EX-99.6 7 tm2133386d1_ex99-6.htm EXHIBIT 99.6

Exhibit 99.6

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The unaudited pro forma condensed combined financial information presents the pro forma effects of the following transactions (collectively the “Transactions”):

 

The Two-Step Merger

 

The Convertible Note Financing

 

The C Acquisition

 

The unaudited pro forma condensed combined financial information also presents the pro forma effects of the RSU Modification (as defined below).

 

890 is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. 890 was incorporated in Delaware on September 9, 2020, consummated its IPO on January 11, 2021 and closed its IPO on January 14, 2021, raising $287.5 million, which was placed in a trust account. As of September 30, 2021, there was $287.5 million held in the trust account.

 

BuzzFeed was incorporated in Delaware on June 19, 2008. BuzzFeed is a global digital media company with a portfolio of well-known brands with massive reach, engagement and distribution, and leveraging data and innovation to reach hundreds of millions of people worldwide. BuzzFeed provides breaking news, original reporting, entertainment, and video across the social web to its global audience.

 

On June 24, 2021, 890, BuzzFeed, Merger Sub I, and Merger Sub II entered into the Merger Agreement. The Merger Agreement provides for, among other things, the following transactions at the closing: Merger Sub I will merge with and into BuzzFeed, with BuzzFeed as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly owned subsidiary of 890 (the “Merger”). Immediately following the Merger, BuzzFeed will merge with and into Merger Sub II (the “Second Merger,” together with the Merger the “Two-Step Merger”) with Merger Sub II being the surviving company of the second merger. Upon the consummation of the Business Combination, the new combined company will be renamed BuzzFeed, Inc.

 

CM Partners was formed on April 8, 2016 as a Delaware limited liability company for the purpose of acquiring 100% of Complex Media. Complex Media was incorporated on May 22, 2009 and is a publisher of original online media content targeting Millennial and Gen Z consumers. On March 27, 2021, BuzzFeed entered into an agreement to acquire 100% of the outstanding membership interests of CM Partners in exchange for approximately $200 million in cash and 10,000,000 shares of New BuzzFeed Class A common stock.

 

Accounting for the Transactions

 

This information should be read together with BuzzFeed, 890, and Complex Networks’ financial statements and related notes, and other financial information included elsewhere in this proxy statement/ prospectus.

 

The Two-Step Merger will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, 890 will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the reverse recapitalization will be treated as the equivalent of BuzzFeed issuing stock for the net assets of 890, accompanied by a recapitalization. The net assets of 890 will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse recapitalization will be those of BuzzFeed.

 

1 

 

 

The C Acquisition will be treated as a business combination under FASB ASC 805, and will be accounted for using the acquisition method of accounting. BuzzFeed will record the fair value of assets acquired and liabilities assumed from Complex Networks.

 

BuzzFeed has been determined to be the accounting acquirer of 890 and Complex Networks based on the following facts and circumstances:

 

BuzzFeed’s existing stockholders will own a majority of the outstanding shares of and hold a majority of the voting power in the combined entity under the no redemption and maximum redemption scenarios with over 94% of the voting interests in each scenario;

 

BuzzFeed will appoint the majority of the directors on the New BuzzFeed Board;

 

BuzzFeed’s existing management will comprise the majority of the management of New BuzzFeed;

 

BuzzFeed is the larger entity based on historical revenues and business operations and will comprise of the majority of the ongoing operations of New BuzzFeed; and

 

New BuzzFeed will assume BuzzFeed’s name.

 

The preponderance of evidence as described above is indicative that BuzzFeed is the accounting acquirer of 890 and Complex Networks.

 

Description of the Transactions

 

890 has agreed to pay approximately $1.2345 billion in aggregate consideration. As consideration, each BuzzFeed stockholder will have the right to receive shares of common stock of New BuzzFeed.

 

With respect to Series F Preferred Stock and Series G Preferred Stock (other than Excluded Shares and Dissenting Shares) held by BuzzFeed stockholders, such stockholders will receive: a number of shares of New BuzzFeed Class A common stock equal to the quotient, rounded to the tenth decimal place, obtained by dividing: (A) 30,880,000 shares of 890 Class A common stock by (B) the aggregate number of shares of Series F Preferred Stock and Series G Preferred Stock outstanding as of the effective time.

 

With respect to BuzzFeed Class A common stock and BuzzFeed preferred stock (other than Series F Preferred Stock, Series G Preferred Stock, BuzzFeed Restricted Stock Awards, Excluded Shares and Dissenting Shares) held by BuzzFeed stockholders, such stockholders will receive: a number of shares of New BuzzFeed Class A common stock equal to the quotient of: (A) the quotient, rounded to the tenth decimal place, obtained by dividing (a) (x) $1,234,500,000.00 minus (y) $308,800,000 by (b) the Aggregate Adjusted Company Share Amount (as defined herein and calculated in accordance with the Merger Agreement), divided by (B) $10.00.

 

With respect to BuzzFeed Class B common stock (other than BuzzFeed Restricted Stock Awards, Excluded Shares and Dissenting Shares) held by BuzzFeed stockholders, such stockholders will receive: a number of shares of New BuzzFeed Class B common stock equal to the quotient of: (A) the quotient, rounded to the tenth decimal place, obtained by dividing (a) (x) $1,234,500,000.00 minus (y) $308,800,000 by (a) the Aggregate Adjusted Company Share Amount (as defined herein and calculated in accordance with the Merger Agreement), divided by (B) $10.00.

 

With respect to BuzzFeed Class C common stock (other than BuzzFeed Restricted Stock Awards, Excluded Shares and Dissenting Shares) held by BuzzFeed stockholders, such stockholders will receive: a number of shares of New BuzzFeed Class C common stock equal to the quotient of: (A) the quotient, rounded to the tenth decimal place, obtained by dividing (a) (x) $1,234,500,000.00 minus (y) $308,800,000 by (b) the Aggregate Adjusted Company Share Amount (as defined herein and calculated in accordance with the Merger Agreement), divided by (B) $10.00.

