Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Lerer Hippeau Acquisition Corp., a Delaware corporation (the "Company"), was
formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). The amended and restated
certificate of incorporation of the Company (the "Charter") provides that, prior
to the consummation of the Business Combination, the Company shall provide all
holders of shares of Class A common stock, par value $0.0001 per share, of the
Company ("Class A common stock") sold in the Company's initial public offering
(the "Public Shares") with the opportunity to have their Public Shares redeemed
upon the consummation of the Business Combination pursuant to, and subject to
the limitations of, the terms of the Charter; provided, however, that the
Company shall not redeem or repurchase Public Shares to the extent that such
redemption would result in failure of the Company, or any entity that succeeds
the Company as a public company, to have net tangible assets (as determined in
accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as
amended, (or any successor rule)) of at least $5,000,0001 or any greater net
tangible asset or cash requirement which may be contained in the agreement
relating to the Business Combination.
In accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity ("ASC
480"), redemption provisions not solely within the control of the Company
require common stock subject to redemption to be classified outside of permanent
equity. In the Company's (i) unaudited financial statements as of and for the
three months ended March 31, 2021 included in the Company's Quarterly Report on
Form 10-Q filed with the SEC on May 14, 2021 (the "Q1 Financials"), and (ii)
unaudited financial statements as of and for the six months ended June 30, 2021
included in the Company's Quarterly Report on Form 10-Q filed with the SEC on
August 12, 2021 (the "Q2 Financials"), the Company classified a portion of the
Public Shares in permanent equity. In addition, in the Company's audited balance
sheet as of March 9, 2021 included in the Company's Current Report on Form 8-K
filed with the SEC on March 15, 2021 (the "Audited Balance Sheet"), the Company
also classified a portion of the Public Shares in permanent equity.
On November 9, 2021, the Company filed its Form 10-Q for the quarterly period
ending September 30, 2021 (the "Original Third Quarter 10-Q"), which included a
section within Note 2, Revision of Previously Reported Financial Statements,
("Note 2") that described a revision to the Company's classification of the
Public Shares. As described in Note 2, upon its IPO, the Company classified 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 initial business
combination only if the Company has net tangible assets of at least $5,000,001.
The Company's management revised this interpretation to include temporary equity
in net tangible assets. As a result, management corrected the error by restating
its Public Shares subject to redemption as temporary equity. This resulted in an
adjustment to the initial carrying value of its 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. 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 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. The Company determined the
changes were not qualitatively material to the Company's previously issued
financial statements and did not restate its financial statements. Instead, the
Company revised its previously reported financial statements in Note 2 to the
Original Third Quarter 10-Q. Although the qualitative factors that management
assessed tended to support a conclusion that the misstatements were not
material, these factors were not strong enough to overcome the significant
quantitative errors in the financial statements. The qualitative and
quantitative factors support a conclusion that the misstatements are material on
a quantitative basis. Management concluded that the misstatement was such of
magnitude that it is probable that the judgment of a reasonable person relying
upon the financial statements would have been influenced by the inclusion or
correction of the foregoing items. As such, upon further consideration of the
change, the Company determined the change in classification of the Public Shares
and change to its presentation of earnings per share is material quantitatively
and it should restate its previously issued financial statements
On December 22, 2021, the Audit Committee of the Board of Directors of the
Company (the "Audit Committee") concluded, after discussion with the Company's
management, that each of (i) the Q1 Financials, (ii) the Q2 Financials, and
(iii) Note 2 to the unaudited interim financial statements and Item 4 of Part 1
included in the
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Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2021, filed with the SEC on November 9, 2021, should no longer be
relied upon due to changes required to reclassify all of the Company's Public
Shares in temporary equity (collectively, the "Interim Financial Statements").
As such, the Company intends to file an amendment to its Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2021 (the "Amended Third
Quarter 10-Q") reflecting this reclassification. The adjustments to the Interim
Financial Statements will be set forth through expanded disclosure in the
financial statements included in the Amended Third Quarter 10-Q. In addition,
the audit report of WithumSmith+Brown, PC ("Withum"), the Company's independent
registered public accounting firm, included in the Current Report on Form 8-K
filed with the SEC on March 15, 2021 should no longer be relied upon. The
restatement of the Audited Balance Sheet will be set forth in a subsequent
filing.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K with Withum.
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