 12-month transition period for organizations to conform. The code requires online services, including our games that are likely to be accessed by children under 18, to put the best interests of the child’s privacy first in the design, development and data-related behavior of the game. The U.K. government is also separately consulting on legislation in relation to user safety online. It is possible that other countries within and outside the European Union will follow with their own codes or guidance documents relating to processing personal information from children or in relation to online harms. These may result in substantial costs and may necessitate changes to our business practices which may compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations.

Additionally, certain countries, such as the People’s Republic of China (the “PRC” or “China”), have laws that permit governmental entities to restrict marketing or distribution of interactive entertainment software products because of the content therein. For example, the government and regulatory authorities in China have adopted regulations governing content contained within videos, games, and other information over the internet. Under these regulations, internet content providers are prohibited from posting or displaying over the internet content that, among other things, violates the PRC laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent, violent or defamatory. Internet content providers are also prohibited from displaying content that may be deemed by relevant government authorities as “socially destabilizing” or leaking “state secrets” of China. Such regulations may extend to a prohibition on certain state flags, or scrutiny of in-game chat and messaging functions. These rules and regulations could limit our growth potential in China and may damage our reputation, any of which could have a material adverse effect on our business. See “— Expansion into new international markets, such as China, would subject us to increased regulatory oversight and regulatory, economic, social, health and political uncertainties, which could cause a material adverse effect on our business, financial position, and results of operations.” Furthermore, the future implementation of similar laws or regulations in the jurisdictions in which we operate may restrict or prohibit the sale of our games or may require modifications

 

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to our games that are costly to implement, degrade the consumer experience to the point where users cease to play the affected games, or are not feasible at all. Further changes in the regulations, their interpretation or their enforcement could have a material adverse effect on our business and results of operations.

Risks Related to Nexters’ Intellectual Property

Our intellectual property rights and proprietary information help protect our business. If we are unable to obtain, maintain and enforce intellectual property protection for our games, or if the scope of intellectual property protection is not sufficiently broad, others may be able to develop and commercialize games substantially similar to ours, and our ability to successfully commercialize our games may be compromised.

We believe that our success depends, in part, on protecting our owned and licensed intellectual property rights in the United States and in other countries, and we strive to protect such intellectual property rights by relying on applicable law in such jurisdictions, including federal, state and common law rights, as well as contractual restrictions. Our intellectual property includes certain trademarks, copyrights and trade secrets relating to our games or technology we operate, and other proprietary or confidential information. Our success may depend, in part, on our and our licensors’ ability to protect the trademarks, trade dress, names, logos or symbols under which we market our games and other products and to obtain and maintain copyright, trade secret and other intellectual property protection for the technologies, designs, software and innovations used in our games and our business. It is possible that third parties, including our competitors, may develop similar technology to ours that overlap or compete with our technology. If third parties obtain patent protection with respect to such technologies, they may assert that our technology infringes their patents and seek to charge us a licensing fee or otherwise preclude the use of our technology. We do not own any patents or pending patent applications, and may not own any in the future. Accordingly, we are not able to assert any infringement claims against any third party, including counterclaims against any third party that may assert that our technology infringes their patents, and we may not be able to do so in the future. We have pursued and continue to pursue the filing and registration of trademarks in the United States and certain other jurisdictions, a process that is expensive and time-consuming and may not be successful. We may not pursue or be able to obtain protection for our intellectual property rights and our copyright and trademarks may, in certain instances, be denied in certain jurisdiction because they are determined not to fulfill the criteria for copyright or trademark protection. Even if we are successful in obtaining effective trademark and copyright protection, it is expensive to maintain these rights and the costs of defending our rights could be substantial. Moreover, our failure to develop and properly manage new intellectual property could hurt our market position and limit or eliminate our business opportunities. Furthermore, changes to intellectual property laws may jeopardize the enforceability and validity of our intellectual property portfolio and harm our ability to obtain intellectual property protection.

In addition, we cannot assure you that we will be able to maintain consumer value in our trademarks, copyrights or other intellectual property rights in our technologies, designs, software and innovations, and the measures we take to protect our intellectual property rights may not provide us with a competitive advantage. If we are unable to adequately protect our intellectual property and other proprietary rights, our competitive position and our business could be harmed. Any of our owned or licensed intellectual property rights could be challenged, invalidated, circumvented, infringed, misappropriated or otherwise violated, our trade secrets and other confidential information could be disclosed in an unauthorized manner to third parties, or our intellectual property rights may not be sufficient to permit us to take advantage of current market trends, which could result in competitive harm.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

We rely on maintaining as confidential our trade secrets and other proprietary information, including our know-how, software source code and technology, to maintain our competitive position. We enter into agreements containing obligations of confidentiality with our employees and independent contractors in order to limit access to, and disclosure and use of, our trade secrets and proprietary information, but we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary information. Further, we cannot assure you that the obligation to maintain the confidentiality of our trade secrets and proprietary information will be honored. Any of these

 

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parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Additionally, even if parties to whom we intentionally disclose our trade secrets and other proprietary information maintain the confidentiality of that information, third party actions may result in a breach of our cybersecurity or information technology systems, or those of the persons to whom we disclosed our trade secrets or proprietary information, which could result in the loss of confidentiality of our trade secrets and proprietary information. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us, which could harm our competitive position, business, financial condition, results of operations, and prospects.

We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants, and advisors are currently or were previously employed at other companies in our field, including our competitors or potential competitors. Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us by including standard provisions in our employment agreements and contracts with consultants, advisors and independent contractors, as well as by entering into non-disclosure agreements, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer in the performance of their work for us. If any such claims are asserted, whether they are made with or without basis, we may need to engage in litigation may be necessary to defend against them. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and our employees.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

Third parties, including our competitors, could be infringing, misappropriating or otherwise violating our intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult and costly. The steps we have taken to protect our proprietary rights may not be adequate to enforce our rights against infringement, misappropriation or other violation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Any inability to meaningfully enforce our intellectual property rights could harm our ability to compete and reduce demand for our games.

In the future, we may make claims of infringement against third parties, or make claims that third-party intellectual property rights are invalid or unenforceable. These claims could:

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cause us to incur greater costs and expenses in the protection of our intellectual property;

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potentially negatively impact our intellectual property rights, for example, by causing one or more of our intellectual property rights to be ruled or rendered unenforceable or invalid;

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•

potentially negatively impact our position vis-à-vis third-party intellectual property rights if they are determined to be valid and enforceable; or

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divert management’s attention and our resources.

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In any lawsuit we bring to enforce our intellectual property rights, a court may refuse to stop the other party from using the technology at issue on grounds that our intellectual property rights do not cover the technology in question. Further, in such proceedings, the defendant could counterclaim that our intellectual property is invalid or unenforceable and the court may agree, in which case we could lose valuable intellectual property rights. The outcome in any such lawsuits are unpredictable.

Litigation or other legal proceedings relating to intellectual property claims, even if resolved in our favor, may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of intellectual property proceedings could harm our ability to compete in the marketplace. In addition, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects.

We license certain intellectual property rights from third parties, and in the future we may enter into additional agreements that provide us with licenses to valuable intellectual property rights or technology.

In particular, we license certain intellectual property rights from third parties related to the operations of our business, including those needed to develop our own intellectual property and non-exclusive licenses with respect to the use of certain intellectual property rights of the platforms on which our games are offered. Even if games based on licensed content or brands remain popular, any of our licensors could decide not to renew our existing licenses or not to license additional intellectual property rights to us and instead license to our competitors or develop and publish its own games or other applications, competing with us in the marketplace. Many of these licensors already develop games for other platforms, and may have significant experience and development resources available to them should they decide to compete with us rather than license to us.

