Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENT

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FAIR VALUE MEASUREMENT
3 Months Ended
Mar. 31, 2022
FAIR VALUE MEASUREMENT  
FAIR VALUE MEASUREMENT

NOTE 5 – FAIR VALUE MEASUREMENT

On November 30, 2021, Kubient entered into and consummated an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and MediaCrossing Inc., a Delaware corporation (“MediaCrossing”), pursuant to which the Company acquired certain assets and liabilities that were critical to continue to operate the business of MediaCrossing for (i) $500,000 in cash and (ii) if the acquired business achieves certain milestones in 2022, up to 822,369 shares of the Company’s common stock, par value $0.00001 per share (the “Earnout Shares”) (the “Transaction”). The Earnout Shares had a fair value of $2.55 as of the acquisition date. The Earnout Shares were measured using a Monte Carlo simulation. Key assumptions used in the fair value assessment consisted of revenue projections (which were used to estimate the number of Earnout Shares issuable), discount rate and standard deviation. The fair value measurement of the contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect Kubient’s own assumptions in measuring fair value.

On March 31, 2022, the Company recomputed the fair value of its Earnout Shares as $26,719 using the Monte Carlo simulation. The Company recorded a gain on the change in fair value of the contingent consideration of $589,622 during the three months ended March 31, 2022.

The following table sets forth a summary of the changes in the fair value of Level 3 liabilities that are measured at fair value on a recurring basis:

Contingent Consideration

    

  

Beginning balance as of January 1, 2022

$

613,000

Change in fair value of contingent consideration

 

(589,622)

Ending balance as of March 31, 2022

$

23,378