 

Upon consummation of the Business Combination, all BuzzFeed Options, BuzzFeed Restricted Stock Awards, and BuzzFeed RSUs outstanding will automatically convert into New BuzzFeed Options, New BuzzFeed RSAs, and New BuzzFeed RSUs, respectively, based on the applicable exchange ratios as determined in accordance with the Merger Agreement. Each New BuzzFeed Option, New BuzzFeed RSA, and New BuzzFeed RSU will vest on the same schedule as the vesting schedule set forth in the respective BuzzFeed Option, BuzzFeed RSA, and BuzzFeed RSU. Continuous employment with or services provided to BuzzFeed or any of its subsidiaries will be credited to each holder for purposes of determining vesting.

 

2 

 

 

In connection with the execution of the Merger Agreement, Sponsor and 890’s directors and officers (the “Sponsor Agreement Parties”) entered into the Sponsor Agreement. The Sponsor Agreement sets forth the consent for the automatic conversion of the Founders’ 890 Class F common stock into 890’s Class A common stock on a one-for-one basis upon closing of the Transactions.

 

The RSU Modification

 

BuzzFeed has certain outstanding RSUs that vest based on both a liquidity and a service condition. The liquidity condition for 8,043,830 restricted stock units, (“Liquidity Condition 1 RSUs”), is satisfied upon the occurrence of a sale transaction (“Acquisition”) or the completion of an initial public offering. The Two-Step Merger will not result in the satisfaction of this liquidity condition as it does not meet the definition of an Acquisition per the award agreements. However, in the fourth quarter of 2021, BuzzFeed’s management team intends to ask its board of directors to waive the liquidity condition, contingent on the closing of the Business Combination, and permit the 8,043,830 Liquidity Condition 1 RSUs to vest upon completion of requisite service. The effect of this waiver (the “RSU Modification”) is presented below as a separate column to the unaudited pro forma condensed consolidated financial statements as “RSU Modification Adjustments”. If approved by the board of directors, we expect that the waiver of the liquidity condition for the Liquidity Condition 1 RSUs would represent a modification of the RSUs under ASC

 

718 and, accordingly, the fair value of the modified awards on the date of the modification would be recognized as stock-based compensation expense over the requisite service period, with a cumulative catch-up adjustment for service rendered to date.

 

Basis of Pro Forma Presentation

 

Pursuant to 890’s amended and restated certificate of incorporation, 890’s Public Stockholders may demand that 890 redeem their shares of Class A common stock for cash if the Business Combination is consummated, irrespective of whether they vote for or against the Business Combination. If a Public Stockholder properly demands redemption of their shares, 890 will redeem each share for cash equal to the Public Stockholder’s pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the Business Combination.

 

The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of cash redemptions of 890’s common stock:

 

Assuming No Redemptions: This presentation assumes that no 890 public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in 890’s trust account.

 

Assuming Maximum Redemptions: This presentation assumes that 890’s public stockholders holding 28,750,000 of 890’s public shares exercise their redemption rights and that such shares are redeemed for their pro rata share (approximately $10.00 per share) of the funds in 890’s trust account for aggregate redemption proceeds of $287.5 million.

 

The following summarizes the pro forma New BuzzFeed shares outstanding under the two scenarios:

 

   Assuming
No Redemptions
(Shares)
   %   Assuming
Maximum
Redemptions
(Shares) 
   % 
New BuzzFeed Class A shares issued to BuzzFeed stockholders  90,983,734   56.9%  90,983,734   69.3%
New BuzzFeed Class B shares issued to BuzzFeed stockholders   15,767,386   9.9%  15,767,386   12.0%
New BuzzFeed Class C shares issued to BuzzFeed stockholders  6,492,371   4.0%  6,492,371   5.0%
Total BuzzFeed stockholders  113,243,491   70.8%  113,243,491   86.3%

 

3 

 

 

   Assuming
No Redemptions
(Shares)
   %   Assuming
Maximum
Redemptions
(Shares) 
   % 
New BuzzFeed Class A shares issued to Complex Networks equityholders  10,000,000   6.3%  10,000,000   7.6%
New BuzzFeed Class A shares issued to 890 Public stockholders  28,750,000       28,750,000     
Less: shares redeemed         (28,750,000)    
Total public 890 shares  28,750,000   18.0%     %
New BuzzFeed Class A shares issued to Founders, Sponsor, and underwriters  7,965,000   4.9%  7,965,000   6.1%
Pro Forma New BuzzFeed Shares Outstanding  159,958,491   100.0%  131,208,491   100.0%

 

The actual results will be within the parameters described by the two scenarios. However, there can be no assurance regarding which scenario will be closest to the actual results. The table above excludes New BuzzFeed Options, New BuzzFeed RSAs, and New BuzzFeed RSUs expected to be issued upon conversion of outstanding BuzzFeed Options, BuzzFeed Restricted Stock Awards, and BuzzFeed RSUs upon consummation of the Business Combination.

 

The following unaudited pro forma condensed combined balance sheet as of September 30, 2021 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 are based on the historical financial statements of 890, BuzzFeed, and Complex Networks. The unaudited pro forma adjustments are based on information currently available. The assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

4 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

 

(in thousands)

 

    As of September 30, 2021                         As of September
30, 2021
            As of September 30,
2021
 
    BuzzFeed, Inc.
(Historical)
    890 5th Avenue
Partners, Inc.
(Historical)
    Complex
Networks
(Historical)
    Accounting
Policies and
Reclassification
Adjustments
(Note 2)
    Transaction
Accounting
Adjustments
(Assuming
No Redemptions)
(Note 3)
      RSU Modification
Adjustments
(Assuming No
Redemptions)
    Pro Forma
Combined
(Assuming
No Redemptions)
    Additional
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
      Pro Forma
Combined
(Assuming
Maximum
Redemptions)
 