Failure to maintain or renew our existing licenses or to obtain additional licenses would impair our ability to introduce new games or to continue to offer our current games, which would materially harm our business, results of operations and financial condition. If we breach our obligations under existing or future licenses, we may be required to pay damages and our licensors might have the right to terminate the license. Termination by a licensor would cause us to lose valuable rights and could inhibit our ability to commercialize future games, which would harm our business, results of operations and financial condition. In addition, most of our licensed intellectual property rights are licensed to us on a non-exclusive basis. The owners of nonexclusively licensed intellectual property rights are free to license such rights to third parties, including our competitors, on terms that may be superior to those offered to us, which could place us at a competitive disadvantage. In addition, the agreements under which we license intellectual property rights or technology from third parties are generally complex, and certain provisions in such agreements may be susceptible to multiple interpretations.

In the future, we may identify additional third-party intellectual property rights we may need to license in order to engage in our business, including to develop or commercialize new games. However, such licenses may not be available on acceptable terms or at all. Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects.

In the future, we may identify additional third-party intellectual property rights we may need to license in order to engage in our business, including to develop or commercialize new games. However, such licenses

 

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may not be available on acceptable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater development or commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Even if such licenses are available, we may be required to pay the licensor substantial royalties based on our net sales. Moreover, such licenses may be non-exclusive, which could give our competitors access to the same intellectual property rights licensed to us. If we are unable to enter into the necessary licenses on acceptable terms or at all, if any necessary licenses are subsequently terminated, if our licensors fail to abide by the terms of the licenses, if our licensors fail to prevent infringement by third parties, or if the licensed intellectual property rights are found to be invalid or unenforceable, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

Even if we are successful in gaining new licenses or extending existing licenses, we may fail to anticipate the entertainment preferences of our players when making choices about which brands or other content to license. If the entertainment preferences of players shift to content or brands owned or developed by companies with which we do not have relationships, we may be unable to establish and maintain successful relationships with these developers and owners, which would materially harm our business, results of operations and financial condition. In addition, some rights are licensed from licensors that have or may develop financial difficulties, and may enter into bankruptcy protection under U.S. federal law or the laws of other countries. If any of our licensors files for bankruptcy, our licenses might be impaired or voided, which could materially harm our business, results of operations and financial condition.

We use open source software in connection with certain of our games, which may pose particular risks to our proprietary software, games and services in a manner that could have a negative impact on our business.

We use open source software in connection with our technology and games. The original developers of the open source code provide no warranties on such code and open source software may have unknown bugs, malfunctions and other security vulnerabilities which could impact the performance and information security of our technology. Some open source software licenses impose significant limitations on the use of their proprietary software, including, among other things, a limitation on the number of free copies that may be distributed as well as the requirement to publicly disclose all or part of the source code to such proprietary software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. Although we believe we are in compliance with the license terms of the open source software that we use, from time to time, we may face claims from the copyright holders of open source software alleging copyright infringement and breach of contract for failure to meet the open source license terms, such as the failure to publicly disclose our proprietary code that is a derivative work of the open source software. Additionally, the copyright holders of open source software could demand release of the source code of any of our proprietary code that is a derivative work of the open source software, or otherwise seek to enforce, have us specifically perform, or recover damages for the alleged infringement or breach of, the terms of the applicable open source license. While we would not expect there to be a basis for such claims or for them to succeed, there is a risk that these types of claims may be brought and it is possible that such claims could succeed. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our games. The terms of various open source licenses have been interpreted by courts to a very limited extent, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions, obligations or restrictions on our use of the open source software. We endeavor to use open source software in a manner that complies with the terms of the open source licenses while at the same time not requiring the disclosure of the source code of our proprietary software. Our failure to comply with the terms of the open source licenses could result in us being enjoined from using certain software and require us to replace certain code used in our games, pay a royalty or license fee to use some open source code, make the source code of our games publicly available, pay damages for copyright infringement or breach of contract of open source licenses, or temporarily or permanently discontinue certain games. The above risks could have a material adverse effect on our competitive position, business, reputation, legal exposures, financial condition, results of operations, and prospects.

 

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The intellectual property rights of others may prevent us from developing new games and services or entering new markets or may expose us to liability or costly litigation.

Our success depends in part on our ability to continually adapt our games to incorporate new technologies, as well as intellectual property related to game mechanics and procedures, and to expand into markets that may be created by these new developments. If technologies are protected by the intellectual property rights of others, including our competitors, we may be prevented from introducing games based on these technologies or expanding into markets created by these technologies.

We cannot assure you that our business activities and games will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against us. We may in the future be subject to litigation alleging that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including our competitors, non-practicing entities and former employers of our personnel. A successful claim of infringement by a third party against us, our games or one of our licensees in connection with the use of our technologies, game mechanics or procedures, or an unsuccessful claim of infringement made by us against a third party or its products or games, could adversely affect our business or cause us financial harm. Any such claim and any resulting litigation, should it occur, could:

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be expensive and time consuming to defend or require us to pay significant amounts in damages;

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result in invalidation of our proprietary rights or render our proprietary rights unenforceable;

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cause us to cease making, licensing or using games that incorporate the subject intellectual property;

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require us to redesign, reengineer or rebrand our games or other products or services or limit our ability to bring new games or other products or services to the market in the future;

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require us to enter into costly or burdensome royalty, licensing or settlement agreements in order to obtain the right to use a product or process;

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impact the commercial viability of the games that are the subject of the claim during the pendency of such claim; or

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require us to stop selling the infringing games or other products or services.

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If any of our technologies or games are found to infringe, misappropriate or otherwise violate a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue commercializing or using such technology or game. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We could also be forced, including by court order, to cease the commercialization or use of the infringing, misappropriating or otherwise violating technology, game or game element. Accordingly, we may be forced to design around such infringed, misappropriated or otherwise violated intellectual property, which may be expensive, time-consuming or infeasible. In addition, we could be found liable for significant monetary damages, including enhanced damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Claims that we have misappropriated the confidential information or trade secrets of third parties could similarly harm our business. If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement, misappropriation or other violation claims against us, such payments, costs or actions could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.

We may not be able to enforce our intellectual property rights throughout the world.

We may be required to protect our intellectual property and proprietary information in an increasing number of jurisdictions, a process that is expensive and may not be successful. Or we may not pursue protection of our intellectual property in every jurisdiction in which we or our licensees operate. Filing, prosecuting, maintaining, defending, and enforcing our intellectual property rights in all jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some jurisdictions outside the United States may be less extensive than those in the United States. Competitors

 

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may use what we regard as our intellectual property in jurisdictions where we have not obtained protection over that intellectual property to develop their own games and, further, may export otherwise violating games to territories where we have protection. These games may compete with our games, and our intellectual property rights may not be effective or sufficient to prevent such competition. In addition, the laws of some foreign jurisdictions do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant challenges in establishing and enforcing their intellectual property and other proprietary rights outside of the United States. These challenges can be caused by the absence or inconsistency of the application of rules and methods for the establishment and enforcement of intellectual property rights outside of the United States. In addition, the legal systems of some jurisdictions, particularly developing countries, do not favor the enforcement of intellectual property protection. This could make it difficult for us to stop the infringement, misappropriation or other violation of our intellectual property rights. Accordingly, we may choose not to seek protection in certain jurisdictions, and we will not have the benefit of protection in such jurisdictions. Proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such jurisdictions may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign jurisdictions may affect our ability to obtain adequate protection for our games or enforce our intellectual property rights. Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects.

If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed.

The registered or unregistered trademarks or trade names that we own or use may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other trademarks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition. In addition, third parties have filed, and may in the future file, for registration of trademarks similar or identical to our trademarks, thereby impeding our ability to build brand identity and possibly leading to market confusion. If third parties succeed in registering or developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to develop brand recognition of our games. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could harm our competitive position, business, financial condition, results of operations and prospects.

If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.

Our brand name and image are integral to the growth of our business and to the implementation of our strategies for expanding our business. We believe that our brand image has significantly contributed to the success of our business and is critical to maintaining and expanding our customer base. Maintaining and enhancing our brand may require us to make substantial investments in areas such as research and development, marketing, and customer experience and these investments may not be successful.

