Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 4, 2021, Medicus Sciences Acquisition Corp. (the "Company") filed
its Quarterly Report on Form 10-Q for the quarterly period ended September 30,
2021 (the "Q3 Form 10-Q"), which included in Note 2, Revision of Previously
Issued Financial Statements ("Note 2"), a discussion of the revision to a
portion of the Company's previously issued financial statements for the
classification of its Class A ordinary shares subject to redemption issued as
part of the units sold in the Company's initial public offering ("IPO") on
February 18, 2021. As described in Note 2, upon its IPO, the Company classified
a portion of the Class A ordinary shares subject to redemption as permanent
equity to maintain net tangible assets greater than $5,000,000 on the basis that
the Company will consummate its initial business combination only if the Company
has net tangible assets of at least $5,000,001. The Company's management
re-evaluated the conclusion and determined that the Class A ordinary shares
subject to redemption included certain provisions that require classification of
the Class A ordinary shares subject to redemption should be treated as temporary
equity regardless of the minimum net tangible assets required to complete the
Company's initial business combination. As a result, management corrected the
error by revising all Class A ordinary shares subject to redemption as temporary
equity. This 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.
As described above, originally the Company determined the changes were not
qualitatively material to the Company's previously issued financial statements
and revised its previously financial statements in Note 2 in its Q3 Form 10-Q.
However, upon further consideration of the material nature of the changes, the
Company determined the change in classification of the Class A ordinary shares
subject to redemption and change to its presentation of earnings per share are
material quantitatively and the Company should restate its previously issued
financial statements.
Therefore, on December 2, 2021, the audit committee of the board of directors of
the Company determined that (i) the Company's audited balance sheet as of
February 18, 2021 filed as Exhibit 99.1 to the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission (the "SEC") on February
24, 2021, (ii) the Company's unaudited financial statements as of March 31, 2021
contained in the Company's Quarterly Report on Form 10-Q filed with the SEC on
May 24, 2021, (iii) the Company's unaudited financial statements as of June 30,
2021 contained in the Company's Quarterly Report on Form 10-Q filed with the SEC
on August 5, 2021, and (iv) the Company's unaudited financial statements as of
September 30, 2021 contained in the Q3 Form 10-Q (collectively, the "Affected
Periods"), should no longer be relied upon due to the reclassification described
above. As a result, the Company plans to restate its financial statements for
all Affected Periods, to indicate that the classification error is a restatement
and not a revision, in an amended Q3 Form 10-Q, which the Company intends to
file as soon as practicable.
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting and that the Company's disclosure controls and
procedures were not effective as of September 30, 2021. The Company's
remediation plan with respect to such material weakness will be described in
more detail in an amended Q3 Form 10-Q.
The Company does not expect the changes described above to have any impact on
its cash position or the balance held in the trust account.
The Company's management and the audit committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with
WithumSmith+Brown, the Company's independent registered public accounting firm.
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