Current Assets                                                            
Cash and cash equivalents   $ 145,597     $ 60     $ 4,796     -     $ 287,511   [A]   -      $ 347,421     $ (287,500 ) [I]   $ 59,921  
                          150,000   [B]                          
                          (40,747 ) [C]                          
                          (200,000 ) [M]                          
                          5,000   [J]                          
                          (4,796 ) [K]                          
                                                           
Restricted cash   -     -     -     -     -       -      -     -        -  
Accounts receivable, net   77,351     -     37,177     -     -       -      114,528     -        114,528  
Prepaid and other current assets   23,851     550     16,928     (14,149 )   (1,799 ) [C]   -      25,381             25,381  
Total Current Assets   246,799     610     58,901     (14,149 )   195,169       --     487,330     (287,500 )     199,830  
                                                           
Investments held in Trust Account   -     287,511     -     -     (287,511 ) [A]   -      -     -        -  
Property and equipment, net   22,875     -     -     -     -       -      22,875     -        22,875  
Capitalized software costs, net   16,586     -     -     -     -       -      16,586     -        16,586  
Intangible assets, net   19,139     -     61,427     -     58,873   [M]   -      139,439     -        139,439  
Goodwill, net   5,927     -     83,956     -     110,658   [M]   -      200,541     -        200,541  
Prepaid and other assets   18,506     -     1,824     14,149     (5,000 ) [J]   -      29,479       -          29,479  
Total Assets   $ 329,832     $ 288,121     $ 206,108     $ -     $ 72,189       $ -     $ 896,250     $ (287,500 )     $ 608,750  
                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY                                                          
Current Liabilities                                                          
Accounts payable   12,587     469     3,682     -     (1,045 ) [C]   -      15,693     -        15,693  
Accrued expenses   20,188     70     -     17,581     (919 ) [C]   -      36,920     -        36,920  
Accrued expenses and other liabilities   -     -     28,675     (28,675 )   -        -      -     -        -  
Advances from related party   -     -     -     -     -       -      -     -        -  
Franchise tax payable   -     150     -     (150 )   -       -      -     -        -  
Deferred rent   4,252     -     -     54     -       -      4,306     -        4,306  
Deferred revenue   1,503     -     13,461     -     -       -      14,964     -        14,964  
Accrued compensation   23,749     -     -     10,882     -       -      34,631     -        34,631  
Derivative liability   -     -     -     -     33,420   [B]   -      33,420     -        33,420  
Note payable   -     1,000     5,000           (5,000 ) [K]   -      1,000     -        1,000  
Other current liabilities   1,312     -     -     308     -       -      1,620     -        1,620  
Total Current Liabilities   63,591     1,689     50,818     -     26,456       -     142,554     -       142,554  
Deferred rent   13,634     -     -     439     -       -      14,073     -        14,073  
Debt   19,504     -           -     116,580   [B]   -      130,569     -        130,569  
                            (5,515 ) [C]                          
Other liabilities   3,781     -     600     2,264     -       -      6,645     -        6,645  
Warrant liabilities   -     12,214     -     -     -       -      12,214     -        12,214  
Deferred tax liabilities   -     -     5,828     -     (5,828 ) [M]   -      -     -        -  

 

5 

 

 

    As of September 30, 2021                         As of September 30,
2021
          As of September 30,
2021
 
    BuzzFeed, Inc
(Historical)
    890 5th Avenue
Partners,Inc
(Historical)
    Complex
Networks
(Historical)
    Accounting
Policies and
Reclassification
Adjustments
(Note 2)
    Transaction
Accounting
Adjustments
(Assuming
No Redemptions)
(Note 3)
      RSU Modification
Adjustments
(Assuming No
Redemptions)
    Pro Forma
Combined
(Assuming
No Redemptions)
    Additional
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
    Pro Forma
Combined
(Assuming
Maximum
Redemptions)
 
Long-term notes payable               -     -     -           -           -  
Long-term incentive plan, noncurrent   -     -     2,703     (2,703 )   -             -           -  
Total Liabilities   100,510     13,903     59,949     -     131,693       -     306,055     -     306,055  
                                                         
Commitments and Contingencies                                                        
Class A Common Stock subject to possible redemption, 27,393 shares at redemption value   -     287,500     -     -     (287,500 ) [F]   -      -     -      -  
Series A, convertible preferred stock   3,001     -     -     -     (3,001 )  [D]   -      -     -      -  
Series A-1, convertible preferred stock   4     -     -     -     (4 )  [D]   -      -     -      -  
Series B, convertible preferred stock   7,904     -     -     -     (7,904 )  [D]   -      -     -      -  
Series C, convertible preferred stock   15,434     -     -     -     (15,434 )  [D]   -      -     -      -  
Series D, convertible preferred stock   19,311     -     -     -     (19,311 )  [D]   -      -     -      -  
Series E, convertible preferred stock   49,646     -     -     -     (49,646 )  [D]   -      -     -      -  
Series F, convertible preferred shares   199,856     -     -     -     (199,856 )  [D]   -      -     -      -  
Series G, convertible preferred shares   199,681     -     -     -     (199,681 )  [D]   -      -     -      -  
Redeemable noncontrolling interest   1,570     -     -     -     -       -      1,570     -      1,570  
Stockholders' Equity                                                        
Class A Common stock   1     -     -     -     -       -      14     (3 ) [I] 11  
                            8   [D]                        
                            3   [F]                        
                            1   [G]                        
                            1   [M]                        
Class B Common stock   3     -     -     -     (1 )  [D]   -      2     -      2  
Class C Common stock   2     -     -     -     (1 )  [D]   -      1     -      1  
Class F Common stock         1           -     (1 ) [G]   -      -     -      -  
Preferred stock   -     -     -     -     -       -      -     -      -  
CM Partners, LLC members' interests   -     -     273,573     -     (273,777 ) [M]   -      -     -      -  
                            204   [K]                        
Additional paid-in capital   97,683     -     -     -     -       -      1,009,310     (287,497 ) [I] 721,813  
                          (27,364 ) [C]                        
                          522,987    [D]                        
                          (13,284 ) [E]                        
                          287,497   [F]                        
                          5,640   [H]                        
                            99,999   [M]                        
                            13,469   [L]   22,683   [N]                
Accumulated other comprehensive income (loss)   (3,098 )   -     -     -     -       -      (3,098 )   -      (3,098 )
Accumulated deficit   (362,553 )   (13,283 )   (127,414 )   -     (7,703 ) [C]   -      (418,481 )         (418,481 )
                            (28,156 ) [D]                        
                          13,284   [E]                        
                            (5,640 ) [H]                        
                          149,136   [M]                        
                            (13,469 ) [L]   (22,683 ) [N]              -  
Treasury stock   (820 )   -     -     -     -             (820 )   -      (820 )

