| Item 4.02. |
Non-Reliance on Previously
Issued Financial Statements or a Related Audit Report or Completed
Interim Review.
|
On November 22, 2021, Alpha Healthcare Acquisition Corp. III
(the “Company”) filed its Form 10-Q for the quarterly period ended
September 30, 2021 (the “Q3 Form 10-Q”), which included in Note 2,
Revision to Previously Reported 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 common stock subject to redemption issued as part of
the units sold in the Company’s initial public offering (“IPO”). As
described in Note 2, upon its IPO, the Company incorrectly
classified the Class A common stock issued in connection with
the Company’s IPO as permanent equity instead of temporary equity.
As a result, management corrected the error by revising all
Class A common stock subject to redemption as temporary
equity. As described in Note 2, the impact of the error correction
was a $9.0 million increase in Class A common stock
subject to possible redemption included within temporary equity and
a decrease of $9.0 million in total stockholders’ equity, with
decreases of $5.0 million in additional paid-in-capital and
$4.0 million in accumulated deficit, respectively. 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 to its Q3 Form
10-Q.
In addition to the above, the Company has identified an error
resulting from the misclassification of the underwriter’s
over-allotment option as equity within the audited balance sheet as
of July 29, 2021 included in the Company’s Form 8-K, filed on August 4, 2021 (the
“August 2021 8-K”). The
impact of the error correction was the establishment of the
overallotment liability of $0.2 million, with a corresponding
decrease in accumulated deficit of $0.2 million. The Company
also identified 225,000 Founders shares transferred to certain
investors at the IPO date as a compensation for their commitment to
purchase the Public Units sold in the IPO resulting in an
understatement of offering costs by $1 million and the omitted
disclosure of 600,900 of Founders shares transferred to certain
investors at the IPO date as a compensation for their commitment to
purchase the Public Units sold in the IPO with a fair value of
$5.27 per share and subject to forfeiture if the investors sell
their Units prior to the closing of the initial Business
Combination. The Company also identified an understatement of other
offering costs with the corresponding understatement of accrued
offering costs amounting to $0.1 million. The Company also
omitted to disclose the transfer on July 27, 2021, of 25,000
shares of Class B common stock to each of the three
independent director nominees as compensation for their service on
the board of directors with an aggregate grant date fair value of
the award amounted to approximately $394,000. Since no expense was
recognized through July 29, 2021, this error has no impact on
the balance sheet as of July 29, 2021 included in the August
2021 8-K.
Finally, the Company has identified an error resulting from the
misclassification of the underwriter’s over-allotment option as
equity within the unaudited condensed statements of operations for
the three months ended September 30, 2021 and the period from
January 21, 2021 (inception) to September 30, 2021
included in the Q3 Form 10-Q. The impact of the error
correction was the recording of $127,035 gain on expiration of
overallotment option and $2,923 change in fair value of
overallotment liability for both periods. The Company also omitted
to disclose the transfer on July 27, 2021, of 25,000 shares of
Class B common stock to each of the three independent director
nominees as compensation for their service on the board of
directors with an aggregate grant date fair value of the award
amounted to approximately $394,000. Since no expense was recognized
through September 30, 2021, this error has no impact on the
unaudited condensed financial statements as of September 30,
2021 included in the Q3 Form 10-Q.
On September 9, 2022, upon consideration of the nature of the
changes described above, the audit committee of the board of
directors of the Company concluded, after discussion with the
Company’s management, that the Company’s previously issued
(i) audited balance sheet as of July 29, 2021, filed as
Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on
August 4, 2021; and (ii) 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 and should no longer be relied upon. Similarly,
other communications describing the Company’s financial statements
and other related financial information covering the Affected
Periods should no longer be relied upon.
In light of the foregoing, the audit committee of the board of
directors of the Company determined that it is appropriate to file
(i) an amendment to the Company’s Current Report on Form
8-K, filed with the SEC on
August 4, 2021; and (ii) an amendment to the Company’s
Form 10-Q for the quarterly
period ended September 30, 2021, filed with the SEC on
November 22, 2021, including a restated Note 2 to the
unaudited interim financial statements, as soon as practicable.