Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
(a) On April 12, 2021, the staff (the "Staff") of the Securities and Exchange
Commission (the "SEC") issued a statement entitled "Staff Statement on
Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies ("SPACs")." In the statement, the Staff, among other
things, highlighted potential accounting implications of certain terms that are
common in warrants issued in connection with the initial public offerings of
SPACs such as DFP Healthcare Acquisitions Corp. (the "Company" or "DFP").
The warrant agreement governing the warrants 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 statement by the SEC Staff, 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. Based on
management's evaluation, the Company's audit committee (the "Audit Committee"),
in consultation with management concluded that the Company's warrants are not
indexed to the Company's common stock in the manner contemplated by ASC Section
815-40-15 because the characteristics of the holder of the instrument is not an
input into the pricing of a fixed-for-fixed option on equity shares.
On May 14, 2021, the Audit Committee of the Company, in consultation with its
management, concluded that the Company's (i) previously issued audited balance
sheet dated as of March 13, 2020 which was related to its initial public
offering, (ii) unaudited interim financial statements as of and for the
quarterly periods ended March 31, 2020, June 30, 2020 and September 30, 2020, as
reported in the Company's Quarterly Reports on Form 10-Q filed with the SEC on
May 8, 2020, August 13, 2020 and November 13, 2020, respectively, and (iii)
audited financial statements as of December 31, 2020 and for the period from
November 1, 2019 (inception) through December 31, 2020 as reported in the
Company's Annual Report on Form 10-K filed with the SEC on March 30, 2021 (the
"Relevant Periods") included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2020 (the "Annual Report") should no longer be relied
upon and that it is appropriate to restate the Annual Report. The Company will
file an amendment to the Annual Report, which will include the restated audited
financial statements for the Relevant Periods, as soon as those audited
financial statements are available.
As a result, the Company today is announcing that it will restate its historical
financial results for the Non-Reliance Periods, in each case to reflect the
change in accounting treatment (the "Restatement").
The Company's prior accounting for the warrants as components of equity instead
of as derivative liabilities did not have any effect on the Company's previously
reported operating expenses, cash flows or cash or cash equivalents.
The Audit Committee and management have discussed the matters disclosed pursuant
to this Item 4.02(a) with the Company's independent accountant.
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