Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
As of the date of this Quarterly Report on Form
10-Q, there have been no material changes to the risk factors disclosed in our final prospectus filed with the SEC on March 18,
2021, our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 and our Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2021, except as described below.
Unless specifically stated, this Quarterly Report
does not contain the risks associated with the proposed Obagi and Milk Business Combinations.
We have identified material weaknesses in our
internal control over financial reporting as of September 30, 2021. If we are unable to develop and maintain an effective system of internal
control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely
affect investor confidence in us and materially and adversely affect our business and operating results.
In connection with the preparation of the Company’s
financial statements as of September 30, 2021, the Company reevaluated the classification of the Class A ordinary shares subject to possible
redemption. After consultation with our independent registered public accounting firm, our management and our audit committee concluded
that the previously issued financial statements as of March 18, 2021, March 31, 2021 and June 30, 2021 and for the periods from December
8, 2020 (inception) through January 12, 2021, from January 1, 2021 through March 31, 2021, and the three months and six months ended June
30, 2021 (the “Relevant Periods”) should be restated to report all Class A ordinary shares subject to possible redemption
as temporary equity.
As described elsewhere in this Quarterly Report on
Form 10-Q, we identified a material weakness in our internal control over financial reporting related to the accounting for the Company’s
Class A ordinary shares subject to possible redemption. 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 and corrected on a timely basis.
As a result of this material weakness, and the material
weakness related to the reclassification of our warrants and other accounting matters which resulted in the restatement of our audited
opening balance sheet as of March 18, 2021, our management has concluded that our internal control over financial reporting was not effective
as of September 30, 2021. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We
have taken a number of measures to remediate the material weaknesses, and continue to evaluate steps to remediate the material weaknesses.
However, these remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects. If we are unable to remediate our material weaknesses in a timely manner or we identify additional material
weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial
information. If our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by Nasdaq,
the SEC or other regulatory authorities. Failure to timely file would 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. If any of these events were to occur, it could have a material adverse effect on our business.
In addition, the existence of material weaknesses
or a significant deficiency in internal control over financial reporting could adversely affect our reputation or investor perceptions
of us, which could have a negative effect on the trading price of our securities.
We can provide no assurance that the measures we have
taken and plan to take in the future will remediate the material weaknesses 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. 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.
We may face litigation and other risks as a
result of the material weaknesses in our internal control over financial reporting.
As a result of such material weaknesses, the changes
in accounting for the warrants and for Class A ordinary shares subject to redemption, and other matters raised or that may in the future
be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal
and state securities laws, contractual claims or other claims arising from the material weaknesses in our internal control over financial
reporting and the preparation of our financial statements. As of the date of this Quarterly Report on Form 10-Q, we have no knowledge
of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future.
Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations
and financial condition or our ability to complete a business combination.
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