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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to        

Commission file number: 001-41091

Wejo Group Limited

(Exact name of registrant as specified in its charter)

Bermuda

    

Not Applicable

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

Canon’s Court

22 Victoria Street

Hamilton HM12, Bermuda

(Address of principal executive offices)

(Zip Code)

+44 8002 343065

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, $0.001 par value

WEJO

NASDAQ Stock Market LLC

Warrants, each whole warrant exercisable for one share of common shares at an exercise price of $11.50 per share

WEJOW

NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

    

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, 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 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 22, 2021, there were 93,950,205 Common Shares, $0.001 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Page

Item 1.

Financial Statements

1

Financial Statements of Wejo Limited

Condensed Consolidated Balance Sheets – September 30, 2021 and December 31, 2020 (unaudited).

2

Condensed Consolidated Statements of Operations and Comprehensive Loss – Three and Nine Months Ended September 30, 2021 and 2020 (unaudited).

3

Condensed Consolidated Statements of Shareholders’ Deficit – Three and Nine Months Ended September 30, 2021 and September 30, 2020 (unaudited).

4

Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2021 and 2020 (unaudited).

5

Notes to Condensed Consolidated Financial Statements (unaudited.)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures.

38

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings.

40

Item 1A.

Risk Factors.

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

66

Item 3.

Defaults Upon Senior Securities.

66

Item 4.

Mine-Safety Disclosure.

66

Item 5.

Other Information.

66

Item 6.

Exhibits.

66

Signatures

67

i

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding the Company’s strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “target,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements include, but are not limited to, statements regarding the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future including, without limitation, statements regarding: (i) the size, demands and growth potential of the markets for the Company’s products and services and the Company’s ability to serve those markets, (ii) the degree of market acceptance and adoption of the Company’s products and services, (iii) the Company’s ability to develop innovative products and services and compete with other companies engaged in the automotive technology industry and (iv) the Company’s ability to attract and retain customers. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. The Company does not give any assurance that the Company will achieve its expectations. Forward-looking statements in this Form 10-Q may include, for example, statements about:

The projected financial information, anticipated growth rate and market opportunity of the Company;
The ability to obtain or maintain the listing of the Company’s Common Shares and Company warrants on the NASDAQ;
The Company’s public securities’ potential liquidity and trading;
The Company’s ability to raise financing in the future;
The Company’s success in retaining or recruiting, or changes required in, our officers, key employees or directors;
The impact of the regulatory environment and complexities with compliance related to such environment, including compliance with restrictions imposed by federal law and data/privacy law in “internet of things” milieu; and
Factors relating to the business, operations and financial performance of the Company and its subsidiaries.

FINANCIAL STATEMENT PRESENTATION

The registrant was incorporated by Wejo Limited under the laws of Bermuda on May 21, 2021 for the purpose of effectuating the business combination with Virtuoso Acquisition Corp. Prior to the business combination, Wejo Group Limited had no material assets and did not operate any businesses. The business combination resulted in Wejo Group Limited acquiring, and becoming the successor to, Wejo Limited. Simultaneously, it completed the combination with the public shell company, Virtuoso Acquisition Corp., with an exchange of the shares and warrants issued by Wejo Group Limited for those of Virtuoso Acquisition Corp., which was treated as a recapitalization. Following the business combination, Wejo Limited and Virtuoso Acquisition Corp. are wholly owned subsidiaries of Wejo Group Limited.

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Wejo Limited

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

    

September 30, 

    

December 31, 

    

2021

    

2020

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash

$

8,611

$

14,421

Accounts receivable, net

 

930

 

688

Prepaid expenses and other current assets, including due from related party of $1,079 and nil, respectively (Note 4)

 

12,577

 

6,053

Total current assets

 

22,118

 

21,162

Property and equipment, net (Note 4)

 

603

 

320

Intangible assets, net (Note 4)

 

9,917

 

10,946

Total assets

$

32,638

$

32,428

Liabilities and Shareholders’ Deficit

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable, including due to related party of nil and $2,407, respectively

$

7,282

$

4,890

Accrued expenses and other current liabilities (Note 4)

 

20,957

 

9,891

Advanced subscription agreement, including due to related party of nil and $4,333, respectively (Note 8)

 

 

8,098

Debt to related parties (Note 14)

 

34

 

10,129

Total current liabilities

28,273

 

33,008

Non-current liabilities:

