Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
The management of DiamondHead Holdings Corp. (the "Company") has re-evaluated
the Company's application of ASC 480-10-S99 to its accounting classification of
its Class A common stock subject to possible redemption (the "Public Shares"),
issued as part of the units sold in the Company's initial public offering (the
"IPO") on January 28, 2021. Pursuant to such re-evaluation, the Company's
management has determined that all Public Shares subject to redemption include
certain provisions that require classification of the Public Shares as temporary
equity. The Company had previously classified a portion of its Class A common
stock in permanent equity.
On November 19, 2021, the Company's management and the audit committee of the
Company's board of directors (the "Audit Committee"), after consultation with
its advisors, concluded that the Company's previously issued (i) balance sheet
as of the closing of the IPO on January 28, 2021, included in the Company's
Current Report on Form 8-K filed with the SEC on February 3, 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 U.S. Securities and Exchange Commission (the "SEC") on June 3, 2021 and
(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 16, 2021 (collectively, the "Affected Periods"), should be
restated and should no longer be relied upon. As such, the Company has restated
its financial statements for the Affected Periods in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2021, filed
with the SEC today, November 19, 2021 (the "Q3 Form 10-Q").
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. The Company's remediation plan with respect to
such material weakness is described in more detail in the Q3 Form 10-Q.
The Company's management and the Audit Committee have discussed with its
independent registered public accounting firm the matters disclosed in this
Current Report on Form 8-K pursuant to this Item 4.02.
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 impact of the Company's restatement of certain
historical financial statements and any proposed remediation measures with
respect to identified material weaknesses. 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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