such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the
registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash
consideration to offset the negative impact on the market price of our securities that is expected when the securities owned by our initial shareholders or their permitted transferees are registered for resale.
General Risk Factors
Our search for a business
combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and
equity markets.
The COVID-19 outbreak has resulted, and a significant outbreak of other infectious
diseases could result, in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and
adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential
investors or the target companys personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions
to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time,
our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability to consummate a transaction may be
dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and third-party
financing being unavailable on terms acceptable to us or at all.
Our warrants are accounted for as liabilities and the changes in value of our
warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the Division of Corporation Finance
and Acting Chief Accountant of the SEC issued a statement (the Statement) discussing the accounting implications of certain terms that are common in warrants issued by special purpose acquisition companies (SPACs).
Specifically, the Statement focused on certain settlement terms and provisions that are similar to those contained in the Warrant Agreement, dated October 20, 2020, between the Company and Continental Stock Transfer & Trust Company, a
New York Corporation, as warrant agent, entered into in connection with the Companys initial public offering (the IPO). In light of the Statement, the Companys management reevaluated the accounting treatment of (i) the
6,666,667 redeemable warrants (the Public Warrants) that were included in the units issued by the Company in its IPO and (ii) the 3,333,333 redeemable warrants (the Sponsor Warrants) that were issued to the
Companys sponsor and the 666,667 redeemable warrants (collectively with the Public Warrants and the Sponsor Warrants, the Warrants) that were issued to Cantor Fitzgerald & Co., in each case in a private placement that
closed concurrently with the closing of the IPO, and determined to classify the Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings. While the Company has not generated any operating
revenues to date and will not generate any operating revenues until after completion of its initial business combination, at the earliest, the change in fair value of the Warrants is a non-cash charge and will be reflected in the
Companys statement of operations.
On May 19, 2021, the Companys management, after consultation with the audit committee of the board of
directors of the Company (the Audit Committee), concluded that, in light of the Statement, it is appropriate to restate the Companys previously issued (1) audited balance sheet, dated October 23, 2020, included in the
Form 8-K that was filed on October 29, 2020, and (2) the Companys audited financial statements for the year ended December 31, 2020, and for the period from August 12, 2020 (inception) through December 31,
2020, included in the Annual Report on Form 10-K that was filed on March 31, 2021 (the Relevant Periods). In light of such restatement, such audited financial statements should no longer be relied upon.
Historically, the warrants were reflected as a component of equity as opposed to liabilities on the balance sheets and the statements of operations did not
include the subsequent non-cash changes in estimated fair value of the warrants, based on our application of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 815-40, Derivatives and
Hedging, Contracts in Entitys Own Equity (ASC 815-40). The views expressed in the Statement were not consistent with the Companys historical interpretation of the specific provisions within its warrant agreement and the
Companys application of ASC 815-40 to the warrant agreement. We reassessed our accounting for the warrants issued on October 23, 2020, in light of the SEC Staffs published views. Based on this reassessment, we determined that the
warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in our Statement of Operations each reporting period.
In this Amendment No. 1 to Annual Report on Form 10-K, we reached a determination to restate the previously issued Form 10-K to correct the accounting
treatment for the Companys warrants.
In this Amendment No. 1 to Annual Report on Form 10-K, we reached a determination to restate the Annual
Report on Form 10-K that was filed on March 31, 2021. See Explanatory Note above for further information. In addition, in connection therewith, management has concluded that the Companys disclosure controls and procedures were not
effective as of December 31, 2020. See Item 9A: Controls and Procedures. As a result, we have incurred unanticipated costs for accounting and legal fees in connection with or related to the restatement, and may become subject to
additional risks and uncertainties related to the restatement, such as a negative impact on investor confidence in the accuracy of our financial disclosures (or in SPACs or former SPAC companies in general), and may raise reputational risks for our
business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTY
We maintain our principal executive offices at 660 Steamboat Rd., Greenwich, CT 06830. This space is being provided to us by Sarissa Capital
Acquisition Sponsor LLC, our sponsor, for a monthly fee of $10,000. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations.
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