Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
In connection with the preparation of its financial statements as of and for the
quarterly period ended September 30, 2021, Shelter Acquisition Corporation I
(the "Company") reevaluated the classification of its Class A common stock, par
value $0.0001 per share (the "Public Shares"), issued as part of the units sold
in the Company's initial public offering (the "Initial Public Offering") on July
2, 2021, and concluded that it is appropriate to restate the presentation of the
Public Shares subject to possible redemption to reflect all Public Shares as
temporary equity. The Company previously recorded the Public Shares subject to
possible redemption to be equal to the redemption value of such shares, while
also taking into consideration the requirement in the Company's amended and
restated certificate of incorporation that redemptions cannot result in net
tangible assets falling below $5,000,001 (the "Minimum Net Tangible Assets
Requirement"). The Company had therefore recorded a portion of the Public Shares
as permanent equity. Upon further evaluation, the Company has determined that
the Public Shares include certain redemption features that are not solely within
the control of the Company. Under Accounting Standards Codification 480-10-S99,
Distinguishing Liabilities from Equity, redemption provisions not solely within
the control of the Company require Public Shares subject to redemption to be
classified as temporary equity, regardless of the Minimum Net Tangible Assets
Requirement. This reclassification of equity was reflected in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021,
filed with the U.S. Securities and Exchange Commission (the "SEC") on
November 12, 2021 as a revision and not a restatement.
On February 11, 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 audited balance sheet as of
July 2, 2021 included in the Company's Form 8-K filed on July 12, 2021 (the
"Original 8-K") should no longer be relied upon. The Company plans to amend the
Original 8-K to file the restated audited balance sheet as of July 2, 2021.
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 Initial Public Offering (the "Trust Account").
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 Quarterly Report
on Form 10-Q/A for the quarterly period ended September 30, 2021, to be filed
with the SEC.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with
Marcum, LLP, the Company's independent registered public accounting firm.
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. Certain of these 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 statements may include, but are not limited to,
statements regarding the impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. These statements are based on current
expectations on 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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