Item 4.02 Non-Reliance on Previously Issued Financial Statement and Related
Audit Report or Completed Interim Review.
In light of information discovered by Northern Genesis Acquisition Corp. III
(the "Company") in completing the audit of its annual financial statements for
the year ended December 31, 2021, the management of Northern Genesis Acquisition
Corp. III (the "Company") in conjunction with its independent registered public
accounting firm, Marcum LLP ("Marcum"), has re-evaluated the Company's
application of ASC 480 to its accounting classification of the overallotment
option provided to the Company's underwriters (the "Overallotment Option") in
connection with the Company's initial public offering (the "IPO") on March 26,
2021. The Overallotment Option was not exercised by the Company's underwriters
until April 8, 2021, at which point it was partially exercised by such
underwriters. The Company determined that an overallotment option is considered
to be a freestanding financial instrument and, therefore, should be classified
as a liability under ASC 480. The determination is based on the understanding
that an overallotment option may be exercised subsequent to the transfer of the
securities from the underwriters to investors and that an overallotment option
should be detached from the initial securities before it is exercised.
Therefore, the Company determined an overallotment option liability should be
measured at fair value at inception and on a recurring basis, with changes in
fair value presented in the statement of operations. As a result, management has
noted a classification error related to the Overallotment Option not being
included as a liability on its unaudited interim financial statements.
Therefore, on April 11, 2022, the Company's management and the audit committee
of the Company's board of directors (the "Audit Committee"), after consultation
with Marcum, concluded that the Company's previously issued (i) unaudited
interim financial statements included in the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May
26, 2021, (ii) unaudited interim financial statements included in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021,
filed with the SEC on August 16, 2021, and (iii) unaudited interim financial
statements included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2021, filed with the SEC on November 22,
2021 (collectively, the "Affected Periods"), should be restated to report the
Overallotment Option as a liability and should no longer be relied upon. As
such, the Company will restate its financial statements for the Affected Periods
on Forms 10-Q/A, to be filed with the SEC as soon as practicable (each, a "Form
10-Q/A").
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in the trust account established in connection with
the IPO (the "Trust Account"). The above changes also will have no impact on the
Company's financial statements for the year ended December 31, 2021 to be filed
by the Company in its Annual Report on Form 10-K.
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. The Company's remediation plan with respect to
such material weakness is described in more detail in each Form 10-Q/A.
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
Marcum.
Cautionary Statements Regarding Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. Certain of these forward-looking statements can be
identified by the use of words such as "believes," "expects," "intends,"
"plans," "estimates," "assumes," "may," "should," "will," "seeks," or other
similar expressions. These statements are based on current expectations on the
date of this Form 8-K and involve a number of risks and uncertainties that may
cause actual results to differ significantly. The Company does not assume any
obligation to update or revise any such forward-looking statements, whether as
the result of new developments or otherwise. Readers are cautioned not to put
undue reliance on forward-looking statements.
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