We anticipate that, as our business expands into new markets and we launch new game offerings, and as the industry in which we operate becomes increasingly competitive, maintaining and enhancing our brand may become difficult and expensive. For example, consumers in any new international markets into which we expand may not know our brand and/or may not accept our brand, resulting in increased costs to market and attract customers to our brand. Our brand may also be adversely affected if our public image or reputation is tarnished by negative publicity, including negative social media campaigns, poor reviews of our products or negative customer experiences. For example, we receive complaints from users regarding various aspect of our games. In particular, we have received complaints regarding inappropriate behavior and content posted in our in-game chats and via private messages among game players. Although we have implemented internal mechanisms to track and react to inappropriate behavior by our customers, we cannot assure that we will be able to react to such behavior on a timely manner in the future. In addition, we

 

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cannot assure that we will not be party to further claims and actions by either the customers affected by any inappropriate behavior or the customers who have been restricted or banned from our in-game chats for such behavior.

Furthermore, ineffective marketing, product diversion to unauthorized distribution channels, product defects, unfair labor practices, and failure to protect our intellectual property rights are among the potential threats to the strength of our brand, and those and other factors could rapidly and severely diminish consumer confidence in us and our brand. Failure to maintain the strength of our brand could have a material adverse effect on our business, financial condition, and results of operations.

Risks Related to Nexters’ International Operations and Ownership

We face added business, political, regulatory, operational, financial and economic risks as a result of our operations and distribution in a variety of countries, any of which could increase our costs and hinder our growth.

A significant portion of our operations are outside of the United States, including our principal executive offices in Cyprus, and we generate a significant portion of our revenues from operations outside of the United States. For each of the years ended December 31, 2020 and 2019, we derived approximately 63% and 59%, respectively, of our revenues from sales to players outside of the United States. Our operations in foreign jurisdictions may subject us to additional risks customarily associated with such operations, including:

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challenges caused by distance, language and cultural differences;

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the complexity of foreign laws, regulations and markets;

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the uncertainty of enforcement of remedies in foreign jurisdictions;

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higher costs associated with doing business internationally;

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the effect of currency exchange rate fluctuations;

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difficulties in staffing and managing international operations;

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the impact of foreign labor laws and disputes;

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the ability to attract and retain key personnel in foreign jurisdictions;

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protectionist laws and business practices that favor local businesses in some countries;

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the economic, tax and regulatory policies of local governments;

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compliance with applicable anti-money laundering, anti-bribery and anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, or the FCPA, and other anti-corruption laws that generally prohibit U.S. persons and companies and their agents from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business;

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economic tensions between governments and changes in international trade policies and/or the economic and trade sanctions programs administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury;

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difficulty of verifying end-user information, including for the purposes of complying with the verification requirements of certain countries and with the economic and trade sanctions programs administered by OFAC;

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compliance with local data protection laws;

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limitations on and costs related to the repatriation of funds;

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compliance with applicable sanctions regimes regarding dealings with certain persons or countries;

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restrictions on the export or import of technology;

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trade and tariff restrictions;

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variations in tariffs, quotas, taxes and other market barriers; and

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•

difficulties in obtaining and enforcing intellectual property rights in countries other than the United States.

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Certain of these laws also contain provisions that require accurate record keeping and further require companies to devise and maintain an adequate system of internal accounting controls. Although we intend to have policies and controls in place that are designed to ensure compliance with these laws by the consummation of the Proposed Transactions, if those controls are ineffective or an employee or intermediary fails to comply with the applicable regulations, we may be subject to criminal and civil sanctions and other penalties. Any such violation could disrupt our business and adversely affect our reputation, results of operations, cash flows and financial condition.

Further, violations of the complex laws and regulations that apply to our business’ international operations in the various countries in which we operate may result in fines, criminal actions, or sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees, contractors, or agents will not violate our policies. These risks inherent in our international operations and expansion increase our costs of doing business internationally and could harm our business.

Lastly, our ability to expand successfully in foreign jurisdictions involves other risks, including difficulties in integrating foreign operations, risks associated with entering jurisdictions in which we may have little experience and the day-to-day management of a growing and increasingly geographically diverse company. We may not realize the operating efficiencies, competitive advantages or financial results that we anticipate from our investments in foreign jurisdictions. In addition, our international business operations could be interrupted and negatively affected by terrorist activity, political unrest or other economic or political uncertainties. Moreover, foreign jurisdictions could impose tariffs, quotas, trade barriers and other similar restrictions on our international sales.

Our failure to comply with the anti-corruption, trade compliance and economic sanctions laws and regulations of the United States and applicable jurisdictions could materially adversely affect our reputation and results of operations.

Because we operate internationally, we must comply with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which may include the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) and the U.K. Bribery Act 2010 (the “Bribery Act”), as well as the laws of the countries where we do business. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. Where they apply, the FCPA and the Bribery Act prohibit us and our officers, directors, employees and business partners acting on our behalf, including joint venture partners and agents, from corruptly offering, promising, authorizing or providing anything of value to public officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The Bribery Act also prohibits non-governmental “commercial” bribery and accepting bribes. As part of our business, we may deal with governments and state-owned business enterprises, the employees and representatives of which may be considered public officials for purposes of the FCPA and the Bribery Act. We also are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and agents into contact with public officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption.

Our business must be conducted also in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our global operations expose us to the risk of violating, or being accused of violating, anti-corruption laws and economic and trade sanctions laws and regulations. Our failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits,

 

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injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.

Further, because end-users may download our games on third-party platforms that we do not control, our games may be downloaded and played by persons that are the target, or individuals in countries or territories that are the target, of economic sanctions administered by the United States, the European Union, and other governmental authorities. Although we have taken steps to limit the ability of end-users to download our games from sanctioned countries, we cannot eliminate the risk that our games will be played in countries or territories that are the target of economic sanctions administered by the United States, the European Union, and other governmental authorities.

It may be difficult to enforce a judgment of a U.S. court against us and our officers and directors, to assert U.S. securities laws claims in Cyprus or to serve process on our officers and directors.

We maintain offices in Cyprus and many of our employees and officers and directors are residents of Cyprus. Certain of our assets and the assets of these persons are located in Cyprus. Therefore, a judgment obtained against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not necessarily be enforced by a Cypriot court. It also may be difficult to affect service of process on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Cyprus. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws in Cyprus. Cypriot courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Cyprus is not the most appropriate forum in which to bring such a claim. In addition, even if a Cypriot court agrees to hear a claim, it may determine that Cypriot law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Cypriot law. There is little binding case law in Cyprus that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Cyprus, you may not be able to collect any damages awarded by either a U.S. or foreign court.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.

Our functional currency is the U.S. Dollar and our expenses are primarily denominated in U.S. Dollars. However, a substantial portion of our revenue are denominated in euros. This foreign currency exposure gives rise to market risk associated with strengthening of the euro versus the U.S. Dollar. Additionally, certain of our euro-denominated banks accounts are subject to negative interest rates, and a further increase in such negative interest rates could adversely affect our financial condition and results of operations.

In addition, increased international sales in the future may result in greater foreign currency denominated sales, increasing our foreign currency risk. Moreover, operating expenses incurred outside the United States and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations could be adversely affected. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure, which could adversely affect our financial condition and results of operations.

We are subject to various laws and regulations in the jurisdictions in which we operate, many of which are unsettled or are subject to change. We may be unable to identify or address regulatory changes in timely manner or at all, which could lead to additional compliance costs, customer claims and investigations by regulators, which in turn, can have a material adverse effect on our financial condition and results of operations.

We are subject to a variety of laws in the jurisdictions in which we operate, including laws regarding advertising, consumer protection, and intellectual property, which are continuously evolving and developing.

