Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 12, 2021, Big Sky Growth Partners, Inc. (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 as part of the units
sold 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 its previously reported 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 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 January 25, 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 May 3, 2021, filed as Exhibit 99.1 to the Company's Current Report
on Form 8-K, filed with the SEC on May 7, 2021; (ii) 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; and
(iii) Note 2 to the unaudited interim financial statements and Item 4 of Part I
of the Q3 Form 10-Q (collectively, the "Affected Periods"), should no longer be
relied upon and should be restated. 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 to file (i)
an amendment to the Company's Current Report on Form 8-K, filed with the SEC on
May 7, 2021; and (ii) an amendment to its Q3 Form 10-Q (the "Q3 Form 10-Q/A"),
including restated unaudited interim financial statements for the quarterly
period ended June 30, 2021 and a restated Note 2 to the unaudited interim
financial statements and Item 4 of Part I of the Q3 Form 10-Q, in each case,
reflecting the restatement of the shares of Class A common stock subject to
redemption and the change to its presentation of earnings per share, 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 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 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 Frank, Rimerman + Co. LLP, the
Company's independent registered public accounting firm.
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