 

  

 

  

Convertible loan notes (Note 9)

 

8,809

 

6,130

Derivative liability (Note 9)

 

126,927

 

34,982

Long term debt, net of unamortized debt discount and debt issuance costs (Note 10)

26,313

Other non-current liabilities

 

 

84

Total liabilities

 

190,322

 

74,204

Commitments and contingencies (Note 13)

 

  

 

  

Shareholders’ deficit: (Note 6)

 

  

 

  

Ordinary shares, £0.01 nominal value, 6,232,305 and 6,083,872 shares authorized, issued and outstanding as of September 30, 2021 and December 31, 2020

 

89

 

87

B Ordinary shares, £0.01 nominal value, 5,476,837 and 5,296,549 shares authorized, issued and outstanding as of September 30, 2021 and December 31, 2020

 

70

 

67

Additional paid in capital

 

146,768

 

104,799

Accumulated deficit

 

(308,678)

 

(146,770)

Accumulated other comprehensive income

 

4,067

 

41

Total shareholders’ deficit

 

(157,684)

 

(41,776)

Total liabilities and shareholders’ deficit

$

32,638

$

32,428

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Wejo Limited

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, other than per share amounts)

    

Three Months Ended September 30,

Nine Months Ended September 30, 

    

2021

    

2020

    

2021

    

2020

Revenue, net (Note 5)

$

351

$

313

$

1,198

$

836

Costs and operating expenses:

 

  

 

  

Cost of revenue (exclusive of depreciation and amortization shown separately below)

1,422

265

 

3,764

 

1,139

Technology and development

7,446

3,191

 

13,941

 

6,289

Sales and marketing

5,233

808

 

11,372

 

4,109

General and administrative

6,106

1,560

 

14,055

 

6,385

Depreciation and amortization

1,108

1,050

 

3,263

 

3,297

Total costs and operating expenses

21,315

6,874

 

46,395

 

21,219

Loss from operations

(20,964)

(6,561)

 

(45,197)

 

(20,383)

Loss on issuance of convertible loan notes

 

(44,242)

 

Change in fair value of derivative liability (Note 3)

(1,637)

(3,138)

 

(58,253)

 

(3,138)

Change in fair value of advanced subscription agreements, including related party of $155, $(861), $(3,665) and $(188), respectively (Note 3)

288

(723)

 

(6,477)

 

693

Interest expense

(2,954)

(919)

 

(7,271)

 

(1,346)

Other (expense) income, net

(383)

639

 

(468)

 

1,289

Net loss

(25,650)

(10,702)

 

(161,908)

 

(22,885)

Other comprehensive loss:

 

  

 

  

Foreign currency exchange translation adjustment

3,591

(238)

 

4,026

 

(583)

Total comprehensive loss

$

(22,059)

$

(10,940)

$

(157,882)

$

(23,468)

Net loss per ordinary share - basic and diluted (Note 11)

$

(2.22)

$

(0.95)

$

(14.14)

$

(2.02)

Weighted-average basic and diluted ordinary shares

11,542,639

11,324,677

 

11,453,864

 

11,324,677

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

Wejo Limited

Condensed Consolidated Statements of Shareholders’ Deficit

(unaudited)

(in thousands, except share amounts)

    

Additional

Other

Ordinary Shares

B Ordinary Shares

Paid in

Subscription

Comprehensive

Accumulated

Shareholders’

    

Shares

    

Value

    

Shares

    

Value

    

Capital

    

Receivable

    

Income (Loss)

    

Deficit

    

Deficit

Balance at December 31, 2020

 

6,083,872

$

87

5,296,549

$

67

$

104,799

$

$

41

$

(146,770)

$

(41,776)

Debt discount related to beneficial conversion feature of convertible loan notes (Note 9)

 

 

 

 

16,961

 

 

 

 

16,961

Unrealized loss on foreign currency translation

(324)

(324)

Net loss

(79,433)

(79,433)

Balance at March 31, 2021

6,083,872

87

5,296,549

67

121,760

(283)

(226,203)

(104,572)

Debt discount related to beneficial conversion feature of convertible loan notes (Note 9)

10,263

10,263

Unrealized gain on foreign currency translation

 

 

 

 

 

 

759

 

 

759

Net loss

 

 

 

 

 

 

 

(56,825)

 

(56,825)

Balance at June 30, 2021

 

6,083,872

87

5,296,549

67

132,023

476

(283,028)

