Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
In light of recent comment letters issued by the U.S. Securities and Exchange
Commission (the "SEC"), the management of Eucrates Biomedical Acquisition Corp.
(the "Company") has re-evaluated the Company's application of ASC 480-10-S99 to
its accounting classification of the ordinary shares, no par value per share
(the "Public Shares"), issued as part of the units sold in the Company's initial
public offering (the "IPO") on October 27, 2020. Historically, a portion of the
Public Shares was classified 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. Pursuant to such re-evaluation, the Company's management has
determined that the Public Shares include certain provisions that require
classification of the Public Shares as temporary equity regardless of the
minimum net tangible assets required to complete the Company's initial business
combination.
Therefore, on November 15, 2021, the Company's management and the audit
committee of the Company's board of directors (the "Audit Committee"), after
consultation with Marcum LLP ("Marcum"), the Company's independent registered
public accounting firm, concluded that the Company's previously issued (i)
audited balance sheet as of October 27, 2020 included in the Company's Current
Report on Form 8-K, filed with the SEC on November 2, 2020 and as restated in
the Company's Annual Report on Form 10-K/A, filed with the SEC on July 15, 2021,
(ii) unaudited interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2020, filed
with the SEC on December 7, 2020, (iii) audited financial statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2020,
filed with the SEC on March 31, 2021 and as restated in the Company's Annual
Report on Form 10-K/A, filed with the SEC on July 15, 2021, (iv) 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 July
16, 2021, and (v) 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 (collectively, the "Affected
Periods"), should be restated to report all Public Shares as temporary equity
and should no longer be relied upon. As such, the Company intends to restate its
its financial statements for the Affected Periods in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2021 that will
be filed with the SEC (the "Q3 Form 10-Q"). The Company will also amend its Form
10-K/A as previously filed on July 15, 2021.
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 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 will be described in more detail in the Q3 Form 10-Q.
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 United States 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. Such statements may include, but are not limited to
statements regarding the impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. 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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