Item 1A. Risk Factors
Item 1A. Risk Factors.
There have been no material
changes from the risk factors previously disclosed in the Company’s final prospectus for the Initial Public Offering as filed with
the SEC on March 1, 2021, except for the below:
We recently re-evaluated
the accounting for our Warrants and determined that our Warrants will be accounted as a warrant liability, which may have an adverse effect
on the market price of our Class A ordinary shares and may make it more difficult for us to consummate an initial business combination.
On April 12, 2021, the
Staff of the SEC issued a statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by
Special Purpose Acquisition Companies.” In the statement, the SEC Staff, among other things, highlighted potential accounting implications
of certain terms that are common in warrants issued in connection with the initial public offerings of special purpose acquisition companies
such as us. As a result of the Staff statement and in light of evolving views as to certain provisions commonly included in warrants issued
by special purpose acquisition companies, we re-evaluated the accounting for the Warrants under ASC 815-40.
Based on such re-evaluation,
we determined that as of March 2, 2021, we account for 14,891,667 Warrants (the 8,625,000 Public Warrants included in the Units and the
6,266,667 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the
Warrants do not meet the criteria for equity treatment thereunder, each Warrant must be recorded as a liability. Accordingly, we re-classified
each of the Warrants as a liability at its fair value as determined by us based upon a valuation report obtained from an independent third
party valuation firm. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A ordinary
shares. In addition, potential targets may seek a blank check company that does not have warrants that are accounted for as a warrant
liability, which may make it more difficult for us to consummate an initial business combination with a target business.
We have identified
a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability
to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses
identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Quarterly Report,
we identified a material weakness in our internal control over financial reporting related to the accounting for a significant and unusual
transaction related to our Warrants. As a result of this material weakness, our management concluded that our internal control over financial
reporting was not effective as of March 31, 2021. This material weakness resulted in a material misstatement of our warrant liabilities,
change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures.
To respond to this material weakness, we have
devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over
financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance
these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our
financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents
and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications.
The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately
have the intended effects.
Any failure to maintain such internal control
could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our
financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements
are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares
are listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Failure
to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair
our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. Ineffective
internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our securities.
We can give no assurance that the measures we have taken and plan to
take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial
results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or
circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those
controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of
our financial statements.
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