Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On April 12, 2021, the Acting Director of the Division of Corporation Finance
and Acting Chief Accountant of the Securities and Exchange Commission (the
"SEC") together issued a public statement entitled "Staff Statement on
Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies ("SPACs")" (the "SEC Statement"). Specifically, the SEC
Statement focused on certain terms and provisions which are similar to those
contained in the warrant agreement, dated as of November 16, 2020, between Pine
Island Acquisition Corp. (the "Company") and Continental Stock Transfer & Trust
Company, a New York corporation, as warrant agent (the "Warrant Agreement"). As
a result of the SEC Statement, the Company reevaluated the accounting treatment
of (i) 7,279,600 redeemable warrants (the "Public Warrants") that were included
in the units issued by the Company in its initial public offering (the "IPO")
and (ii) the 4,245,173 redeemable warrants (together with the Public Warrants,
the "Warrants") that were issued to the Company's sponsor in a private placement
that closed concurrently with the closing of the IPO, and determined to classify
the Warrants as derivative liabilities measured at fair value, with subsequent
changes in fair value each period in reported earnings. While the Company has
not generated any operating revenues to date and will not generate any operating
revenues until after completion of its initial business combination, at the
earliest, the change in fair value of the Warrants is a non-cash charge and will
be reflected in the Company's statement of operations.
On June 23, 2021, the Company's management and the audit committee of the
Company's Board of Directors (the "Audit Committee") concluded that, in light of
the SEC Statement, the Company's previously issued audited financial statements
as of December 31, 2020 and for the period from August 21, 2020 (inception)
through December 31, 2020, as included in the Company's Annual Report on Form
10-K filed with the SEC on April 5, 2021 (the "Annual Report"), should be
restated. Considering such restatement, such audited financial statements,
should no longer be relied upon. As a result, the Company will file an amendment
to its Annual Report on Form 10-K as of December 31, 2020 to reclassify the
Warrants as liabilities. Additionally, the Company plans to reflect this
reclassification of the Warrants in its Q1 2021 Form 10-Q.
Going forward, unless we amend the terms of the Warrant Agreement, we expect to
continue to classify the Warrants as liabilities, which would require us to
incur the cost of measuring the fair value of the Warrants, and which may have
an adverse effect on our results of operations.
The Audit Committee and management have discussed the matters disclosed pursuant
to this Item 4.02(a) with the Company's independent accountant.
Cautionary Statements Regarding Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995, as amended. Certain of such forward-looking
statements can be identified by the use of words such as "believes," "expects,"
"intends," "plans," "estimates," "assumes," "may," "should," "will," "seeks" or
other similar expressions. Such forward-looking statements may include, but are
not limited to, statements regarding the Company's intent to restate certain
historical financial statements and the timing and impact of such restatement.
Such forward-looking statements are based on current expectations as of the date
of this Current Report on Form 8-K and involve a number of risks and
uncertainties that may cause actual results to differ significantly. The Company
does not assume any obligation to update or revise any such forward-looking
statements, whether as the result of new developments or otherwise. Readers are
cautioned not to put undue reliance on forward-looking statements.
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