 

6 

 

 

   As of September 30, 2021               As of September 30,
2021
       As of September 30,
2021
 
   BuzzFeed,Inc. (Historical)   890 5th Avenue Partners,Inc. (Historical)   Complex Networks (Historical)   Accounting Policies and Reclassification Adjustments
(Note 2)
   Transaction Accounting
Adjustments (Assuming No Redemptions)
(Note 3)
   RSU Modification Adjustments (Assuming No Redemptions)   Pro Forma
Combined
(Assuming No Redemptions)
   Additional Transaction Accounting Adjustments
(Assuming Maximum Redemptions)
   Pro Forma
Combined
(Assuming Maximum Redemptions)
 
Total Parent stockholders' equity   (268,782)   (13,282)   146,159               -    722,833               -    586,928    (287,500)   299,428 
Noncontrolling interest   1,697    -    -    -    -    -    1,697         1,697 
Total stockholders' equity   (267,085)   (13,282)   146,159    -    722,833    -    588,625    (287,500)   301,125 
TOTAL LIABILITIES AND EQUITY  $329,832   288,121   206,108    -   72,189    -   896,250   (287,500)  608,750 

 

7 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

 

(in thousands, except per share amounts)

 

   Nine Months Ended September 30, 2021                     Nine Months Ended
September 30, 2021
 
   BuzzFeed, Inc.
(Historical)
   890
5th Avenue
Partners, Inc.
 (Historical)
   Complex
Networks
(Historical)
   Accounting
Policies and
Reclassification
Adjustments
(Note 2)
   Transaction
Accounting
Adjustments
(Assuming
No and
Maximum
Redemptions)
(Note 3)
       RSU
Modification
Adjustments
(Assuming
No and
Maximum
Redemptions)
     Pro Forma
Combined
(Assuming
No and
Maximum
Redemptions)
 
Revenue  $251,848   $-   $84,256   $-    -        -      $ 336,104  
                                               
Cost and Expenses:                                              
Cost of revenue, excluding depreciation and amortization   135,903    -    41,500    1,199    -        685    [II]    179,287  
Sales and marketing   34,170    -    2,874    492    -        253    [II]    37,789  
General and administrative   65,274    2,318    14,800    34,561    -        636    [II]    117,589  
Research and development   19,285    -    -    -    -        487    [II]    19,772  
Depreciation and amortization   15,033    -    7,642    -    3,925    [FF]     -        26,600  
Employee related costs   -    -    36,252    (36,252)   -        -        -  
Administrative fee - related party   -    180    -    -    -        -        180  
Franchise tax expense   -    150    -    -    -        -        150  
                                               
Total costs and expenses   269,665    2,648    103,068    -    3,925        2,061        381,367  
                                               
Income (Loss) from operations   (17,817)   (2,648)   (18,812)   -    (3,925)       (2,061)       (45,263)  
                                               
Change in fair value of warrant liabilities   -    (807)   -    -    -        -        (807)  
Offering costs associated with issuance of public and private warrants   -    (232)   -    -    -        -        (232)  
Net gain from investments held in Trust Account   -    11    -    -    (11)   [BB]     -        -  
Other income,net   (2,278)   -    -    (58)   (12,722)   [CC]     -        (15,058)  
Interest expense   -    -    (58)   58    -        -        -  
Loss on disposition   (612)   -    -    -    -        -        (612)  
                                               
Income (loss) before income taxes   (20,707)   (3,676)   (18,870)   -    (16,658)       (2,061)       (61,972)  
                                               
Income tax provision (benefit)   (5,011)   -    (4,202)        5,617    [HH]     -        (3,596)  
                                               
Net income (loss)  $(15,696)  $(3,676)  $(14,668)  $-   $(22,275)      $(2,061)     $ (58,376)  
                                               
Net income (loss) attributable to the redeemable noncontrolling interest   212    -    -    -    -        -        212  
Net income (loss) attributable to noncontrolling interest   (173)   -    -    -    -        -        (173)  
                                               
Net Income (loss) attributable to BuzzFeed, Inc.  $(15,735)  $(3,676)  $(14,668)  $-   $(22,275)      $(2,061)     $ (58,415)  

 

8 

 

 

              Assuming No
Redemptions
 
Net (loss) income per common share - basic and diluted  (0.28)  (0.10)  -   (0.37)
Basic and diluted weighted average common shares outstanding  57,072   28,121   -   159,958 
                 
Net (loss) income per share, Class F common stock – basic and diluted      (0.10)        
Basic and diluted weighted average shares outstanding of Class F common stock      7,143         

 

   Assuming Maximum
Redemptions
 
Net loss per common share – basic and diluted  (0.45)
Basic and diluted weighted average common shares outstanding  131,208 

 

9 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

 

(in thousands, except per share amounts)

 

   Year ended
December 31, 2020
   Period from
September 9, 2020
(inception) to
December 31, 2020
   Year ended
December 31, 2020
                     Year ended
December 31, 2020
 
   BuzzFeed, Inc.
(Historical)
   890 5th Avenue
Partners, Inc.
 (Historical)
   Complex Networks
(Historical)
   Accounting
Policies and
Reclassification
Adjustments
(Note 2)
   Transaction
Accounting
Adjustments
(Assuming
No and
Maximum
Redemptions)
(Note 3)
      RSU
Modification
Adjustments
(Assuming
No and
Maximum
Redemptions)
      Pro Forma
Combined
(Assuming
No and
Maximum
Redemptions)
 