(150,375)

Unrealized loss on foreign currency translation

3,591

3,591

Conversion of advanced subscription agreements into ordinary shares

148,433

2

180,288

3

14,745

14,750

Net loss

(25,650)

(25,650)

Balance at September 30, 2021

6,232,305

$

89

5,476,837

$

70

$

146,768

$

$

4,067

$

(308,678)

$

(157,684)

Balance at December 31, 2019

 

6,028,128

$

86

5,296,549

$

67

$

94,315

$

(1,004)

$

2,261

$

(91,895)

$

3,830

Proceeds received for B Ordinary Shares

 

 

 

 

 

1,004

 

 

 

1,004

Unrealized loss on foreign currency translation

 

 

 

 

 

 

(359)

 

 

(359)

Net loss

 

 

 

 

 

 

 

(5,523)

 

(5,523)

Balance at March 31, 2020

6,028,128

86

5,296,549

67

94,315

1,902

(97,418)

(1,048)

Unrealized gain on foreign currency translation

14

14

Net loss

(6,660)

(6,660)

Balance at June 30, 2020

6,028,128

86

5,296,549

67

94,315

1,916

(104,078)

(7,694)

Unrealized loss on foreign currency translation

(238)

(238)

Net loss

(10,702)

(10,702)

Balance at September 30, 2020

 

6,028,128

$

86

5,296,549

$

67

$

94,315

$

$

1,678

$

(114,780)

$

(18,634)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Wejo Limited

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

    

Nine Months Ended September 30, 

    

2021

    

2020

Operating activities

 

  

 

  

Net loss

$

(161,908)

$

(22,885)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Non-cash interest expense

 

4,230

 

427

Loss on issuance of convertible loans

 

44,242

 

Gain on disposal of property and equipment

(4)

Depreciation and amortization

 

3,263

 

3,297

Non-cash loss (gain) on foreign currency remeasurement

 

527

 

(51)

Changes in fair value of advanced subscription agreements

 

6,477

 

(693)

Changes in fair value of derivative liability

 

58,253

 

3,138

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

(244)

 

(217)

Prepaid expenses and other current assets

 

3,662

 

(65)

Accounts payable

 

5,171

 

1,424

Accrued expenses and other liabilities

 

6,404

 

(631)

Net cash used in operating activities

 

(29,927)

 

(16,256)

Investing activities

 

 

Purchases of property and equipment

 

(482)

 

(58)

Development of internal software

 

(2,136)

 

(1,965)

Net cash used in investing activities

 

(2,618)

 

(2,023)

Financing activities

 

 

Proceeds from issuance of ordinary shares, net of issuance costs

 

 

1,004

Proceeds from issuance of advanced subscription agreements, net of issuance costs

349

Proceeds from issuance of convertible loans

 

16,222

 

11,753

Payment of issuance costs of convertible loans

 

(1,004)

 

Proceeds from other loan

84

Net proceeds from issuance of long-term debt

25,631

Payment of issuance costs of long-term debt

(638)

Repayment of other loan

 

(84)

 

Proceeds from issuance of related party debt

 

 

10,060

Repayment of related party debt

(10,143)

Payment of deferred financing costs

 

(3,148)

 

Net cash provided by financing activities

 

26,836

 

23,250

Effect of exchange rate changes on cash

 

(101)

 

(208)

Net (decrease) increase in cash

 

(5,810)

 

4,763

Cash at beginning of period

 

14,421

 

1,295

Cash at end of period

$

8,611

$

6,058

Non-cash financing activities

 

 

Property and equipment purchases in accounts payable

$

40

$

Advanced subscription agreements converted into ordinary shares

$

14,750

$

Deferred offering costs included in accounts payable and accrued expenses

$

5,392

$

Convertible note issued through settlement of accounts payable and recognition of prepaid revenue share costs

$

4,714

$

Supplemental cash flow information

Interest paid

$

863

$

524

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Wejo Limited

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.  Nature of the Business

Wejo Limited (“the Company” or “Wejo”) is a private limited liability company incorporated under the laws of England and Wales on December 13, 2013. Wejo is an early leader in the connected vehicle data market. Connected vehicles contain hundreds of data sensors, emitting information such as location, speed, direction and events such as braking, temperature and weather conditions. This data creates intelligence, in near real- time and historically, that is unavailable from any other source.

