Item 4.02 Non-Reliance on Previously Issued Financial Statement or Related Audit
Report or Completed Interim Review.
(a) On April 12, 2021, the staff of the SEC issued a new Staff Statement on
Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies ("SPACs") (the "SEC Staff Statement"). The SEC Staff
Statement addresses certain accounting and reporting considerations related to
warrants. In the SEC Staff Statement, 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 equity.
The warrant agreement governing certain warrants issued by Natural Order
Acquisition Corp (the "Company") includes a provision that provides for
potential changes to the settlement amounts dependent on the characteristics of
the holder of the warrant. Upon review of the SEC Staff Statement, the Company's
management further evaluated the warrants under Accounting Standards
Codification ("ASC") Subtopic 815-40, Contracts in Entity's Own Equity. ASC
Section 815-40-15 addresses equity versus liability treatment and classification
of equity-linked financial instruments, including warrants, and states that a
warrant may be classified as a component of equity only if, among other things,
the warrant is indexed to the issuer's common stock. Under ASC Section
815-40-15, a warrant is not indexed to the issuer's common stock if the terms of
the warrant require an adjustment to the exercise price upon a specified event
and that event is not an input to the fair value of the warrant.
In light of that new SEC Staff Statement, after discussion and evaluation,
including with our independent registered public accounting firm, the Audit
Committee of our Board of Directors (the "Audit Committee"), determined that
6,800,000 warrants that were issued in a private placement (the "Private
Warrants") should be presented as liabilities with subsequent fair value
remeasurement. This conclusion results from the determination that the provision
that provides for potential changes to the settlement amount based upon the
holder of the warrant fails the indexation guidance of ASC 815-40-15, because
the holder is not an input into the determination of fair value of the warrant.
As a result of the foregoing, on May 12, 2021, the Audit Committee concluded, in
consultation with the Company's management, that its previously issued Financial
Statements as of December 31, 2020, and the period from August 10, 2020 (date of
inception) through December 31, 2020 (the "Affected Periods") should no longer
be relied upon.
As a result, investors, analysts and other persons should not rely upon the
Company's previously released financial statements and other financial data for
the Affected Periods. Similarly, the related press releases, Report of
Independent Registered Public Accounting Firm on the financial statements for
the Affected Periods, and the stockholder communications, investor presentations
or other communications describing relevant portions of our financial statements
for the Affected Periods that need to be restated should no longer be relied
upon. The Company will, as soon as practicable, file Amendment No. 1 to its
Annual Report on Form 10-K for the fiscal period ended December 31, 2020 that
restates our audited financial statements as of, and for the period from August
10, 2020 (date of inception) to December 31, 2020.
These restatements result in non-cash, non-operating financial statement
corrections and will have no impact on the Company's current or previously
reported cash position, operating expenses or total cash flows.
The Audit Committee and management have discussed the matters disclosed pursuant
to this Item 4.02(a) with the Company's independent registered public accounting
firm.
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