 

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The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the United States. For example, in January 2021, we received an advice notice from the United Kingdom Advertising Standards Authority (“ASA”) alleging that certain of our advertising on the Manchester Evening News website did not reflect the content of the game and could mislead consumers. While we have discontinued the advert referenced in the advice notice and no further action is expected from the ASA, we may be subject to further complaints and, as a result, our reputation may be harmed and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Additionally, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the adverts posted or the content provided by users. It is also likely that as our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions. We are potentially subject to a number of foreign and domestic laws and regulations that affect the offering of certain types of content, such as that which depicts violence, many of which are ambiguous, still evolving and could be interpreted in ways that could harm our business or expose us to liability. It is difficult to predict how existing laws will be applied to our business and the new laws to which we may become subject.

We may be unable to identify or address regulatory changes in a timely manner or at all, which could lead to additional compliance costs, customer claims and investigations by regulators, which in turn, can have a material adverse effect on our financial condition and results of operations. We may be forced to implement new measures to address regulatory changes, which may require us to expend substantial resources or to modify our games, which would harm our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results.

We have no controlling shareholders, however, the loss of one or more of our largest shareholders could significantly harm our business.

We are closely held by a diverse group of shareholders. Our largest shareholders include our co-founders, Andrey Fadeev and Boris Gertsovskiy and Everix Investments Limited, who will beneficially own an aggregate of approximately 16.9%, 16.9% and 38.7%, respectively, of outstanding Pubco ordinary shares, assuming none of Kismet’s existing public shareholders exercise their redemption rights, and whose individual interests will influence the decision-making process of the Company by means of their representation on Pubco’s Board of Directors. As a result, we have no single controlling shareholder able to influence key decision making and therefore any disagreements among our largest shareholders could potentially adversely affect the key decision-making process, which could result in significant disruptions to our business and may materially adversely affect our business, results of operations, cash flows or financial condition. For example, in 2018 one of the shareholders of the Company filed a petition in a Cypriot court for the appointment of an interim receiver and / or liquidator to protect and preserve the value of the assets of the company. The petition was dismissed by the court following resolution. Conversely, these shareholders, acting together, could have significant influence over the outcome of matters submitted to our shareholders for approval, including the election or removal of directors; any amendments to our articles of incorporation or bylaws; any merger, consolidation or sale of all or substantially all of our assets; and over the management and affairs of the Company. Furthermore, Pubco’s articles of association will contain provisions requiring certain matters to be approved by a supermajority vote of directors (all directors minus one) that effectively allow a director to block actions that other directors believe are in the best interests of the Company and may materially adversely affect our business, results of operations, cash flows or financial condition.

Matters that require the approval of a supermajority of directors include:

(a)

redemption or repurchase of the shares of the Company (subject to the approval of the shareholder whose shares are to be acquired or redeemed, save in circumstances where the Companies Act permits the compulsory redemption or repurchase of shares);

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(b)

creating new classes of shares and setting the rights and privileges attaching thereto;

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(c)

amending the Amended and Restated Memorandum and Articles of Association of the Company (subject to certain limitations imposed by the Companies Act, set out below), and/or giving prior approval to amendments to the Amended and Restated Memorandum and Articles of Association which are subsequently approved by the shareholders of the Company;

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(d)

issuance of shares with an aggregate value greater than 5% of the revenue of the Company;

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(e)

declaring dividends, and adopting or amending any dividend policy;

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(f)

setting the size of the board of directors of the Company;

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(g)

incurring indebtedness of the Company in an amount greater than 5% of the revenue of the Company;

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(h)

the Company extending credit or making any advance or capital contribution to or in any third party (other than in connection with working capital matters or ordinary-course employee advances) for an amount in excess of 0.5% of the revenue of the Company;

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(i)

the acquisition by the Company or its subsidiaries of share stakes in other companies (other than ordinary course treasury operations of the relevant entity) or the acquisition of assets constituting a business, in each case where the value of such acquisition (whether completed in one transaction or a series of related transactions) exceeds $1,000,000 (one million US dollars);

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(j)

the Company or any of its subsidiaries entering into joint ventures with any person;

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(k)

the Company or any of its subsidiaries establishing or amending any profit-sharing, share-option or other similar incentive scheme for directors, officers or employees (save where such scheme has been previously approved);

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(l)

the Company adopting the strategy and business plan and any changes or modifications thereto (subject to certain dispute resolution mechanisms set out in the Amended and Restated Memorandum and Articles of Association of the Company);

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(m)

any sale of all or substantially all of the business or assets of the Company or its subsidiaries;

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(n)

any actions to be decided by the Company in relation to exercising warrants over shares in the Company;

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(o)

the appointment or removal of a Chief Executive Officer; and

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(p)

the appointment of a voluntary liquidator or the initiation of any dissolution, bankruptcy filing or similar action of the Company or any of its subsidiaries.

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The limitations on the ability of the directors to amend the Amended and Restated Memorandum and Articles of Association are set out below. The directors do not have the power to amend the Amended and Restated Memorandum and Articles of Association:

(a)

to restrict the rights or powers of the shareholders to amend the memorandum or articles of association;

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(b)

to change the percentage of shareholders required to pass a resolution to amend the memorandum or articles; or

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(c)

in circumstances where the memorandum or articles cannot be amended by the shareholders.

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The beneficial owners of Everix Investments Limited are Igor Bukhman and Dmitrii Bukhman, founders of Playrix (the leading global mobile games developer), which is a competitor of the Company. As a result, they may have a conflict of interest in certain decision-making processes, which may be adverse to that of the Company or our shareholders.

Our largest shareholders have particular expertise in various aspects essential to the ongoing operations and growth plans of the Company. Any loss of any particular group of shareholders that contributes its

 

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expertise to the Company, either by way of disposition of shares and/or discontinuation of their representation on our Board of Directors, could result in the loss of expertise essential to the ongoing operations and growth plans of the Company and could result in significant disruptions to our business, and therefore be materially adverse.

Expansion into new international markets, such as China, would subject us to increased regulatory oversight and regulatory, economic, social, health and political uncertainties, which could cause a material adverse effect on our business, financial position, and results of operations.

We may in the future expand our business and operations into new international jurisdictions in which we have limited operating experience, including with respect to seeking regulatory approvals and marketing and selling our games, products and services. For example, our growth in China could be limited by the available legal protections uncertain aspects of the PRC legal system. Furthermore, under the PRC legal system, the government’s intervention power can be more expansive than in other jurisdictions. The PRC legal system is a civil law system based on written statutes. Unlike common law systems, decided legal cases have little precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, these laws, regulations and legal requirements change frequently, and their interpretation and enforcement involve uncertainties. The PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available than in other legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Additionally, the Chinese central government exercises significant control over the Chinese economy, including through controlling capital, foreign currency exchange, foreign exchange rates and tax regulations, providing preferential treatment to certain industry segments or companies and issuing required licenses to conduct business. These uncertainties could limit our growth potential in China, which could have a material adverse effect on our business.

Changes in tax law and differences in interpretation of tax laws and regulations may adversely impact our financial statements.

We operate in multiple jurisdictions and are subject to tax laws and regulations of the U.S. federal, state and local and non-U.S. governments. U.S. federal, state and local and non-U.S. tax laws and regulations are complex and subject to varying interpretations. U.S. federal, state and local and non-U.S. tax authorities may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken. This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest or penalties that could have an adverse effect on our financial condition and results of operations. Further, future changes to U.S. federal, state and local and non-U.S. tax laws and regulations could increase our tax obligations in jurisdictions where we do business, or are deemed to do business, for tax purposes, or require us to change the manner in which we conduct some aspects of our business.

Due to the nature of our business, we are likely subject to significant taxes and fees that could increase at any time and could materially affect our financial condition and results of operations.