The Company ingests and standardizes this data, mainly in the United States and Europe at this time, through its proprietary data exchange platform (“Wejo ADEPT” or “ADEPT”). The Company’s products enable customers such as departments of transportation, retailers, construction firms and research departments to unlock unique insights about journeys, cities, electric vehicle usage, safety and more. Over the next two to three years, the Company expects to expand its platform to ingest data globally, and to expand into additional marketplaces as well as providing business insights to its Original Equipment Manufacturer (“OEM”) preferred partners.

The Company is comprised of eight wholly-owned subsidiaries. The Company’s primary office is located in Manchester, England. In addition to its primary office, Wejo Concierge UK Ltd, and Rewardrive Ltd., are also located in the United Kingdom (the “U.K.”), Wejo EU is located in Ireland, Wejo Group Ltd. (“Wejo Group”) is located in Bermuda, and Wejo California Corp., Wejo Data Services Inc., Wejo Services Inc., and Wejo Inc. are located in the United States (the “U.S.”).

Products and services

The Company partners with the world’s leading automotive manufacturers to standardize connected car data through the Wejo ADEPT platform, including traffic intelligence, analysis of high frequency vehicle movements and analysis of common driving events and trends. For  customers and marketplaces, the Company will provide insights, solutions and analytics through software and visualization tools available for license and subscription by its customers.  

Wejo ADEPT is a cloud-based data exchange platform that makes sharing and accessing vast volumes of connected car data simple by removing the barriers and maximizing the intrinsic value in car data for drivers, vehicle manufacturers and other adjacent businesses. The Wejo ADEPT platform interfaces with the electronic data within vehicles from manufacturers which have agreed to use the platform. This data can be utilized by the manufacturers as well as other private and public sector businesses in order to create advanced analysis, machine learning and rapid insights. The Wejo ADEPT platform also includes flexible implementation options and adaptable interfaces to ensure a successful and rapid roll out across territories. In addition, Wejo ADEPT’s compliance wrappers support legal and legislative assurance, including country, federal, state and local variations.

Wejo ADEPT is hosted by cloud data centers, and as a function of this central hosting, the ADEPT platform operates in a multi-tenancy environment, that standardizes vehicle data. The end users of the Wejo ADEPT platform can only access  data through a licensing agreement and do not have the ability to take possession of the software itself.

The Company has two primary areas of service, Data Marketplace and Automotive Business Insight Solutions (SaaS). Each product line utilizes the Company’s exclusive, proprietary dataset that is derived from the vehicle sensors of the connected vehicles of its OEM partners. In the Data Marketplace, the Company offers licenses for the use of data and licenses software analytical tools that interpret the dataset to customers. In the Automotive Business Insight Solutions (SaaS) business, the Company offers licenses of software analytical tools to OEMs and their direct ecosystem (suppliers, distributors, partners) that interpret the dataset to improve the management of their operations and support the improvement of the automotive customers’ experience.

Going Concern

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

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Table of Contents

As is common to early-stage companies with limited operating histories, the Company is subject to risks and uncertainties such as its ability to influence the connected vehicle market; invest in technology, resources and new business capabilities; maintain and grow the customer base; secure additional capital to support the investments needed for its anticipated growth; comply with governing laws and regulations; and other risks and uncertainties. To manage these risks and uncertainties while growing as expected, the Company will make significant investments and will therefore need to raise substantial capital during its loss- making period.

The Company has incurred operating losses and negative cash flows from operations since inception. The Company expects to continue to incur losses and negative cashflows from operations for the foreseeable future as it continues to develop its product offerings. As the Company makes investments to increase the markets and customers it serves, the operating losses are expected to increase until the Company reaches the necessary scale to generate cash profits from operations. The Company has historically relied on private equity offerings and debt financings, and to a limited extent revenue from customers to fund its operations. As of September 30, 2021 and December 31, 2020, the Company had an accumulated deficit of $308.7 million and $146.8 million, respectively. Net losses incurred for the nine months ended September 30, 2021 and year ended December 31, 2020 amounted to $161.9 million and $54.9 million, respectively.