Revenue  $321,324   $-    125,044    -    -       -      $446,368 
                                          
Cost and Expenses:                                         
Cost of revenue, excluding depreciation and amortization   140,290    -    65,428    18,471    1,553    [EE]   5,609    [II]   231,351 
Sales and marketing   50,680    -    2,678    15,583    3,480    [EE]   3,064    [II]   75,485 
General and administrative   83,061    11    13,377    9,938    9,872    [AA]   4,380    [II]   134,086 
                      5,640    [DD]   -       - 
                       7,807    [EE]   -       - 
Research and development   17,669    -    -    -    628    [EE]   7,569    [II]   25,866 
Depreciation and amortization   17,486    -    9,684    -    4,333    [FF]   -       31,503 
Employee related costs   -    -    43,992    (43,992)   -       -       - 
                                        - 
Total costs and expenses   309,186    11    135,159    -    33,313       20,622       498,291 
                                          
Income (Loss) from operations   12,138    (11)   (10,115)   -    (33,313)      (20,622)      (51,923)
                                          
Offering costs associated with issuance of public and private warrants   -    -    -    -    -       -       - 
Other income,net   670    -    -    48    (1,581)   [AA]   -       (17,138)
                        (16,275)   [CC]             
Interest income   -    -    48    (48)   -       -       - 
Interest expense   -    -    -    -    -       -       - 
Loss on disposition   (711)   -    -    -    -       -       (711)
                                          
Income (loss) before income taxes   12,097    (11)   (10,067)   -    (51,169)      (20,622)      (69,772)
                                          
Income tax provision (benefit)   941    -    (3,077)   -    (18,645)   [GG]   -       (20,781)
                                          
Net income (loss)  $11,156   $(11)  $(6,990)  $-   $(32,524)     $(20,622)     $(48,991)
                                          
Net income (loss) attributable to the redeemable noncontrolling interest   820    -    -    -    -       -       820 
                                          
Net Income (loss) attributable to BuzzFeed, Inc.  $10,336   $(11)  $(6,990)  $-   $(32,524)     $(20,622)     $(49,811)

  

10 

 

  

             Assuming No
Redemptions
 
Net income (loss) per common share - basic and diluted    -   -    (0.31)
Basic and diluted weighted average common shares outstanding     39,027    6,250     159,958 

 

   Assuming
Maximum
Redemptions
 
Net loss per common share — basic and diluted  (0.38)
Basic and diluted weighted average common shares outstanding   131,208 

 

 

(1)The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 includes $25,289 of revenue earned by Complex Networks and $11,517 of expenses incurred by Complex Networks, included within cost of revenue, related to a contract with a related party. Revenue and expenses related to this contract are not expected to reoccur beyond 12 months after the C Acquisition.

 

11 

 

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Note 1 — Basis of Presentation

 

The Two-Step Merger will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, 890 will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Two-Step Merger will be treated as the equivalent of BuzzFeed issuing shares for the net assets of 890, accompanied by a recapitalization. The net assets of 890 will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Two-Step Merger will be those of BuzzFeed.

 

The C Acquisition will be considered a business combination under FASB ASC 805, and will be accounted for using the acquisition method of accounting. BuzzFeed will record the fair value of assets acquired and liabilities assumed from Complex Networks.

 

The determination of BuzzFeed being the accounting acquirer for the Two-Step Merger and C Acquisition was primarily based on evaluation of the following facts and circumstances: (i) BuzzFeed’s existing stockholders will own the majority of the shares and have the majority of the voting interests in New BuzzFeed under both the no redemption and maximum redemption scenarios with over 94% of the voting interests in each scenario; (ii) BuzzFeed will appoint the majority of the directors on the New BuzzFeed Board; (iii) BuzzFeed’s existing management will comprise the majority of the management of New BuzzFeed; (iv) BuzzFeed is the larger entity based on historical revenues and business operations and will comprise the majority of the ongoing operations of New BuzzFeed; and (v) New BuzzFeed will assume BuzzFeed’s name.

 

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 assumes that the Transactions and the RSU Modification occurred on September 30, 2021. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 present the pro forma effect of the Transactions and the RSU Modification as if it had been completed on January 1, 2020. These periods are presented on the basis of BuzzFeed being the accounting acquirer.

 

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 has been prepared using, and should be read in conjunction with, the following:

 

890’s unaudited condensed balance sheet as of September 30, 2021 and the related notes for the nine months ended September 30, 2021, included elsewhere in this proxy statement/prospectus;

 

BuzzFeed’s unaudited condensed consolidated balance sheet as of September 30, 2021 and the related notes for the nine months ended September 30, 2021, included elsewhere in this proxy statement/prospectus; and

 

Complex Networks’ unaudited condensed consolidated balance sheet as of September 30, 2021 and the related notes for the nine months ended September 30, 2021, included elsewhere in this proxy statement/prospectus.

 

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2021 has been prepared using, and should be read in conjunction, with the following:

 

890’s unaudited condensed statement of operations for the nine months ended September 30, 2021 and the related notes, included elsewhere in this proxy statement/prospectus;

 

BuzzFeed’s unaudited condensed consolidated statement of operations for the nine months ended September 30, 2021 and the related notes, included elsewhere in this proxy statement/prospectus; and

 

Complex Networks’ unaudited condensed consolidated statement of operations for the nine months ended September 30, 2021 and the related notes, included elsewhere in this proxy statement/prospectus.

 

12 

 

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 has been prepared using, and should be read in conjunction, with the following:

 

890’s statement of operations for the period from September 9, 2020 (inception) through December 31, 2020 and the related notes, included elsewhere in this proxy statement/prospectus;

 

BuzzFeed’s consolidated statement of operations for the year ended December 31, 2020 and the related notes, included elsewhere in this proxy statement/prospectus; and

 

Complex Networks’ consolidated statement of operations for the year ended December 31, 2020 and the related notes, included elsewhere in this proxy statement/prospectus.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments (“Transaction Accounting Adjustments” and “RSU Modification Adjustments”). As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The pro forma financial information reflects transaction-related adjustments management believes are necessary to present fairly BuzzFeed’s pro forma results of operations and financial position following the closing of the Two-Step Merger, C Acquisition, RSU Modification and related transactions as of and for the periods indicated. The related transaction accounting adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. 890 believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Two-Step Merger, C Acquisition, RSU Modification, and related transactions contemplated based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Transactions.

