Item 4.02. Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review.
(a) On April 12, 2021, the Acting Director of the Division of Corporation
Finance and Acting Chief Accountant of the SEC together issued a public statement (the “SEC Warrant Accounting Statement”)
on accounting and reporting considerations for warrants issued by special purpose acquisition companies (“SPACs”). The SEC
Warrant Accounting Statement discussed “certain features of warrants issued in SPAC transactions” that “may be common
across many entities.” The SEC Warrant Accounting Statement indicated that when one or more of such features is included in a warrant,
the warrant “should be classified as a liability measured at fair value, with changes in fair value each period reported in earnings.”
The warrant agreement governing Churchill Capital Corp II’s
(the “Company”) warrants includes a provision that provides for potential changes to the settlement amounts dependent on the
characteristics of the holder of the warrant. Upon review of the statement, the Company’s management further evaluated the
warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC
Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including
warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed
to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the
terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair
value of the warrant.
The Company previously classified (i) the public warrants and private
placement warrants issued in connection with the Company’s initial public offering (the “Warrants”), (ii) the Company’s
convertible promissory note – related party and (iii) the subscription agreement, dated as of October 12, 2020, by and among the
Company, Churchill Sponsor II LLC and MIH Ventures B.V. (the “Prosus Agreement”) as equity instruments. Upon
further consideration of the rules and guidance, management of the Company concluded that the Warrants, the convertible promissory note
and the Prosus Agreement (collectively, the “Derivative Instruments”) are precluded from equity classification.
As a result, the Derivative Instruments should be recorded as liabilities on the balance sheet and measured at fair value at inception
and on a recurring basis in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of
operations.
On May 10, 2021, the Company's management and the Audit Committee
of the Company's board of directors, after consultation with management and a discussion with Marcum LLP, the Company's independent
registered public accounting firm, concluded that its financial statements for the year ended December 31, 2020; as of July 1, 2019;
as of and for the period ended September 30, 2019; as of December 31, 2019 and for the period April 11, 2019 (inception) to December
31, 2019; and as of and for the periods ended March 31, 2020, June 30, 2020 and September 30, 2020 (collectively, the
“Non-Reliance Periods”) should no longer be relied upon based on the correction of an error as
described above.
As a result, the Company today is announcing that it will restate its
historical financial results for the Non-Reliance Periods, in each case to reflect the change in accounting treatment (the “Restatement”).
The Company is filing its Form 10-K/A for the year ended December 31, 2020 to reflect the Restatement contemporaneously with the filing
of this Form 8-K.
The Company’s prior accounting for the Derivative Instruments
did not have any effect on the Company’s previously reported investments held in trust or cash.
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 Company’s intent to restate certain historical financial statements and the timing and impact of the Restatement.
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.