As of September 30, 2021, the Company had cash of $8.6 million. In the fourth quarter of 2021, the Company issued further notes in a principal amount of $7.5 million under the Loan Note Instrument. In November 2021, the Company completed the business combination (see Note 15), which raised $178.8 million. This consisted of $230.0 million cash received in the trust, less redemptions of $132.8 million, and $128.5 million, through a Private Investment in Public Entity (“PIPE”) investment, net of expenses of $46.9 million. The $178.8 million in proceeds were offset by a payment of $75.0 million from the Company to Apollo as stipulated in the Forward Purchase Transaction (see Note 15). After considering the fund raising described above, the Company believes that it has sufficient cash on hand to support the Company’s operating expenses and capital requirements through at least the next twelve months from the date of issuance of these condensed consolidated financial statements.

2.  Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Wejo Limited and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Unaudited Condensed Consolidated Financial Statements

The accompanying condensed consolidated balance sheets as of September 30, 2021, and the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, condensed consolidated statements of shareholders’ deficit for the three and nine months ended September 30, 2021 and 2020, and statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position at September 30, 2021 and the results of its operations for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020 are also unaudited. The results for the nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the full year or for any other subsequent interim period. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes included elsewhere in the prospectus filed on October 18, 2021.

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Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements and accompanying notes include, but are not limited to, the fair value of the Company’s ordinary shares, derivative liability, advanced subscription agreements, income taxes, software development costs and the estimate of useful lives with respect to developed software. Although the Company believes that its estimates, assumptions, and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

Net Loss per Share

The Company has reported losses since inception and has computed basic net loss per share attributable to ordinary shareholders by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per ordinary share after giving consideration to all potentially dilutive ordinary shares, including warrants and share options, outstanding during the period determined using the treasury-share and if-converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential ordinary shares have been anti-dilutive and basic and diluted loss per share were the same for all periods presented.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize most leases on their balance sheet as a right-of-use asset and a lease liability. Leases will be classified as either operating or finance, and classification will be based on criteria similar to current lease accounting, but without explicit bright lines. As an emerging growth company (“EGC”), the Company will adopt the guidance with nonpublic entities during the annual reporting periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its financial statements.

In June 2019, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, and ASU 2020-03 (collectively, “Topic 326”), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Topic 326 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. For non-public companies, Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of its pending adoption of Topic 326 on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes. This update removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective beginning April 1, 2022. The Company does not expect the adoption of ASU 2019-12 to have a material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments by removing major separation models required under current guidance. ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact ASU 2020-06 will have on its consolidated financial statements and related disclosures.

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3.  Fair Value Measurement

Liabilities that are measured at fair value on a recurring basis, and the level of the fair value hierarchy utilized to determine such fair values, consisted of the following as of September 30, 2021 (in thousands):

    

Fair Value Measurements

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities:

 

  

 

  

 

  

 

  

Derivative liability (Note 9)

$

$

$

126,927

$

126,927

Total

$

$

$

126,927

$

126,927

Liabilities that are measured at fair value on a recurring basis, and the level of the fair value hierarchy utilized to determine such fair values, consisted of the following as of December 31, 2020 (in thousands):

    

Fair Value Measurements

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities:

 

  

 

  

 

  

 

  

Advanced subscription agreements (Note 8)

$

$

$

8,098

$

8,098

Derivative liability (Note 9)

 

 

 

34,982

 

34,982

Total

$

$

$

43,080

$

43,080

There were no transfers into or out of Level 3 instruments and/or between Level 1 and Level 2 instruments during the three and nine months ended September 30, 2021 and 2020.

The following table provides a roll forward of the aggregate fair value of the Company’s Advanced Subscription Agreements (“ASAs”) and derivative liability (in thousands):

    

ASAs

    

Derivative Liability

Balance as of December 31, 2020

$

8,098

$

34,982

Initial fair value of derivative liability

 

 

36,870

Change in estimated fair value

 

6,477

 

58,253

Conversion of ASAs into ordinary shares and B ordinary shares

(14,750)

Foreign currency translation loss (gain)

 

175

 

(3,178)

Balance as of September 30, 2021

$

$

126,927

The changes in estimated fair value are recorded in the condensed consolidated statements of operations and comprehensive loss and the foreign currency translation losses are recorded in the foreign currency translation adjustment in other comprehensive loss in the condensed consolidated statements of operations and comprehensive loss. The ASAs and derivative liability were valued using a scenario-based analysis. Five primary scenarios were considered: qualified financing, unqualified financing, merger or acquisition, held to maturity, and insolvency. The value of the ASAs and derivative liability under each scenario were probability weighted to arrive at their respective estimated fair values.

