Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 12, 2021, Research Alliance Corp. II (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 shares of
Class A common stock subject to redemption issued in the Company's initial
public offering ("IPO"). As described in Note 2, upon its IPO, the Company
classified a portion of the shares of Class A common stock 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 shares of Class A
common stock subject to redemption included certain provisions that require
classification of the shares of Class A common stock 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 shares of Class A common stock subject to
redemption as temporary equity. This resulted in an adjustment to the initial
carrying value of the shares of Class A common stock subject to possible
redemption with the offset recorded to additional paid-in capital (to the extent
available), accumulated deficit and shares of Class A common stock.
Also in Note 2 of the Company's Q3 Form 10-Q, in connection with the change in
presentation for the shares of Class A common stock 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 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 shares of Class A common stock 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 February 17, 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 March 22, 2021, filed as Exhibit 99.1 to the Company's Current
Report on Form 8-K, filed with the SEC on March 26, 2021; (ii) 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 May 11, 2021;
(iii) 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 9, 2021; and (iv) Note 2 to the unaudited interim financial
statements and Item 4 of Part 1 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 12, 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.
The Company's Form 10-K for the year ended December 31, 2021 (the "Form 10-K")
will reflect the restatement of the shares of Class A common stock subject to
redemption and the change to its presentation of earnings per share.
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 Form 10-K.
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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