The gaming industry represents a significant source of tax revenue to many jurisdictions. Gaming companies are currently subject to significant taxes and fees in addition to normal corporate income taxes, and such taxes and fees are subject to increase at any time. From time to time, various legislators and other government officials have proposed and adopted changes in tax laws, or in the administration or interpretation of such laws, affecting the gaming industry. For example, the Russian tax authorities have recently started discussing the imposition of a tax on the use of customer data for marketing and other purposes and similar taxes may be adopted by other jurisdictions in which we operate. In addition, any worsening of economic conditions and the large number of jurisdictions with significant current or projected budget deficits could intensify the efforts of governments to raise revenues through increases in gaming

 

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taxes and/or other taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration or interpretation or enforcement of such laws. Any material increase in tax rates, or the adoption of additional taxes or fees, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Additionally, tax authorities may impose indirect taxes on internet-related commercial activity based on existing statutes and regulations or newly enacted law. Tax authorities may interpret existing tax laws originally enacted for commercial activities that are physically carried out and apply it to internet-based activities as well. The application of such laws may be inconsistent from jurisdiction to jurisdiction. Our in-jurisdiction activities may vary from period to period which could result in differences in nexus from period to period.

Risks Relating to the Russian Federation and Nexters operations in Russia

Political or other risks in Russia could adversely affect our business.

The majority of our game developers are located in Russia and, as of December 31, 2020, we derived 15% of our total revenue from the Former Soviet Union countries. Additionally, we have operating subsidiaries located in Russia. Any change in the Russian Government or its program of reform or lack of consensus between the Russian President, the Prime Minister, the Russian Government, the Parliament and powerful economic groups could lead to political instability, which could pose a risk to our continued business operations in the region.

Russia is a federative state consisting of 85 constituent entities, or “subjects.” The Russian Constitution reserves some governmental powers for the Russian Government, some for the subjects and some for areas of joint competence. In addition, eight “federal districts” ​(“federal’nye okruga”), which are overseen by a plenipotentiary representative of the President, supplement the country’s federal system. The delineation of authority among and within the subjects is, in many instances, unclear and contested, particularly with respect to the division of tax revenues and authority over regulatory matters. For these reasons, the Russian political system is vulnerable to tension and conflict between federal, subject and local authorities. This tension creates uncertainties in the operating environment in Russia, which may prevent us from carrying out our strategy effectively. The risks associated with these events or potential events could materially and adversely affect the investment environment and overall consumer and entrepreneurial confidence in Russia, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Political and economic relations between Russia the United States and the European Union are complex. The Russian economy has often been impacted by actions taken by governments outside of Russia and by political risk within Russia. The United States, the European Union and certain other countries have imposed economic sanctions on certain Russian government officials, private individuals and Russian companies, as well as “sectoral” sanctions affecting specified types of transactions with named participants in certain industries, including named Russian financial state-owned institutions, and sanctions that prohibit most commercial activities of U.S. and EU persons in Crimea and Sevastopol. In 2019 and 2020, these sanctions were prolonged and extended. Although we do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that we would be targeted by any sanctions in the future, further confrontation in Ukraine and any escalation of related tensions between Russia and the United States and/or the European Union, the continuation of existing sanctions, the imposition of further sanctions, or uncertainty regarding the scope thereof, could have a prolonged adverse impact on the Russian economy, particularly levels of disposable income, consumer spending and consumer confidence, which could impact our revenue stream from paying users in Russia and could have a material adverse impact on our financial condition, results of operations or prospects.

Furthermore, high levels of corruption reportedly exist in Russia, including the bribing of officials for the purpose of initiating investigations by government agencies. Corruption and other illegal activities could disrupt our ability to conduct our business effectively, and claims that the we are involved in such corruption or illegal activities could generate negative publicity, of which could harm our financial condition, results of operations or prospects.

 

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Economic and other risks in Russia could adversely affect our business.

The majority of our game developers are located in Russia and, as of December 31, 2020, we derived 15% of our total revenue from the Former Soviet Union. Additionally, we have operating subsidiaries located in Russia. Operating a business in an emerging market such as Russia can involve a greater degree of risk than operating a business in more developed markets.

Over the last two decades, the Russian economy has experienced or continues to experience at various times:

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significant volatility in its GDP;

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the impact of international sanctions;

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high levels of inflation;

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increases in, or high, interest rates;

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sudden price declines in oil and other natural resources;

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instability in the local currency market;

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budget deficits;

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the continued operation of loss-making enterprises due to the lack of effective bankruptcy proceedings;

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capital flight; and

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significant increases in poverty rates, unemployment and underemployment.

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The Russian economy has been subject to abrupt downturns in the past, including as a result of the global financial crisis, and, as an emerging market, remains particularly vulnerable to further external shocks and any future fluctuations in the global markets. For example, the recent outbreak of COVID-19, as described further in the risk factor entitled “— The recent COVID-19 pandemic and similar health epidemics, contagious disease outbreaks and public perception thereof, could significantly disrupt our operations and adversely affect our business, results of operations, cash flows or financial condition,” has materially adversely affected the Russian economy due to mitigation measures to reduce the spread of the virus and the impact of the sharp decline in oil demand, among other factors. Any deterioration in the general economic conditions in Russia (whether or not as a result of the events mentioned above) could have a material adverse effect on the Russian economy and may result in a loss of revenue from paying players, as well as potential flight of human capital, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

The legal framework governing data protection and related internet services in Russia is not well developed, and we may be subject to the newly adopted legislation, as well as the changes to the existing legislation, which may be costly to comply with or may limit our flexibility to run our business.

As the internet continues to develop on a global scale and, in particular, in Russia, new laws and regulations relating to the use of the internet in general may be adopted. These laws and regulations may further govern the collection, use and protection of data, buyer protection, online payments, pricing, anti-bribery, tax, website contents and other aspects relevant to our business. The adoption or modification of laws or regulations relating to our operations could adversely affect our business by increasing compliance costs, including as a result of confidentiality or security breaches in case of non-compliance and administrative burdens. We must comply with applicable regulations in Russia, and any non-compliance could lead to fines and other sanctions imposed by the Russian government authorities.

Over the recent years, a number of legislative initiatives related to the internet were submitted to the Russian State Duma, the lower house of the Russian Parliament, and a few of them were further signed into laws. For example, in December 2018, a draft law aimed at ensuring the safe and sustainable functioning of the internet in Russia was submitted for consideration to the Russian State Duma and, in April 2019, the draft law was adopted. The law requires Russian telecommunications operators to install new equipment to ensure that the Russian internet functions autonomously in case the global internet is not operating in

 

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Russia, and introduces the notion of the Russian national domain zone. It is currently unclear how this law might affect our operations, and there can be no assurances that this may not negatively affect our business or operations. Russia may adopt further laws to implement the Russian domain zone, which may have an unknown effect on us. Furthermore, we may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure our websites are accessible within an acceptable load time, and longer load times may result in a loss of players, which may adversely affect our business.

In addition, a number of legislative initiatives, including a draft law regulating big data, are reportedly under consideration. If any such initiatives applicable to the use of the internet and the e-commerce sector are adopted, we may be required to comply with the new requirements, and such compliance may require us to introduce further security protection measures or make further costly investments in our IT infrastructure, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Legal risks in Russia could materially adversely affect our operations and Russian tax legislation is subject to frequent change.

Among the risks of the Russian legal system are: inconsistencies among laws, presidential decrees, and government and ministerial orders and resolutions; conflicting local, regional and federal laws and regulations; the untested nature of the independence of the judiciary and its sensitivity to economic or political influences; substantial gaps in the regulatory structure due to the delay or absence of implementing legislation; a high degree of discretion on the part of governmental authorities; reported corruption within governmental entities and other governmental authorities; the relative inexperience of judges and courts in interpreting laws applicable to complex transactions; and the unpredictability of enforcement of foreign judgments and foreign arbitral awards. Many Russian laws and regulations are construed in a way that provides for significant administrative discretion in application and enforcement. Unlawful, selective or arbitrary actions of the Russian Government have reportedly included the denial or withdrawal of licenses, sudden and unexpected tax audits, criminal prosecutions, and civil claims. Any of the above events may have a material adverse effect on our financial condition, results of operations or prospects.

