Item 4.02 Non-Reliance on Previously Issued Financial Statements or Related
Audit Report or Completed Interim Report.
(a)
On April 12, 2021, the Acting Director of the Division of Corporation Finance
and Acting Chief Accountant of the U.S. Securities and Exchange Commission (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 Sarissa Capital
Acquisition Corp. (the "Company") and Continental Stock Transfer & Trust
Company, a New York Corporation, as warrant agent, entered into in connection
with the Company's initial public offering (the "IPO"). In light of the
Statement, the Company's 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 Company's 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 Company's statement of
operations.
On May 19, 2021, the Company's 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
Company's 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
Company's 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. The Company will file an amendment
to its Annual Report on Form 10-K as of December 31, 2020, which will include
the restated audited financial statements for the Relevant Periods. Authorized
officers of the Company, as well as the Audit Committee, discussed with
WithumSmith+Brown, PC, the Company's independent registered public accounting
firm, the matters disclosed pursuant to this Item 4.02(a).
The Company has determined that, unless the Warrant Agreement is amended in
accordance with the terms thereof, it expects to reflect the Warrants as
liabilities at fair value at the end of each accounting period and reflect a
non-cash charge related to the change in fair value of the Warrants from the
beginning of each accounting period to the end of each accounting period. This
accounting treatment may have an adverse impact on the Company's results of
operations.
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