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The following table summarizes the significant unobservable inputs that are included in the valuation of the derivative liability as of September 30, 2021 and December 31, 2020:

September 30, 2021

    

December 31, 2020

 

Input Value or

Weighted

Input Value or

Weighted

 

Unobservable Inputs

    

Range

    

Average (1)

    

Range

    

Average (1)

 

Probability of scenarios:

 

  

 

  

 

  

 

  

Qualified financing

 

3.4

%  

3.4

%  

20.0

%  

20.0

%

Nonqualified financing

 

5.0

%  

5.0

%  

5.0

%  

5.0

%

Merger or acquisition

 

91.6

%  

91.6

%  

70.0

%  

70.0

%

Held to maturity

 

0.0

%  

0.0

%  

5.0

%  

5.0

%

Insolvency

 

0.0

%  

0.0

%  

0.0

%  

0.0

%

Timing of scenarios:

 

  

 

  

 

  

 

  

Derivative liability

 

0.2 years

 

0.2 years

 

0.3 years

 

0.3 years

Estimated volatility

 

30.0

%  

30.0

%  

50.0

%  

50.0

%

Risk-free rate

 

0.2

%  

0.2

%  

0.6

%  

0.6

%

Discount rate

 

26.5

%  

26.5

%  

26.8

%  

26.8

%

Value of ordinary share

$

44.09

$

44.09

$

25.04

$

25.04

The following table summarizes the significant unobservable inputs that are included in the valuation of the ASAs as of December 31, 2020:

December 31, 2020

 

    

Input Value or

    

Weighted

 

Unobservable Inputs

Range

Average (1)

 

Probability of scenarios:

 

  

 

  

Qualified financing

 

20.0

%  

20.0

%

Nonqualified financing

 

5.0

%  

5.0

%

Merger or acquisition

 

70.0

%  

70.0

%

Held to maturity

 

5.0

%  

5.0

%

Insolvency

 

0.0

%  

0.0

%

Timing of scenarios:

 

  

 

  

Advanced subscription agreements

 

0.8 - 1.0 years

0.8 years

Estimated volatility

 

50.0

%  

50.0

%

Risk-free rate

 

0.6

%  

0.6

%

Discount rate

 

26.8

%  

26.8

%

Value of ordinary share

$

25.04

$

25.04

(1)Unobservable inputs were weighted by the relative fair value of the respective liability and the period end/year-end probabilities of the five scenarios.

Changes in the unobservable inputs noted above would impact the amount of the respective liability. For the respective liability, increases (decreases) in the estimates of the Company’s annual volatility would increase (decrease) the liability and an increase (decrease) in the annual risk-free rate would increase (decrease) the liability.

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4.  Balance Sheet Details

Prepaid and other current assets consisted of the following (in thousands):

    

September 30, 

    

December 31, 

    

2021

    

2020

Deferred offering costs

$

8,314

$

Prepayments

 

2,020

 

1,001

Prepaid revenue share costs to a related party

1,079

VAT recoverable

 

929

 

425

Research and development expenditure credit receivable

 

62

 

331

Insurance receivable

4,000

Other current assets

 

173

 

296

$

12,577

$

6,053

Insurance receivable represents the insurance compensation for a claim incurred in 2019. See accrued expenses and other liabilities table below for the offsetting insurance accrual as of December 31, 2020 and Note 13 for information regarding the claim.

Property and equipment, net consisted of the following (in thousands):

    

September 30, 

    

December 31, 

    

2021

    

2020

Office equipment

$

1,217

$

715

Furniture and fixtures

 

36

 

36

Total property and equipment

 

1,253

 

751

Less accumulated depreciation

 

(650)

 

(431)

Property and equipment, net

$

603

$

320

Depreciation expense was $0.1 million, $0.2 million, $0.1 million and $0.2 million for the three and nine months ended September 30, 2021 and 2020, respectively.

Intangible assets, net consisted of the following (in thousands):

As of September 30, 2021

Gross

Accumulated

Net

Book Value

Amortization

Book Value

Data sharing agreement

    

$

10,502

    

$

(4,166)

    

$

6,336

Internally developed software

 

14,317

 

(10,736)

 

3,581

$

24,819

$

(14,902)

$

9,917

As of December 31, 2020

Gross

Accumulated

Net

Book Value

Amortization

Book Value

Data sharing agreement

    

$

10,653

    

$

(3,085)

    

$

7,568

Internally developed software