Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On August 8, 2021, the Audit Committee of the Company's board of directors (the
"Audit Committee") approved the dismissal of Marcum LLP ("Marcum") as the
Company's independent registered public accounting firm, and approved the
appointment of BDO USA, LLP ("BDO") as the Company's new independent public
accounting firm.
In connection with the Company's engagement of BDO as its auditors, the Company
reevaluated the accounting treatment of the shares of the Company's Class K
common stock (the "Class K Shares") that were issued by the Company to the
Company's sponsor in a private placement that closed prior to the closing of the
Company's initial public offering, and determined to classify the Class K Shares
as derivative liabilities measured at fair value, with changes in fair value
each period reported in earnings. While the Company has not generated any
operating revenues to date and will not generate any operating revenues until
after completion of its initial business combination, at the earliest, the
change in fair value of the Class K Shares is a non-cash charge and will be
reflected in the Company's statement of operations.
On August 31, 2021, after consultation with BDO, the Company's management and
the Audit Committee concluded that, in light of its reevaluation, it is
appropriate to restate the Company's previously issued unaudited financial
statements as of March 31, 2021 and for the period January 15, 2021 (inception)
through March 31, 2021 (the "Non-Reliance Period") that were included in the
Company's Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2021
(the "Non-Reliance Financial Statements").
Considering such restatement, the Non-Reliance Financial Statements should no
longer be relied upon. Similarly, (i) the Company's previously issued audited
financial statements as of February 1, 2021 and for the period January 29, 2021
(inception) through February 1, 2021 included in the Company's Registration
Statement on Form S-1 and (ii) the Company's audited balance sheet as of
March 26, 2021 included in the Company's Current Report on Form 8-K filed on
April 2, 2021 should no longer be relied upon. The Company will file an
amendment to its Quarterly Report on Form 10-Q for the quarter ended March 31,
2021 reflecting the reclassification of the Class K Shares in restated unaudited
financial statements for the Non-ReliancePeriod as soon as practicable.
Going forward, unless the Company amends the terms of the Class K Shares, it
expects to continue to classify the Class K Shares as liabilities, which would
require the Company to incur the cost of measuring the fair value of the Class K
Shares liabilities, and which may have an adverse effect on the Company's
results of operations.
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
BDO.
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