 

The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of New BuzzFeed. They should be read in conjunction with the audited financial statements and notes thereto of each of 890, BuzzFeed and Complex Networks included elsewhere in this proxy statement/prospectus.

 

Note 2 — Accounting Policies and Reclassifications

 

As part of the preparation of these unaudited pro forma condensed combined financial statements, certain reclassifications were made to align 890’s, and Complex Networks’ financial statement presentation to that of BuzzFeed, the accounting acquirer. Additionally, management has performed an initial review of the accounting policies of each entity to conform the accounting policies to those of BuzzFeed, the accounting acquirer. In doing so, management has not identified differences that would have a material impact on the unaudited pro forma combined financial information. Upon consummation of the Transactions, management will perform a comprehensive review of the three entities’ accounting policies and financial statements. As a result of the review, management may identify differences between the accounting policies of the entities and further reclassification adjustments which, when conformed, could have a material impact on the financial statements of New BuzzFeed.

 

Note 3 — Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Transactions and the RSU Modification and has been prepared for informational purposes only.

 

13 

 

 

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that directly reflect the accounting for the Transactions and RSU Modification.

 

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had New BuzzFeed filed consolidated income tax returns during the periods presented.

 

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of New BuzzFeed’s shares outstanding, assuming the Transactions and RSU Modification occurred on January 1, 2020.

 

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

The adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2021 are as follows:

 

(A)Reflects the reclassification of cash and cash equivalents held in 890’s trust account that becomes available upon completion of the Business Combination.

 

(B)Represents the proceeds from the issuance of $150.0 million of convertible notes in the Convertible Note Financing, including a derivative liability of approximately $33.4 million, based on commitments received.

 

(C)Reflects the transaction costs incurred by BuzzFeed and 890 including, but not limited to, advisory fees, legal fees and registration fees. This includes the recognition against additional paid-in capital of $27.4 million of direct and incremental costs incurred by BuzzFeed and 890 in connection with the consummation of the Two-Step Merger, the recognition against debt of $5.5 million of direct and incremental costs incurred by BuzzFeed and 890 in connection with the Convertible Note Financing, and the expensing and cash settlement of $6.1 million of certain transaction costs incurred by BuzzFeed and Complex Networks related to the C Acquisition and $1.6 million of direct and incremental transaction costs allocated to the derivative liability component of the Convertible Note Financing.

 

(D)Represents recapitalization of BuzzFeed’s equity, including:

 

Conversion of 3,175,773 shares of BuzzFeed Preferred A-1 stock and 500,000 shares of BuzzFeed Preferred A stock into 36,757,730 shares of BuzzFeed Class B common stock;

 

Conversion of 12,487,241 shares of BuzzFeed Class B common stock to an equivalent number of shares of BuzzFeed Class A common stock;

 

Issuance of 30,880,000 shares of New BuzzFeed Class A common stock in exchange for all outstanding shares of BuzzFeed Preferred F stock and all outstanding shares of BuzzFeed Preferred G stock;

 

Issuance of 60,103,734 shares of New BuzzFeed Class A common stock in exchange for all outstanding shares of BuzzFeed Class A common stock and BuzzFeed preferred stock (other than Series F Preferred Stock and Series G Preferred Stock).

 

Issuance of 15,767,386 shares of New BuzzFeed Class B common stock in exchange for all outstanding shares of BuzzFeed Class B common stock.

 

Issuance of 6,492,371 shares of New BuzzFeed Class C common stock in exchange for all outstanding shares of BuzzFeed Class C common stock.

 

(E)Reflects the reclassification of 890’s historical accumulated deficit to additional paid-in capital in connection with the Two-Step Merger.

 

(F)Represents the reclassification of historical 890’s Class A common stock subject to possible redemption from temporary equity into permanent equity.

 

(G)Represents the conversion of 890 Class F common stock to Class A common stock in connection with the Two-Step Merger.

 

14 

 

 

(H)Reflects the recognition of $5.6 million of stock-based compensation expense associated with the Escrow Agreement. Under the terms of the Escrow Agreement in the event the Transfer Date SPAC Share Price (as defined in the Escrow Agreement) is less than $12.50 per share on the Transfer Date (as defined in the Escrow Agreement) (the “Market Condition”), the escrow agent will transfer a number of Escrowed Shares equal to the Make Whole Shares (as defined in the Escrow Agreement) to NBCU, and the remainder, if any, to Mr. Peretti. If the Transfer Date SPAC Share Price is equal to or greater than $12.50 per share, all of the Escrowed Shares will be transferred to Mr. Peretti. The $5.6 million estimated fair value was estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the likelihood that the Market Condition will be satisfied. This equity award is accounted for as compensatory to the Chief Executive Officer. As there are no future service conditions, the estimated fair value of the award is recognized upon closing of the Two-Step Merger as a non-recurring expense.

 

(I)Reflects the maximum redemption of 28,750,000 public shares for aggregate redemption payments of $287.5 million allocated to Class A common stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10.00 per share.

 

(J)Represents the reclassification of the $5.0 million performance deposit placed in escrow associated with the acquisition of Complex Networks from prepaid and other assets to cash. Upon completion of the C Acquisition the deposit will be returned to BuzzFeed by the escrow agent.

 

(K)Represents the repayment of Complex Networks’ related party notes payable with cash on hand and forgiveness of the remaining amount upon closing of the C Acquisition.

