Item 4.02 Non-Reliance on Previously Issued Financial Statement and Related
Audit Report.
In light of recent commentary issued by the U.S. Securities and Exchange
Commission (the "SEC"), the management of NightDragon Acquisition Corp. (the
"Company") has re-evaluated the Company's application of ASC 480-10-S99-3A to
its accounting classification of the redeemable shares of Class A common stock,
par value $0.00001 per share (the "Public Shares"), issued as part of the units
sold in the Company's initial public offering (the "IPO") on March 4, 2021.
Historically, a portion of the Public Shares was classified 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. Pursuant to such re-evaluation, the
Company's management has determined that the Public Shares include 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
initial business combination.
Therefore, on November 16, 2021, the Company's management and the audit
committee of the Company's board of directors (the "Audit Committee"), after
consultation with Marcum LLP ("Marcum"), the Company's independent registered
public accounting firm, concluded that the Company's previously issued
(i) audited balance sheet as of March 4, 2021 filed as Exhibit 99.1 to the
Company's Current Report on Form 8-K filed with the SEC on March 10, 2021, as
restated pursuant to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021 filed with the SEC on June 11, 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, filed with the SEC on August 13, 2021 (collectively, the "Affected
Periods"), should be restated to report all Public Shares as temporary equity
and should no longer be relied upon. As such, the Company will restate 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, to be filed with
the SEC (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.
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 will be described in more detail in the Q3 Form 10-Q.
In addition, the audit report of Marcum included in the Company's Form 8-K filed
on March 10, 2021 should no longer be relied upon.
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