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 the financial statements for PropTech
Investment Corporation II (the "Company") as of and for the period ended
September 30, 2021, the Company's management, in consultation with its advisors,
identified a classification error made in certain of the Company's previously
issued financial statements, arising from the manner in which, as of the closing
of the Company's initial public offering ("IPO"), the Company valued 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 of
such shares of Class A common stock, after 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. The Company's management determined, after consultation with its
advisors, that all of the shares of Class A common stock underlying the
units issued in the IPO can be redeemed or become redeemable subject to the
occurrence of future events considered to be
outside the Company's control. Therefore, management concluded that the
redemption value of the shares of Class A common stock subject to possible
redemption should reflect the possible redemption of all shares of Class A
common stock.
As a result, the Company noted a classification error related to temporary
equity and permanent equity, which it corrected in its condensed financial
statements included in its Quarterly Report on Form 10-Q as of and for the
periods ended September 30, 2021, filed on November 12, 2021 ("Q3 Form 10-Q").
In the condensed financial statements included in the Q3 Form 10-Q, the Company
reclassified the requisite amount of Class A common stock from permanent to
temporary equity, with the offset recorded to additional paid-in capital (to the
extent available), accumulated deficit and shares of Class A common stock, and
presented the effects of the revision on the Company's previously issued
financial statements. The Company also revised its earnings per share
calculation to allocate net income evenly to Class A and Class B common stock.
This presentation contemplates an initial business combination as the most
likely outcome, in which case, both classes of common stock share pro rata in
the income (loss) of the Company. The Company presented the reclassification in
the Q3 Form 10-Q as a revision that did not require the restatement of
previously filed financial statements. Subsequent to the filing of the Q3 Form
10-Q, the Company determined that it needed to restate its prior financial
statements due to the quantitative materiality of the reclassification. Upon
further review, and in consultation with its advisors, the Company determined
that the Q3 Form 10-Q should be updated to indicate that the classification
error is a restatement and not a revision.
On December 6, 2021, the audit committee (the "Audit Committee") of the board of
directors of the Company concluded, after discussion with the Company's
management and advisors, that (i) the Company's audited balance sheet as of
December 8, 2020 filed as Exhibit 99.1 to the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission (the "SEC") on December
14, 2020, (ii) the Company's audited financial statements as of December 31,
2020 contained in the Company's Amendment No. 1 to Annual Report on Form 10-K
filed with the SEC on May 24, 2021, (iii) the Company's unaudited financial
statements as of March 31, 2021 contained in the Company's Quarterly Report on
Form 10-Q filed with the SEC on May 24, 2021, (iv) the Company's unaudited
financial statements as of June 30, 2021 contained in the Company's Quarterly
Report on Form 10-Q filed with the SEC on August 11, 2021, and (v) the Company's
unaudited financial statements as of September 30, 2021 contained in the
Company's Quarterly Report on Form 10-Q filed with the SEC on November 12, 2021,
should no longer be relied upon due to the reclassification of all of the
Company's Class A common stock from permanent equity to temporary equity. The
Company will reflect this reclassification in its forthcoming (i) amended
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021
(the "Amended Q3 Form 10-Q") and (ii) amended Annual Report on Form 10-K for the
period ended December 31, 2020, which the Company plans to file as soon as
practicable.
The Company does not expect the changes described above to have any impact on
its cash position or the balance held in its 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 will describe its remediation plan
with respect to such material weakness in the forthcoming Amended Q3 Form 10-Q.
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
WithumSmith+Brown, PC, the Company's independent registered accounting firm.
1
© Edgar Online, source Glimpses