 

(L)Represents incremental stock-based compensation expense associated with certain BuzzFeed RSUs that vest based on both a liquidity and a service condition. The liquidity condition for 9,124,000 restricted stock units, or Liquidity Condition 2 RSUs, is satisfied upon the occurrence of certain events, including a merger or acquisition or other business combination transaction involving the Company and a publicly traded special purpose acquisition company or other similar entity and, as a result, the liquidity condition for the Liquidity Condition 2 RSUs will be satisfied upon the completion of the Two-Step Merger. Upon closing of the Two-Step Merger, we expect to recognize approximately $13.5 million of incremental stock-based compensation expense associated with these restricted stock units, based on the number of restricted stock units outstanding and the requisite service completed at September 30, 2021, and assuming no forfeitures prior to closing of the Two-Step Merger. The actual incremental stock-based compensation expense that will be recorded upon closing of the Two-Step Merger will depend on the timing of closing and actual forfeitures. The liquidity events have not been deemed probable for expense recognition in the Unaudited Condensed Consolidated Statement of Operations.

 

Purchase Price Allocation Adjustments (PPA)

 

(M)The estimated purchase consideration is as follows (in thousands):

 

Estimated Consideration:    
Cash consideration(1)  $200,000 
Share consideration(2)   100,000 
Total estimated consideration  $300,000 

 

 

(1)Includes the estimated cash consideration of $200 million. This amount will be adjusted for estimated Closing Specified Liabilities as specified in the C Acquisition Purchase Agreement.

(2)Represents 10,000,000 shares of New BuzzFeed Class A common stock at an assumed price of $10.00 per share.

 

Under the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of Complex Networks are recorded at the acquisition date fair values. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the C Acquisition.

 

15 

 

 

For all assets acquired and liabilities assumed other than identified intangible assets and goodwill, unless otherwise noted, the carrying value was estimated to equal fair value. The final determination of the fair value of certain assets and liabilities will be completed within the one-year measurement period as required by FASB ASC 805. The size and breadth of the C Acquisition may necessitate the use of this measurement period to adequately analyze and assess a number of factors used in establishing the asset and liability fair values as of the acquisition date, including the significant contractual and operational factors underlying the developed technology and the assumptions underpinning the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values presented.

 

Accordingly, the pro forma purchase price allocation is subject to further adjustment as additional information becomes available and as additional analyses and final valuations are completed. There can be no assurances that these additional analyses and final valuations will not result in significant changes to the estimates of fair values set forth below.

 

The following table sets forth a preliminary allocation of the estimated consideration for the C Acquisition to the identifiable tangible and intangible assets acquired and liabilities assumed based on Complex Networks’ September 30, 2021 balance sheet, with the excess recorded as goodwill (in thousands):

 

Cash   - 
Accounts receivable    37,177 
Prepaid expenses and other current assets   2,779 
Intangible assets   120,300 
Other assets    15,973 
Total assets    176,229 
Accounts payable   3,682 
Accrued expenses    17,581 
Deferred rent   54 
Deferred revenue   13,461 
Accrued compensation    10,882 
Other current liabilities   158 
Deferred rent, noncurrent   439 
Deferred tax liabilities    21,722 
Other liabilities   2,864 
Total liabilities   70,843 
Net identifiable assets acquired (a)   105,386 
Estimated purchase consideration (b)   300,000 
Estimated goodwill (b) – (a)   194,614 

 

In accordance with FASB ASC 350, goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators are present. In the event management determines that the value of goodwill has become impaired, an accounting charge for the amount of impairment during the quarter in which the determination is made may be recognized. Goodwill recognized is not expected to be deductible for tax purposes.

 

Total consideration was calculated based on a $10.00 share price. In the event that the share price increases or decreases by 10%, the impact on total consideration and goodwill would be as follows (in thousands except for stock price):

 

Change in stock price  Stock Price   Estimated
Consideration
   Goodwill 
Decrease of 10%  $9.00   $290,000   $184,614 

 

Change in stock price  Stock Price   Estimated
Consideration
   Goodwill 
Increase of 10%  $11.00   $310,000   $204,614 

 

16 

 

 

The table below indicates the estimated fair value of each of the identifiable intangible assets (in thousands, except for useful life):

 

   

Preliminary
Estimated Asset
Fair Value

   

Weighted
Average
Useful Life
(Years)

    Pro Forma Amortization Expense  
            For the Nine Months
Ended September
 30, 2021
    For the Year Ended
December 31, 2020
 
Trademarks & tradenames     90,000       15       4,500       6,000  
Customer relationships     25,000       4       4,688       6,250  
Developed technology     5,300       3       1,325       1,767  

 

These preliminary estimates of fair value and estimated useful lives will likely differ from final amounts that will be calculated after completing a detailed valuation analysis, and the difference could be material relative to the preliminary values presented. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill of $12.0 million and annual amortization expense of approximately $1.4 million, assuming an overall weighted average useful life of 12.2 years.

 

Deferred tax liabilities were established based on the preliminary purchase price allocation resulting from the step up in fair value of intangible assets, using a pro forma blended statutory tax rate of 23.0% of the combined company. This estimate of deferred income tax liabilities is preliminary and is subject to change based upon the final determination of the fair value of assets acquired and liabilities assumed by jurisdiction.

 

The C Acquisition results in the recognition of deferred tax liabilities related primarily to amortizable intangible assets with no tax basis. The deferred tax amounts were determined based on an estimated tax rate of 23.0% based on a jurisdictional federal and state blended tax rate. Following the C Acquisition, BuzzFeed and Complex Networks will file a consolidated U.S. federal and various state tax returns. It is expected that the $21.7 million of net deferred tax liabilities recognized as a result of the transaction can be used as a source of future taxable income to support partial realizability of BuzzFeed’s deferred tax assets. The change in the deferred tax asset valuation allowance will be recognized as an income tax benefit and therefore is reflected as an adjustment to the accumulated deficit.

