Item 4.02 Non-Reliance on Previously Issued Financial Statements or Related
Audit Report or Completed Interim Report.
On April 12, 2021, the Acting Director of the Division of Corporation Finance
and Acting Chief Accountant of the Securities and Exchange Commission ("SEC")
together issued a statement regarding the accounting and reporting
considerations for warrants issued by special purpose acquisition companies
entitled "Staff Statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies ("SPACs")" (the "SEC
Statement"). Specifically, the SEC Statement focused on certain settlement terms
and provisions related to certain tender offers following a business
combination, which terms are similar to those contained in the warrant
agreement, dated as of May 20, 2019, between GX Acquisition Corp. ("GX" or the
"Company") and Continental Stock Transfer & Trust Company, a New York
corporation, as warrant agent. As a result of the SEC Statement, the Company
reevaluated the accounting treatment of (i) the 14,375,000 redeemable warrants
(the "Public Warrants") that were included in the units issued by the Company in
its initial public offering (the "IPO") and (ii) the 7,000,000 redeemable
warrants (together with the Public Warrants, the "Warrants") that were issued to
the Company's sponsor 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 April 28, 2021, after consultation with Marcum LLP, the Company's independent
registered public accounting firm (the "Independent Accountants"), the Company's
management and the Audit Committee of the Company's Board of Directors (the
"Audit Committee") concluded that, in light of the SEC Statement, it is
appropriate to restate the Company's previously issued audited financial
statements as of December 31, 2020 and 2019 and for the fiscal years ended
December 31, 2020 and 2019 (the "Relevant Periods"). Considering 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.
Going forward, unless we amend the terms of our warrant agreement, we expect to
continue to classify our warrants as a liabilities, which would require us to
incur the cost of measuring the fair value of the warrant liabilities, and which
may have an adverse effect on our results of operations. In addition, the
Company's management and audit committee are of the view that the foregoing
proposed changes to its previously issued financial statements will not have any
impact on the Company's trust account or disclosure related thereto.
IMPORTANT LEGAL INFORMATION
Additional Information and Where to Find It
This report relates to a proposed transaction between Celularity Inc.
("Celularity") and GX. This report does not constitute an offer to sell or
exchange, or the solicitation of an offer to buy or exchange, any securities,
nor shall there be any sale of securities in any jurisdiction in which such
offer, sale or exchange would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the
transaction, GX filed a registration statement on Form S-4 with the SEC on
January 25, 2021 (as amended, the "Form S-4"). The Form S-4 includes a document
that serves as a prospectus and a proxy statement of GX, referred to as a proxy
statement/prospectus. The proxy statement/prospectus will be sent to all GX
stockholders. GX also will file other documents regarding the proposed
transaction with the SEC. Before making any voting decision, investors and
security holders of GX are urged to read the Form S-4, the proxy
statement/prospectus and all other relevant documents filed or that will be
filed with the SEC in connection with the proposed transaction as they become
available because they will contain important information about the proposed
transaction.
Stockholders may also obtain a copy of the preliminary proxy
statement/prospectus or, once available, the definitive proxy
statement/prospectus, as well as other documents filed with the SEC regarding
the proposed transaction and other documents filed with the SEC by GX, without
charge, at the SEC website located at www.sec.gov or by directing a request to
GX, 1325 Avenue of the Americas, 25th Floor, New York, NY 10019.
Participants in Solicitation
GX and Celularity and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from GX's stockholders
in connection with the proposed transaction. A list of the names of such
directors and executive officers and information regarding their interests in
the business combination is contained in the proxy statement/prospectus. You may
obtain free copies of these documents as described in the preceding paragraph.
Cautionary Statement Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
the federal securities laws with respect to the proposed transaction between
Celularity and GX. These forward-looking statements generally are identified by
the words "believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions.
Forward-looking statements are predictions, projections and other statements
about future events that are based on current expectations and assumptions and,
as a result, are subject to risks and uncertainties. Many factors could cause
actual future events to differ materially from the forward-looking statements in
this document, including but not limited to: (i) the risk that the transaction
may not be completed in a timely manner or at all, which may adversely affect
the price of GX's securities, (ii) the risk that the transaction may not be
completed by GX's business combination deadline and the potential failure to
obtain an extension of the business combination deadline if sought by GX, (iii)
the failure to satisfy the conditions to the consummation of the transaction,
including the adoption of the Merger Agreement and Plan of Reorganization, by
and between GX, Celularity, Alpha First Merger Sub, Inc., a Delaware
corporation, and Alpha Second Merger Sub, LLC, a Delaware limited liability
company, dated as of January 8, 2021 (as it may be amended, the "Merger
Agreement") by the stockholders of GX, the satisfaction of the minimum trust
account amount following redemptions by GX's public stockholders and the receipt
of certain governmental and regulatory approvals, (iv) the lack of a third party
valuation in determining whether or not to pursue the proposed transaction, (v)
the inability to complete the investments described above, (vi) the occurrence
of any event, change or other circumstance that could give rise to the
termination of the Merger Agreement, (vii) the effect of the announcement or
pendency of the transaction on Celularity's business relationships, operating
results, and business generally, (viii) risks that the proposed transaction
disrupts current plans and operations of Celularity and potential difficulties
in Celularity employee retention as a result of the transaction, (ix) the
outcome of any legal proceedings that may be instituted against Celularity or
against GX related to the Merger Agreement or the proposed transaction, (x) the
ability to maintain the listing of GX's securities on a national securities
exchange, (xi) the price of GX's securities may be volatile due to a variety of
factors, including changes in the competitive and highly regulated industries in
which GX plans to operate or Celularity operates, variations in operating
performance across competitors, changes in laws and regulations affecting GX's
or Celularity's business and changes in the combined capital structure, (xii)
the ability to implement business plans, forecasts, and other expectations after
the completion of the proposed transaction, and identify and realize additional
opportunities, and (xiii) the risk of downturns and a changing regulatory
landscape in the highly competitive industry. The foregoing list of factors is
not exhaustive. You should carefully consider the foregoing factors and the
other risks and uncertainties described in the "Risk Factors" section of GX's
Annual Report on Form 10-K, as it may be amended, the Form S-4 discussed above,
as it may be further amended, and other documents filed by GX from time to time
with the SEC. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ materially
from those contained in the forward-looking statements. Forward-looking
statements speak only as of the date they are made. Readers are cautioned not to
put undue reliance on forward-looking statements, and Celularity and GX assume
no obligation and do not intend to update or revise these forward-looking
statements, whether as a result of new information, future events, or otherwise.
Neither Celularity nor GX gives any assurance that either Celularity or GX, or
the combined company, will achieve its expectations.
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