Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 15, 2021, Ackrell SPAC Partners I Co. (the "Company") filed its
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021
(the "Q3 Form 10-Q"), which included in Note 2, Revision of Prior Period
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 public subunits ("Public Subunits") (and the underlying shares of common
stock) subject to redemption issued as part of the public units sold in the
Company's initial public offering ("IPO") on December 23, 2020. The Company had
previously classified a portion of its Public Subunits 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 Public Subunits
subject to redemption included certain provisions that require classification of
Public Subunits subject to redemption should be treated as temporary equity
regardless of the minimum net tangible assets required to complete the Company's
initial business combination. As a result, the Company corrected the error by
revising its prior financial statements and reclassified all Public Subunits as
temporary equity.
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 issued financial statements in Note 2 in 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 Public Subunits
subject to redemption and change to its presentation of earnings per share are
material quantitatively and the Company should restate its previously issued
financial statements.
Therefore, on January 4, 2022, the audit committee of the board of directors of
the Company determined that (i) the Company's audited balance sheet as of
December 23, 2020 (the "Audited Balance Sheet") filed as Exhibit 99.1 to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission (the "SEC") on December 30, 2020, as revised in the financial
statements included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2021 filed with the SEC on May 24, 2021 (the "Q1 Form
10-Q") , (ii) audited financial statements for the year ended December 31, 2020
(together with the Audited Balance Sheet, the "Affected Audited Financials"), as
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 2020 filed with the SEC on March 31, 2021 (the "Form 10-K"), (iii) the
Company's unaudited financial statements contained in the Company's Q1 Form
10-Q, (iv) the Company's unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for quarter ended June 30, 2021 filed
with the SEC on August 23, 2021 (the "Q2 Form 10-Q"), and (v) the Company's
unaudited financial statements in the Q3 Form 10-Q (the "Q3 Form 10-Q", together
with the Q1 Form 10-Q and the Q2 Form 10-Q, the "Affected Form 10-Qs" ), should
no longer be relied upon due to the reclassification described above. The
Company intends to correct the error in an amendment to (1) the Form 10-K (to
include restatements with respect to the Affected Audited Financials) (the
"Amended Form 10-K") and (2) each of the Affected Form 10-Qs (to include
restatements with respect to the financial statements in the Affected Form
10-Qs) (collectively, the "Amended Form 10-Qs").
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting and that the Company's disclosure controls and
procedures were not effective for the affected periods covered by the Form 10-K
and Affected Form 10-Qs. The Company's remediation plan with respect to such
material weakness will be described in more detail in the Amended Form 10-K and
the Amended Form 10-Qs.
The Company does not expect the changes described above to have any impact on
its cash position or the balance held in the trust account.
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 UHY
LLP, the Company's independent registered public accounting firm.
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 impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. These statements are based on current
expectations on the date of this Current Report on 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.
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