Item 1A. Risk Factors
Item 1A. Risk Factors.
There have been no material
changes from the risk factors previously disclosed in the Company’s most recent prospectus for the Initial Public Offering as filed
with the SEC on February 19, 2021. In addition, we may be subject to the following
risk in connection with the accounting treatment of our warrants and FPS:
Our warrants and the FPS are accounted
for as liabilities and the changes in value of our warrants and the FPS could have a material effect on our financial results.
On
April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled
“Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)”
(the “SEC Staff Statement”), wherein the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants
may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to being treated as equity. Specifically,
the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination,
which terms are similar to those contained in the warrant agreement governing our warrants and the warrants to be issued pursuant to
the FPA. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our warrants and the FPS, and pursuant to
the guidance in ASC 815, Derivatives and Hedging (“ASC 815”), determined the warrants and the FPS should be classified
as derivative liabilities measured at fair value on our balance sheet, with any changes in fair value to be reported each period in earnings
on our statement of operations.
As a result of the recurring
fair value measurement of our warrants and the FPS and any subsequent changes in fair value from a prior period, our results of operations
in our financial statements may fluctuate quarterly based on factors which are outside of our control. Due to this recurring fair value
measurement, we expect that we will recognize non-cash gains or losses on our warrants and the FPS each reporting period and that the
amount of such gains or losses could be material.
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