Quarterly report pursuant to Section 13 or 15(d)

Restatement of Previously Issued Financial Statements

v3.21.1
Restatement of Previously Issued Financial Statements
3 Months Ended
Dec. 31, 2020
Condensed Financial Information Disclosure [Abstract]  
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS


The Company previously accounted for its outstanding Public Warrants (as defined in Note 4) and Private Placement Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In addition, the warrant agreement includes a provision that in the event of a tender offer or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of shares, all holders of the Warrants would be entitled to receive cash for their Warrants (the “tender offer provision”).


On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement.


In further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC  815-40 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC 815-40, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants are not indexed to the Company’s ordinary shares in the manner contemplated by ASC 815-40 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the tender offer provision fails the “classified in shareholders’ equity” criteria as contemplated by ASC 815-40.


As a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statements. Under this accounting treatment, the Company is required to measure the fair value of the Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.


The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported investments held in trust, operating expenses or cash.


The table below summarizes the effects of the restatement on the financial statements for all periods being restated:


    As
Previously
Reported
    Adjustments     As
Restated
 
Balance sheet as of December 31, 2020 (unaudited)                        
Warrant Liabilities   $     $ 31,375,000     $ 31,375,000  
Ordinary Shares Subject to Possible Redemption     197,029,190       (31,375,000 )     165,654,190  
Ordinary Shares     530       313       843  
Additional Paid-in Capital     4,716,058       18,924,687       23,640,745  
Retained Earnings (Accumulated Deficit)     283,420       (18,925,000 )     (18,641,580 )
                         
Statement of Operations for the Three Months Ended December 31, 2020                        
Change in fair value of warrant liabilities   $     $ (5,875,000 )   $ (5,875,000 )
Net loss     (201,872 )     (5,875,000 )     (6,076,872 )
                         
Cash Flow Statement for the Period from February 14, 2020 (inception) to December 31, 2020 (audited)                        
Net loss   $ (201,872 )   $ (5,875,000 )   $ (6,076,872 )
Change in fair value of warrant liabilities           5,875,000       5,875,000  
Change in value of ordinary shares subject to possible redemption     (201,870 )     (5,875,000 )     (6,076,870 )