Item 4.02 Non-Reliance on Previously Issued Financial Statement or Related Audit
Report or Completed Interim Review.
(a) In connection with the preparation of the financial statements of Z-Work
Acquisition Corp. (the "Company") as of September 30, 2021, the Company's
management, in consultation with its advisors, identified errors made in the
historical financial statements where, at the closing of the Company's initial
public offering (the "Initial Public Offering") the Company improperly
classified its Class A common stock subject to possible redemption. The Company
previously determined the value of such Class A common stock to be equal to the
redemption value, while also taking into consideration the terms of the
Company's Amended and Restated Certificate of Incorporation, under which a
redemption cannot result in net tangible assets being less than $5,000,001.
Management determined, in consultation with its advisors, that the shares of
Class A common stock underlying the units issued during the initial public
offering can be redeemed or become redeemable subject to the occurrence of
future events considered to be outside of the Company's control. Therefore,
management concluded that the redemption value should include all Class A common
stock subject to possible redemption, resulting in the Class A common stock
subject to possible redemption being equal to their redemption value. Effective
as of the filing of the Company's filing of the original Quarterly Report on
Form 10-Q for the period ended September 30, 2021 (the "Original Quarterly
Report"), the Company revised this interpretation to include temporary equity in
net tangible assets. As a result, management noted a reclassification adjustment
related to temporary equity and permanent equity as of the Initial Public
Offering date and all subsequent reporting periods. This has resulted in a
restatement of 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. The Company filed the Original Quarterly Report on November 10,
2021, which included a revision to the previously issued balance sheet as of
February 2, 2021. The Company determined to present this revision in a
prospective manner in all future filings with historical amounts presented in
current and future filings recast.
Subsequently, on December 22, 2021, the Company's management, together with the
audit committee of the Company's board of directors (the "Audit Committee"),
concluded that the financial statements and other financial data as of and for
the three months ended March 31, 2021 and June 30, 2021 (the "Affected
Periods"), should be restated to report all Class A common stock as temporary
equity and should no longer be relied upon.
As such, the Company will restate its financial statements of the Affected
Periods for the unaudited condensed financial statements for the periods ended
March 31, 2021, and June 30, 2021, in an Amendment No. 1 to the Company's
Quarterly Report on Form 10-Q/A for the quarterly period ended September 30,
2021 (the "Form 10-Q/A"), to be filed with the SEC. 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 Company's management has concluded that a material weakness remains in the
Company's internal control over financial reporting and that the Company's
disclosure controls and procedures were not effective as of September 30, 2021,
due to a material weakness in our internal control over financial reporting
relating to accounting for complex financial instruments. The Company's
remediation plan with respect to such material weakness will be described in
more detail in the Form 10-Q/A.
Management and the Audit Committee have discussed the matters disclosed pursuant
to this Item 4.02(a) with WithumSmith+Brown, PC, the Company's independent
registered public accounting firm.
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. 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 Company's intent to restate certain historical
financial statements and the timing and impact of the restatement. These
statements are based on current expectations on the date of this 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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