Despite certain improvements in the taxation system made by the Russian Government over the past decade, Russian tax legislation is still subject to frequent change, varying interpretations, and inconsistent and selective enforcement. There are currently no clear rules for distinguishing between lawful tax optimization and tax evasion. In addition, Russian tax laws do not contain detailed rules on the taxation in Russia of foreign companies. As such, taxpayers often have to resort to court proceedings to defend their position against the Russian tax authorities. However, in the absence of consistent court practice or binding precedents, there is inconsistency amongst court decisions. Further, the possibility exists that the Russian Federation would impose arbitrary or onerous taxes and penalties in the future, which could have a material adverse effect on our financial condition, results of operations or prospects.

Risks Related to Kismet and the Proposed Transactions

Unless the context otherwise requires, all references in this subsection to “we,” “us,” or “our” refer to Kismet.

We may not be able to complete the Proposed Transactions or any other business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and thereafter commence a voluntary liquidation, in which case our public shareholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.

We must complete a business combination by August 10, 2022. We may not be able to consummate the Proposed Transactions or any other business combination by that date. If we have not completed a business combination by that date, 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 our 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 our

 

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then outstanding public shares, which redemption will completely extinguish our 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 our remaining shareholders and our board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the company, subject in each case to our obligations under the laws of the British Virgin Islands to provide for claims of creditors and the requirements of other applicable law. In such case, our public shareholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their shares, and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share” and other risk factors herein.

The Sponsor, directors, executive officers, advisors or any of their affiliates may elect to purchase shares from our public shareholders, which may influence a vote on the Proposed Transactions and reduce the public “float” of our ordinary shares.

The Sponsor, directors, executive officers, advisors or any of their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. Please see “Information Related to Kismet — Permitted Purchases of our Securities” for a description of how such persons will determine from which shareholders to seek to acquire shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, directors, executive officers, advisors or any of their affiliates purchase our public shares in privately negotiated transactions from our public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of our initial business combination and thereby increase the likelihood of obtaining shareholder approval of the Proposed Transactions, or to satisfy the closing condition in the Business Combination Agreement requiring us to have a minimum net worth or a certain amount of cash at the closing of the Proposed Transactions, where it appears that such requirement would otherwise not be met. This may result in the completion of the Proposed Transactions that may not otherwise have been possible.

In addition, if such purchases are made, the public “float” of our ordinary shares and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share.

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business, except our independent registered public accounting firm, execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver

 

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or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by our public shareholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of such creditors. In order to protect the amounts held in the Trust Account, the Sponsor has agreed it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and we have not asked the Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your Kismet public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

If we liquidate, distributions, or part of them, may be delayed while the liquidator determines the extent of potential creditor claims.

If we do not complete our initial business combination by August 10, 2022, we will be required to redeem our public shares using the available funds in the Trust Account pursuant to our amended and restated memorandum and articles of association, resulting in our repayment of available funds in the Trust Account. Following this redemption, we will proceed to commence a voluntary liquidation and thereby a formal dissolution of the company. In connection with such a voluntary liquidation, the liquidator would give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate, after which our remaining assets would be distributed.

As soon as our affairs are fully wound-up, if we were to liquidate, the liquidator must complete his statement of account and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”) that the liquidation has been completed. However, the liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining assets.

To the extent that any liquidation proceedings of the company were to be commenced prior to the redemption of our public shares (and the distribution of available funds in the Trust Account) referred to above under British Virgin Islands law, the funds held in our Trust Account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the Trust Account we may not be able to return to our public shareholders the full redemption amounts which would be otherwise payable to them.

 

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If we are unable to consummate our initial business combination by August 10, 2022, our public shareholders may be forced to wait beyond the ten business day period thereafter before redemption from our Trust Account.

If we are unable to consummate our initial business combination by August 10, 2022, we will, as promptly as reasonably possible but not more than ten business days thereafter, redeem all our 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 not previously released to us to pay our taxes, if any, less up to $100,000 of interest for our dissolution expenses, divided by the number of our then outstanding public shares and cease all operations except for the purposes of winding up of our affairs by way of a voluntary liquidation, as further described herein. Any redemption of our public shareholders from the Trust Account shall be effected automatically by function of our amended and restated memorandum and articles of association prior to our commencing any voluntary liquidation. If we are required to liquidate prior to distributing the aggregate amount then on deposit in the Trust Account, then such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act and/or the Insolvency Act. In that case, investors may be forced to wait beyond the ten business days following August 10, 2022 before the redemption proceeds of our Trust Account become available to them, and they receive the return of their portion of the proceeds from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated memorandum and articles of association and then only in cases where investors have sought to redeem their Kismet ordinary shares. Only upon our redemption or any liquidation will our public shareholders be entitled to distributions if we are unable to complete our initial business combination.

If deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances, prior payments made by the company may be deemed “voidable transactions.”

If we do not complete our initial business combination by August 10, 2022, we will be required to redeem our public shares from the Trust Account pursuant to our amended and restated memorandum and articles of association.

However, if at any time we are deemed insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), we are required to immediately enter insolvent liquidation. In these circumstances, a liquidator will be appointed who will give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate, after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete its final report and accounts and will then notify the Registrar. The liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders. In such liquidation proceedings, the funds held in our Trust Account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the Trust Account we cannot assure you we will be able to return to our public shareholders the amounts otherwise payable to them.

If we are deemed insolvent, then there are also limited circumstances where prior payments made to our shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would be, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part.

 

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The Sponsor has waived its right to participate in any liquidation distribution with respect to the Kismet founder shares. We will pay the costs of our liquidation and distribution of the Trust Account from the remaining assets outside the Trust Account and up to $100,000 of interest that accrued in the Trust Account that may be used for this purpose. In addition, pursuant to a written agreement, the Sponsor has agreed that it will be liable to us, for all claims of creditors to the extent that we fail to obtain executed waivers from such entities in order to protect the amounts held in trust, except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or shareholder will not file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders.

If deemed to be insolvent, distributions made to our public shareholders, or part of them, from our Trust Account may be subject to claw back in certain circumstances.

If we do not complete our initial business combination by August 10, 2022, and instead distribute the aggregate amount then on deposit in the Trust Account (less interest previously released to us to pay taxes, if any, and less up to $100,000 in interest reserved for expenses in connection with our dissolution) to our public shareholders by way of redemption, it will be necessary for our directors to pass a board resolution approving the redemption of those Kismet ordinary shares and the payment of the proceeds to our public shareholders. Such board resolutions are required to confirm that we satisfy the solvency test prescribed by the Companies Act, (namely that our assets exceed our liabilities; and that we are able to pay our debts as they fall due). If, after the redemption proceeds are paid to our public shareholders, it transpires that our financial position at the time was such that it did not satisfy the solvency test, the Companies Act provides a mechanism by which those proceeds could be recovered from our public shareholders. However, the Companies Act also provides for circumstances where such proceeds could not be subject to claw back, namely where (a) our public shareholders received the proceeds in good faith and without knowledge of our failure to satisfy the solvency test; (b) a Kismet public shareholder altered its position in reliance of the validity of the payment of the proceeds; or (c) it would be unfair to require repayment of the proceeds in full or at all.

The Sponsor, officers and directors have agreed to vote in favor of the Proposed Transactions, regardless of how our public shareholders vote.

Unlike many other blank check companies in which the Initial Shareholders agree to vote their Kismet founder shares in accordance with the majority of the votes cast by our public shareholders in connection with an initial business combination, the Sponsor, officers and directors have agreed to vote their Kismet ordinary shares, as well as any Kismet ordinary shares purchased after the IPO, in favor of the Proposed Transactions, and own 21.3% of the outstanding Kismet ordinary shares. Accordingly, it is more likely that the necessary shareholder approval to complete the Proposed Transactions will be received than would be the case if the Sponsor, officers and directors agreed to vote their Kismet ordinary shares in accordance with the majority of the votes cast by our public shareholders.

