Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 12, 2021, Prime Impact Acquisition I (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
ordinary shares 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 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 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.
Also in Note 2 of the Company's Q3 Form 10-Q, in connection with the change in
presentation for the Class A ordinary shares subject to possible redemption, the
Company revised its earnings per share calculation to allocate income and losses
shared pro rata between the two classes of shares. This presentation differs
from the previously presented method of earnings per share, which was similar to
the two-class method.
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 to 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 is
material quantitatively and the Company should restate its previously issued
financial statements.
Therefore, on January 24, 2022, the audit committee of the board of directors of
the Company (the "Audit Committee") concluded, after discussion with the
Company's management, that the Company's previously issued (i) audited balance
sheet as of September 14, 2020, filed as Exhibit 99.1 to the Company's Current
Report on Form 8-K, filed with the SEC on September 18, 2020 (the "Offering
Audited Balance Sheet"); (ii) audited financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2020, as
amended (the "2020 Form 10-K"); (iii) unaudited interim financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2020 (iv) unaudited interim financial statements included in
the Company's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2021; (v) unaudited interim financial statements included in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2021; and (vi) Note 2 to the unaudited interim financial statements and Item 4
of Part I of the Q3 Form 10-Q (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.
Additionally, the Audit Committee determined that it is appropriate to file
(i) an amendment to its 2020 Form 10-K, including a restated Offering Audited
Balance Sheet, restated unaudited interim financial statements for the quarterly
period ended September 30, 2020, and restated audited financial statements for
the year ended December 31, 2020, and (ii) an amendment to its Q3 Form 10-Q (the
"Q3 Form 10-Q/A"), including restated unaudited interim financial statements for
the quarterly periods ended March 31, 2021 and June 30, 2021, and a restated
Note 2 to the unaudited interim financial statements and Item 4 of Part I of the
Q3 Form 10-Q, in each case, reflecting the restatement of the Class A ordinary
shares subject to redemption and the change to its presentation of earnings per
share, as soon as practicable.
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.
After re-evaluation, the Company's management has concluded that in light of the
errors described above, a material weakness existed in the Company's internal
control over financial reporting for complex securities during the Affected
Periods 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/A.
The Audit Committee has discussed the matters disclosed in this Current Report
on Form 8-K pursuant to this Item 4.02 with WithumSmith+Brown, P.C., the
Company's independent registered public accounting firm.
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