Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 10, 2021, 5:01 Acquisition Corp. (the "Company") filed its Form 10-Q
for the quarterly period ended September 30, 2021 (the "Q3 Form 10-Q"), which
included a subsection in Note 2 entitled "Revision to Previously Reported
Financial Statements," ("Note 2") that describes a revision to a portion of the
Company's previously issued financial statements for the classification of its
Class A common stock, par value $0.0001 per share, sold in the Company's initial
public offering ("IPO") on October 16, 2020, including the shares issued upon
exercise of the underwriters' over-allotment option (collectively, the "Public
Shares"). As described in Note 2, upon its IPO, the Company classified a portion
of the Public Shares as permanent equity to maintain net tangible assets greater
than $5,000,000 on the basis that the Company will consummate its 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 Shares included certain provisions that require classification of the
Public Shares as temporary equity regardless of the minimum net tangible assets
required to complete the Company's business combination. As a result, management
corrected the error by revising all Public Shares as temporary equity. This
resulted in an adjustment to the initial carrying value of Class A common stock
subject to possible redemption with the offset recorded to additional paid-in
capital, 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 Public Shares, 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 its previously financial statements in 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 Public Shares and change
to its presentation of earnings per share is material quantitatively and the
Company should restate its previously issued financial statements.
Therefore, on December 6, 2021, the audit committee (the "Audit Committee") of
the board of directors of the Company concluded, after discussion with the
Company's management, that the Company's previously issued (i) audited balance
sheet as of October 16, 2020 (the "Post IPO Balance Sheet"), (ii) audited
financial statements included in the Company's Annual Report on Form 10-K for
the period from August 31, 2020 (inception) through December 31, 2020, filed
with the Securities and Exchange Commission (the "SEC") on March 17, 2021 (the
"Form 10-K"), (iii) unaudited condensed 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 7, 2021, (iv) unaudited condensed 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 11, 2021; and
(v) Note 2 to the unaudited condensed financial statements included in the Q3
Form 10-Q (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.
Additionally, the Audit Committee determined that it is appropriate for the
Company to file an amendment to its Form 10-K (the "Form 10-K/A"), including a
restated Post IPO Balance Sheet and restated audited financial statements for
the period from August 31, 2020 (inception) through December 31, 2020, and an
amendment to its Q3 Form 10-Q (the "Q3 Form 10-Q/A"), including restated
unaudited condensed financial statements for the quarterly periods ended
March 31, 2021 and June 30, 2021, in each case, reflecting the restatement of
the Public Shares and change to its presentation of earnings per share for the
Affected Periods, as soon as practicable. The Q3 Form 10-Q/A will also include a
revised Note 2 to the unaudited condensed financial statements of the Q3
Form 10-Q and Item 4 of Part I included in the Q3 Form 10-Q.
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 as of the end of each of the Affected Periods or September 30,
2021. The Company's remediation plan with respect to such material weakness will
be described in more detail in the Form 10-K/A and Q3 Form 10-Q/A.
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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