The Sponsor and our executive officers and directors have potential conflicts of interest in recommending that shareholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this registration statement on Form F-4 and the proxy statement/prospectus included herein.

When you consider the recommendation of our board of directors in favor of approval of the Business Combination Proposal and the Adjournment Proposal, you should keep in mind that certain of our directors and officers have interests in the Proposed Transactions that are different from, or in addition to, your interests as a shareholder. These interests include, among other things:

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the beneficial ownership of the Sponsor of 6,750,000 Kismet founder shares, which shares would become worthless if we do not complete a business combination within the applicable time period, as the Sponsor waived any right to redemption with respect to these shares. Such shares have an

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aggregate market value of approximately $      based on the closing price of the Kismet ordinary shares of $      on Nasdaq on           , 2021, the record date for the special meeting of shareholders;

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the beneficial ownership of each of our three independent directors of an option to purchase 40,000 Kismet ordinary shares at an exercise price of $10.00 per share, which will vest upon the consummation of the Proposed Transactions and will expire worthless if we fail to complete a business combination within the required time period;

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the Sponsor and our executive directors and officers are expected to hold an aggregate of approximately 5.7% of the outstanding Pubco ordinary shares upon the consummation of the Proposed Transactions, assuming (i) none of the options held by three of Kismet’s independent directors are exercised and (ii) none of our existing public shareholders exercise their redemption rights;

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Our directors and officers will not receive reimbursement for any out-of-pocket expenses incurred by them on our behalf incident to identifying, investigating and consummating a business combination to the extent such expenses exceed the amount not required to be retained in the Trust Account, unless a business combination is consummated;

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the potential continuation of Ivan Tavrin as a director of Pubco; and

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the continued indemnification of our current directors and officers and the continuation of directors’ and officers’ liability insurance after the consummation of the Proposed Transactions.

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These interests may influence our directors in making their recommendation to vote in favor of the Business Combination Proposal and the other proposals described in this registration statement on Form F-4 and the proxy statement/prospectus included herein. You should also read the section entitled “Summary of the Proxy Statement/Prospectus — The Proposed Transactions.”

The shares beneficially owned by the Sponsor, our officers and directors will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.

The Sponsor, officers, directors and director nominees have entered into respective letter agreements with us, pursuant to which the Sponsor has agreed to waive its redemption rights with respect to its Kismet founder shares, and the Sponsor, officers, directors and director nominees have agreed to waive their redemption rights with respect to any of our public shares they may acquire in connection with the completion of the Proposed Transactions or any other initial business combination. The Sponsor has also waived its right to receive distributions with respect to its Kismet founder shares upon our liquidation if we are unable to consummate an initial business combination. Accordingly, the Kismet founder shares will be worthless if we do not consummate an initial business combination. The Kismet private placement warrants and any other Kismet warrants they acquire will also be worthless if we do not consummate an initial business combination. The personal and financial interests of the Sponsor, officers and directors may influence their motivation in timely identifying and selecting a target business and completing a business combination, especially if the Proposed Transactions are not approved. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders’ best interest.

Activities taken by our shareholders to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on our ordinary shares.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Kismet or its securities, the Sponsor, the Company or the Company’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of our ordinary shares or vote their

 

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shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to complete the Proposed Transactions where it appears that such requirements would otherwise not be met. Entering into any such arrangements may have a depressive effect on our ordinary shares.

In addition, pursuant to the A&R Forward Purchase Agreement, the Sponsor has committed to purchase an aggregate of 5,000,000 Pubco shares and 1,000,000 Pubco warrants prior to the Share Acquisition Closing for an aggregate purchase price of $50,000,000. Such purchase may, therefore, be at a price per share that is less than the then-current market price of our ordinary shares and could have a depressive effect on the market price of our ordinary shares.

The exercise of discretion by Kismet’s directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Business Combination Agreement may result in a conflict of interest when determining whether such changes to the terms of the Business Combination Agreement or waivers of conditions are appropriate and in the best interests of Kismet securityholders.

In the period leading up to the Closing, other events may occur that, pursuant to the Business Combination Agreement, would require Kismet to agree to amend the Business Combination Agreement, to consent to certain actions or to waive rights that Kismet is entitled to under the Business Combination Agreements. Such events could arise because of changes in the course of the Company’s business, a request by the Company to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement, the occurrence of events that would have a material adverse effect on the Company’s business and would entitle us to terminate the Business Combination Agreement, or other reasons. In any of such circumstances, it would be in Kismet’s discretion, acting through its board of directors, to grant Kismet’s consent or waive its rights. For example, Kismet agreed to a waiver of the requirement under the Business Combination Agreement for the Company to deliver audited consolidated financial statements for the fiscal year ended December 31, 2018 on the basis of their exclusion from this proxy statement/prospectus in reliance upon the exemptions available to emerging growth companies.

The existence of the financial and personal interests of the directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he may believe is best for Kismet and its securityholders and what he may believe is best for himself or his affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Kismet does not believe there will be any changes or waivers that its directors and officers would be likely to make after shareholder approval of the Proposed Transactions has been obtained. While certain changes could be made without further shareholder approval, if there is a change to the terms of the transaction that would have a material impact on the shareholders, Kismet will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of its shareholders with respect to the Business Combination Proposal.

Kismet’s board of directors did not obtain a fairness opinion in determining whether or not to proceed with the Proposed Transactions and, as a result, the terms may not be fair from a financial point of view to the Kismet public shareholders.

In analyzing the Proposed Transactions, Kismet’s board of directors conducted significant due diligence on the Company. For a complete discussion of the factors utilized by Kismet’s board of directors in approving the Proposed Transactions, see the section entitled, “Proposal No. 1 — The Business Combination Proposal — Kismet’s Board of Directors’ Reasons for Approval of the Proposed Transactions.” Kismet’s board of directors believes, because of the financial skills and background of its directors, it was qualified to conclude that the Proposed Transactions were fair from a financial perspective to its shareholders and that the Company’s fair market value was at least 80% of Kismet’s net assets (excluding deferred underwriting discounts and commissions). Notwithstanding the foregoing, Kismet’s board of directors did not obtain a fairness opinion to assist it in its determination. Accordingly, investors will be relying solely on the judgment of Kismet’s board of directors in valuing the Company’s business, and Kismet’s board of directors may be incorrect in its assessment of the Proposed Transactions. The lack of a fairness opinion may also lead an increased number of Kismet public shareholders to vote against the Business Combination Proposal or

 

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demand redemption of their shares for cash, which could potentially impact Kismet’s ability to consummate the Transactions or materially and adversely affect Nexter’s liquidity following the consummation of the Transactions.

Kismet’s and the Company’s ability to consummate the Proposed Transactions, and the operations of Pubco following the Proposed Transactions, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic.

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, the U.S. Department of Health and Human Services declared a public health emergency for the United States to aid the U.S., and on March 11, 2020, the World Health Organization characterized the COVID-19 outbreak as a “pandemic.”

The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Proposed Transactions, and the business of the Company or Pubco following the Proposed Transactions could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and Kismet’s and the Company’s ability to consummate the Proposed Transactions and Pubco’s financial condition and results of operations following the Proposed Transactions may be materially adversely affected. Each of Kismet, the Company and Pubco may also incur additional costs due to delays caused by COVID-19, which could adversely affect Pubco’s financial condition and results of operations.

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

On April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for warrants issued by Special Purpose Acquisition Companies (“SPACs”)” ​(the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in our warrant and forward purchase agreements. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our warrants and units associated with our forward purchase agreement and pursuant to the guidance in ASC 815-40, determined that the private placement warrants should be classified as derivative liabilities measured at fair value on our balance sheet, with any changes in fair value to be reported each period in earnings on our statement of operations.

As a result of the recurring fair value measurement, our financial statements may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.

