Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Historically, a portion of the Class A ordinary shares of BCLS Acquisition Corp.
(the "Company") subject to possible redemption was classified as permanent
equity on the basis that the Company will not redeem its Class A ordinary shares
in an amount that would cause its net tangible assets to be less than
$5,000,001, as required by its amended and restated memorandum and articles of
association. Previously, the Company did not consider redeemable stock
classified as temporary equity as part of net tangible assets. Pursuant to the
Company's re-evaluation of the application of ASC 480-10-S99-3A to its
accounting classification of Class A ordinary shares, the Company's management
has determined that all of the Class A ordinary shares subject to possible
redemption should be reclassified as temporary equity.
As a result, the Company's management has corrected the error by reclassifying
all Class A ordinary shares subject to possible redemption as temporary equity.
On November 12, 2021, the Company filed its Form 10-Q for the quarterly period
ending September 30, 2021 (the "Q3 Form 10-Q"), which included a Note 2,
Revision to Previously Reported Financial Statements ("Note 2") that describes a
revision to the Company's classification of its Class A ordinary shares subject
to possible redemption sold in the Company's initial public offering ("Initial
Public Offering") on October 26, 2020. The reclassification resulted in an
adjustment to the initial carrying value of the Class A ordinary shares subject
to possible redemption with the offset recorded to additional paid-in capital
(to the extent available), accumulated deficit and Class A ordinary shares. In
connection with the change in presentation for the Class A ordinary shares
subject to possible redemption, the Company determined that it should revise its
earnings per share calculation to allocate income and losses shared pro rata
between the two classes of shares. This presentation contemplates a business
combination as the most likely outcome, in which case both classes of shares
share pro rata in the income and losses of the Company. The Company determined
the changes were not qualitatively material to the Company's previously issued
financial statements and did not restate its financial statements. Instead, the
Company revised its previously filed financial statements in Note 2 to its Q3
Form 10-Q.
However, although the qualitative factors that management assessed tended to
support a conclusion that the misstatements were not material, subsequently
management determined that the qualitative and quantitative factors support a
conclusion that the misstatements are material on a quantitative basis.
Management thus concluded that the misstatement was of such magnitude that it is
probable that the judgment of a reasonable person relying upon the financial
statements would have been influenced by the inclusion or correction of the
foregoing items. As such, upon further consideration of the change, the Company
determined the change in classification of the Class A ordinary shares subject
to possible redemption and change to its presentation of earnings per share is
material quantitatively and it should restate its previously issued financial
statements.
Therefore, on December 8, 2021, the Company's management and the audit committee
of the Company's board of directors (the "Audit Committee") concluded that the
Company's previously issued (i) audited balance sheet as of October 26, 2020
(the "Post IPO Balance Sheet"), as filed with the SEC on October 30, 2020, (ii)
audited financial statements included in the Annual Report on Form 10-K of the
Company for the period ended December 31, 2020, as filed with the SEC on
March 19, 2021 (the "Form 10-K"); (iii) unaudited condensed financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021, filed with the SEC on May 14, 2021; and (v) unaudited
condensed financial statements included in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on
August 12, 2021 (collectively, the "Affected Periods"), should be restated to
report all Class A ordinary shares subject to possible redemption as temporary
equity and should no longer be relied upon. As such, the Company will restate
its financial statements for the Affected Periods in an Amendment No. 1 to the
Form 10-K for the Post IPO Balance Sheet and the Company's audited financial
statements included in the Form 10-K. The unaudited condensed financial
statements for the quarterly periods ended March 31, 2021 and June 30, 2021 will
be restated in an Amendment No. 1 to the Q3 Form 10-Q, to be filed with the SEC
(the "Amended Q3 Form 10-Q/A").
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in its trust account established in connection with
the Initial Public Offering (the "Trust Account").
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After re-evaluation, the Company's management has concluded that in light of the
errors described above, a material weakness existed in the Company's internal
control over financial reporting during the Affected Periods and that the
Company's disclosure controls and procedures were not effective. The Company's
remediation plan with respect to such material weakness will be described in
more detail in Item 4 of Part 1 to the Amended Q3 Form 10-Q/A.
The Audit Committee and the Company's management have discussed the matters
disclosed pursuant to this Item 4.02(a) with the Company's independent
registered public accounting firm, WithumSmith+Brown, PC.
Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. Certain of these forward-looking statements can
be identified by the use of words such as "believes," "expects," "intends,"
"plans," "estimates," "assumes," "may," "should," "will," "seeks," or other
similar expressions. Such statements may include, but are not limited to,
statements regarding the impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. These statements are based on current
expectations on the date of this Current Report on Form 8-K and involve a number
of risks and uncertainties that may cause actual results to differ
significantly. The Company does not assume any obligation to update or revise
any such forward-looking statements, whether as the result of new developments
or otherwise. Readers are cautioned not to put undue reliance on forward-looking
statements.
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