Item 4.02. Non-Reliance on Previously Issued Financial Statements.
On November 9, 2021, KludeIn I Acquisition Corp. (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 Previously Issued
Financial Statements ("Note 2"), a discussion of a revision to a portion of the
Company's previously issued financial statements regarding the classification of
its Class A common stock subject to redemption. The Company's Class A common
stock was issued as part of the units sold in the Company's initial public
offering ("IPO"), which was consummated on January 11, 2021. As described in
Note 2, following its IPO, the Company classified a portion of the Class A
common stock subject to redemption as permanent equity. As also described in
Note 2, the Company's management re-evaluated the classification of a portion of
Class A common stock as permanent equity, and determined that all of the
Company's outstanding Class A common stock should have been treated as temporary
equity. As a result, in the Q3 Form 10-Q, the Company revised the accounting
treatment of its outstanding Class A common stock to classify all such shares as
temporary equity. This revision resulted in an adjustment to the initial
carrying value of the Class A common stock subject to possible redemption with
the offset recorded to additional paid-in capital (to the extent available),
accumulated deficit and Class A common stock.
Also in Note 2 of the Q3 Form 10-Q, in connection with the change in
presentation for the 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 its Class A common stock and its Class B common stock.
This presentation differed from the previously presented method of determining
earnings per share, which was similar to the two-class method.
The Company initially determined that the changes described above were not
qualitatively material to the Company's previously issued financial statements.
However, upon further evaluation of its materiality determination, the Company
determined the change in the classification of the Class A common stock subject
to redemption is material quantitatively, and such quantitative determination
could not be overcome by qualitative considerations. Subject to review by the
audit committee of the Company's Board of Directors (the "Audit Committee"),
this re-evaluation would require the Company to instead restate its previously
issued financial statements described below.
On November 29, 2021, the Audit Committee met and concluded, after discussion
with the Company's management, that the Company's previously issued (i) audited
balance sheet dated as of January 11, 2021, 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 January 15, 2021 (the "Audited Balance Sheet"), as
revised in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021 filed with the SEC on May 24, 2021 (the "Q1 Form 10-Q"),
(ii) unaudited interim financial statements included in the Q1 Form 10-Q, 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 (the "Q2 Form
10-Q"), filed with the SEC on August 13, 2021 (collectively, the periods between
January 11, 2021 and June 30, 2021, the "Affected Periods"), should be restated
and should no longer be relied upon.
Similarly, other communications with respect to the Company's financial
statements and related financial information covering the Affected Periods
should no longer be relied upon.
The Audit Committee determined that it would be appropriate to restate its
Audited Balance Sheet and its unaudited interim financial statements included in
the Q1 Form 10-Q, Q2 Form 10-Q and Q3 Form 10-Q for the quarterly periods ended
March 31, 2021, June 30, 2021 and September 30, 2021 as filed with the SEC on
May 24, 2021, August 13, 2021 and November 9, 2021, respectively, reflecting the
classification of all shares of Class A common stock subject to redemption as
temporary equity, and for the change to its presentation of earnings per share
for the applicable Affected Periods as soon as practicable. The Company will
file an amendment to its previously filed Q3 Form 10-Q reflecting the
restatement for all Affected Periods 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 also concluded that in light
of the classification errors described above, a material weakness existed in the
Company's internal control over financial reporting during and since the
Affected Periods related to the accounting for complex financial instruments,
and that the Company's disclosure controls and procedures were not effective as
of March 31, 2021, June 30, 2021, or September 30, 2021. To address this
material weakness, management has devoted, and plans to continue to devote,
significant effort and resources to the remediation and improvement of the
Company's internal control over financial reporting. While the Company has
processes to identify and appropriately apply applicable accounting
requirements, the Company's management plans to enhance these processes to
better evaluate its research and understanding of the nuances of the complex
accounting standards that apply to its financial statements. The Company plans
to provide enhanced access to accounting literature, research materials and
documents to its accounting personnel and third-party professionals with whom it
consults regarding accounting matters, and to increase communication regarding
accounting matters.
The Audit Committee and the Company have discussed the above matters with the
Company's independent registered public accounting firm, Marcum LLP.
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