 

RSU Modification Adjustment

 

(N)Represents $22.7 million of incremental stock-based compensation expense associated with the Liquidity Condition 1 RSUs, assuming the BuzzFeed Board of Directors approved the waiver of the liquidity condition on January 1, 2020. We expect that the waiver of the liquidity condition for the Liquidity Condition 1 RSUs will represent a modification of the RSUs under ASC 718 and, accordingly, the fair value of the modified awards on the date of the modification would be recognized as stock-based compensation expense over the requisite service period, with a cumulative catch- up adjustment for service rendered to date. The incremental stock-based compensation expense reflected in the unaudited pro forma condensed combined balance sheet is based on the number of Liquidity Condition 1 RSUs outstanding and the requisite service completed at September 30, 2021, at an estimated fair value of $3.07 per RSU, and assuming no forfeitures prior to the waiver. The incremental stock-based compensation expense that would be recorded upon the occurrence of the waiver will depend on the timing of the waiver and actual forfeitures. The liquidity event has not been deemed probable for expense recognition in the Unaudited Condensed Consolidated Statement of Operations.

 

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Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 are as follows:

 

(AA)Reflects certain non-recurring transaction costs incurred by BuzzFeed, 890, and Complex Networks subsequent to September 30, 2021, principally related to the C Acquisition. A further $13.3 million of transaction costs are included in the historical statements of operations of BuzzFeed, 890, and Complex Networks for the nine months ended September 30, 2021 and are non-recurring in nature.

 

(BB)Reflects the elimination of 890’s historical net gain on investments earned on the Trust Account. (CC) Reflects the incremental interest expense related to the issuance of the convertible notes in the Convertible Note Financing.

 

(DD)Reflects the recognition of $5.6 million of stock-based compensation expense associated with the Escrow Agreement. This equity award is accounted for as compensatory to the Chief Executive Officer. As there are no future service conditions, the estimated fair value of the award is recognized upon closing of the Two-Step Merger as a non-recurring expense.

 

(EE)Represents incremental stock-based compensation expense associated with certain BuzzFeed RSUs that vest based on both a liquidity and a service condition. The liquidity condition for the 9,124,000 Liquidity Condition 2 RSUs is satisfied upon the occurrence of certain events, including a merger or acquisition or other business combination transaction involving the Company and a publicly traded special purpose acquisition company or other similar entity and, as a result, the liquidity condition for the Liquidity Condition 2 RSUs will be satisfied upon the completion of the Two-Step Merger. Upon closing of the Two-Step Merger, we expect to recognize approximately $13.5 million of incremental stock-based compensation expense associated with these restricted stock units, based on the number of restricted stock units outstanding and the requisite service completed at September 30, 2021, and assuming no forfeitures prior to closing of the Two-Step Merger. The actual incremental stock-based compensation expense that will be recorded upon closing of the Two-Step Merger will depend on the timing of closing and actual forfeitures. The liquidity events have not been deemed probable for expense recognition in the Unaudited Condensed Consolidated Statement of Operations.

 

Purchase Price Allocation Adjustments (PPA)

 

(FF)Reflects the incremental amortization expense recorded as a result of the fair value adjustment for intangible assets acquired in the C Acquisition.

 

(GG)Reflects the non-recurring income tax benefit related to the partial release of BuzzFeed’s deferred tax asset valuation allowance as described in Note (M) above. As New BuzzFeed is in a cumulative pro forma loss position and is not expected to have sufficient sources of taxable income to realize any further tax benefits, there are no further income tax effects estimated related to the other pro forma adjustments.

 

(HH)Represents the reduction of income tax benefit recognized from the combination of historical BuzzFeed’s and Complex Networks’ interim tax calculations including the effects of the Transactions.

 

RSU Modification Adjustment

 

(II)Represents incremental stock-based compensation expense associated with the Liquidity Condition 1 RSUs, assuming the BuzzFeed Board of Directors approved the waiver of the liquidity condition on January 1, 2020. We expect that the waiver of the liquidity condition for the Liquidity Condition 1 RSUs would represent a modification of the RSUs under ASC 718 and, accordingly, the fair value of the modified awards on the date of the modification will be recognized as stock-based compensation expense over the requisite service period, with a cumulative catch-up adjustment for service rendered to date. The incremental stock-based compensation expense reflected in the unaudited pro forma condensed combined statements of operations is based on the number of restricted stock units outstanding and the requisite service completed, at an estimated fair value of $3.07 per RSU, and assuming no forfeitures prior to the waiver. The incremental stock-based compensation expense that would be recorded upon the occurrence of the waiver will depend on the timing of the waiver and actual forfeitures. The liquidity event has not been deemed probable for expense recognition in the Unaudited Condensed Consolidated Statement of Operations.

 

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Loss per Share

 

Represents the net loss per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Transactions, assuming the shares were outstanding since January 1, 2020. As the Transactions, are being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable in connection with the Transactions have been outstanding for the entire period presented. If the maximum number of shares of common stock of 890 are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire periods.

 

The unaudited pro forma condensed combined financial information has been prepared assuming the no redemptions and maximum redemptions scenarios (in thousands, except per share amounts):

 

   Assuming No
Redemptions
   Assuming
Maximum
Redemptions
   Assuming No
Redemptions
   Assuming
Maximum
Redemptions
 
Pro Forma Basic and Diluted Earnings Per Share  Nine Months
Ended
September  30,
2021
   Nine Months
Ended
September 30,
2021
   Year Ended
December 31,
2020
   Year Ended
December 31,
2020
 
Pro Forma net income (loss) attributable to common stockholders  $(58,415)  $(58,415)  $(49,811)  $(49,811)
Weighted average shares outstanding, basic and diluted   159,958    131,208    159,958    131,208 
Basic and diluted net income (loss) per share of Class A, Class B, and Class C common stock  $(0.37)  $(0.45)  $(0.31)  $(0.38)
Pro Forma Weighted Average Shares – Basic and Diluted                    
Weighted average shares of Class A common stock outstanding, basic and diluted   137,699    108,949    137,699    108,949 
Weighted average shares of Class B common stock outstanding, basic and diluted   15,767    15,767    15,767    15,767 
Weighted average shares of Class C common stock outstanding, basic and diluted   6,492    6,492    6,492    6,492 
Pro Forma Weighted Average Shares – Basic and Diluted   159,958    131,208    159,958    131,208 

 

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