We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management

 

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is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K/A filed June 8, 2021 (the “Form 10-K/A”), we identified a material weakness in our internal control over financial reporting related to the accounting for a significant transaction related to the warrants we issued in our private placement in August 2020. As a result of this material weakness, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2020. This material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial statements as of and for the period from June 3, 2020 through December 31, 2020 and unaudited condensed financial statements as of and for the period from June 3, 2020 through September 30, 2020.

Any failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We have commenced remediation efforts as discussed in Item 9A. “Controls and Procedures” of our Form 10-K/A to address the material weakness in internal control over financial reporting and ineffective disclosure controls and procedures. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

Risks Related to Pubco Following the Consummation of the Proposed Transactions

Unless the context otherwise requires, all references in this subsection to “we,” “us,” or “our” refer to Kismet.

If we do not maintain a current and effective prospectus relating to the Pubco ordinary shares issuable upon exercise of the Pubco warrants issued in exchange for your Kismet warrants, you will only be able to exercise such Pubco warrants on a “cashless basis.”

If we do not maintain a current and effective prospectus relating to the Pubco ordinary shares issuable upon exercise of the Pubco public warrants issued in exchange for Kismet warrants as part of the Proposed Transactions, at the time that holders wish to exercise such Pubco warrants, they will only be able to exercise them on a “cashless basis.” As a result, the number of Pubco ordinary shares that holders will receive upon exercise of the Pubco public warrants will be fewer than it would have been had such holders exercised their Pubco warrants for cash. Under the terms of the Pubco Warrant Agreement, we have agreed to use our commercially reasonable efforts to maintain a current and effective prospectus relating to the Pubco ordinary shares issuable upon exercise of the Pubco warrants until the expiration of the Pubco warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced. Notwithstanding the foregoing, the Pubco private placement warrants issued in exchange for Kismet warrants held by our officers, directors, the

 

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Sponsor or their affiliates as described elsewhere in this prospectus, as well as any other Pubco warrants that may be issued to them, may be exercisable for unregistered Pubco ordinary shares for cash even if the prospectus relating to the Pubco ordinary shares issuable upon exercise of the Pubco warrants is not current and effective.

An investor will be able to exercise a Pubco warrant only if the issuance of Pubco ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the Pubco warrants.

No Pubco public warrants will be exercisable for cash and we will not be obligated to issue Pubco ordinary shares unless the shares issuable upon such exercise have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Pubco warrants. At the time that the Pubco warrants become exercisable, we expect to that Pubco’s securities will be listed on a national securities exchange, which would provide an exemption from registration in every state. Accordingly, we believe holders in every state will be able to exercise their Pubco warrants as long as our prospectus relating to the Pubco ordinary shares issuable upon exercise of the Pubco warrants is current. However, we cannot assure you of this fact. If the Pubco ordinary shares issuable upon exercise of the Pubco warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the Pubco warrants reside, the Pubco warrants may be deprived of any value, the market for the Pubco warrants may be limited and they may expire worthless if they cannot be sold.

The grant and future exercise of registration rights may adversely affect the market price of Pubco ordinary shares upon consummation of the Proposed Transactions.

Pursuant to the New Registration Rights Agreement to be entered into in connection with the Proposed Transactions and which is described elsewhere in this proxy statement/prospectus, the Sponsor, certain shareholders of the Company can each demand that Pubco register their registrable securities under certain circumstances and will each have piggyback registration rights for these securities in connection with certain registrations of securities that Pubco undertakes. Pubco will bear the cost of registering these securities.

The registration of these securities will permit the public sale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of Pubco ordinary shares following the consummation of the Proposed Transactions.

After the Closing, Pubco will be able to issue additional ordinary shares upon the exercise of outstanding Pubco warrants, the exercise of the options granted to Kismet’s independent directors, and issuances pursuant to an equity incentive plan, all of which would increase the number of shares eligible for future resale in the public market and result in dilution to the combined company’s shareholders.

If the Proposed Transactions are completed, Kismet’s outstanding warrants and Kismet options will convert automatically into Pubco warrants and Pubco options, respectively, to purchase Pubco ordinary shares, and Pubco will adopt an equity incentive plan, the total size of which will equal 5% of Pubco’s outstanding issued shares as of immediately after the Share Acquisition Closing. The Pubco warrants will become exercisable on the later of 30 days after the completion of the Proposed Transactions and August 10, 2021 (the date falling 12 months from the closing of the IPO), and will expire at 5:00 p.m., New York City time, five years after the completion of the Proposed Transactions or earlier upon redemption or liquidation, and the options granted to Kismet’s independent directors will be immediately exercisable. To the extent the warrants or options are exercised, or awards are made under Pubco’s equity incentive plan, additional Pubco ordinary shares will be issued, which will result in dilution to Pubco’s shareholders and increase the number of Pubco ordinary shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such securities may be exercised could adversely affect the market price of the Pubco ordinary shares.

Kismet’s shareholders cannot be sure of the market value of the Pubco ordinary shares to be issued upon completion of the Proposed Transactions.

The holders of Kismet ordinary shares issued and outstanding immediately prior to the consummation of the Proposed Transactions (other than any redeemed shares) will receive one Pubco ordinary share in

 

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exchange for each Kismet ordinary share held by them, rather than a number of shares with a particular fixed market value. The market value of Pubco ordinary shares issued in exchange for Kismet ordinary shares at the time of the consummation of the Proposed Transactions may vary significantly from the price of Kismet ordinary shares on the date the Business Combination Agreement was executed, the date of this registration statement on Form F-4 and the proxy statement/prospectus included herein or the date on which Kismet shareholders vote on the Proposed Transactions. Because the exchange ratio of the shares will not be adjusted to reflect any changes in the market prices of Kismet ordinary share, the market value of the Pubco ordinary shares issued in the Proposed Transactions and the Kismet ordinary shares surrendered in the Proposed Transactions may be higher or lower than the value of these shares on earlier dates. 100% of the consideration to be received for Kismet ordinary shares will be Pubco ordinary shares. Following consummation of the Proposed Transactions, the market price of Pubco’s securities may be influenced by many factors, some of which are beyond its control, including those described above and the following:

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changes in financial estimates by analysts;

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announcements by it or its competitors of significant contracts, productions, acquisitions or capital commitments;

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fluctuations in its quarterly financial results or the quarterly financial results of companies perceived to be similar to it;

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general economic conditions;

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changes in market valuations of similar companies;

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terrorist acts;

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changes in its capital structure, such as future issuances of securities or the incurrence of debt;

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future sales of Pubco ordinary shares ;

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regulatory developments in the United States, foreign countries or both;

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litigation involving Pubco, its subsidiaries or its general industry; and

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additions or departures of key personnel.

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In addition, it is possible that the Proposed Transactions may not be completed until a significant period of time has passed after the special meeting of Kismet’s shareholders. As a result, the market value of Kismet ordinary share may vary significantly from the date of the special meeting to the date of the completion of the Proposed Transactions. You are urged to obtain up-to-date prices for Kismet ordinary share. There is no assurance that the Proposed Transactions will be completed, that there will not be a delay in the completion of the Proposed Transactions or that all or any of the anticipated benefits of the Proposed Transactions will be obtained.

Subsequent to the completion of the Proposed Transactions, Pubco may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on Pubco’s financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.

Although Kismet has conducted due diligence on the Company, we cannot assure you that our diligence surfaced all material issues that may be present inside the Company, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the Company and outside of Kismet’s control will not later arise. As a result of these factors, Pubco may be forced to later write-down or write off assets, restructure its operations, or incur impairment or other charges that could result in Pubco reporting losses. Even if Kismet’s due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Kismet’s preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on Kismet’s liquidity, the fact that Kismet reports charges of this nature could contribute to negative market perceptions about Kismet or its securities. Accordingly, any shareholders who choose to remain shareholders following the Proposed Transactions could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to

 

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