Item 4.02. Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review.
The Company had recognized a liability
upon closing of their initial public offering in December 2020, the underwriter’s commissions which was contingently payable upon
closing of a future business combination, with the offsetting entry resulting in an initial discount to the securities sold in the initial
public offering. The underwriter waived all claims to this deferred commission in June 2022.
The Company recognized the waiver
as an extinguishment, with a resulting non-operating gain recognized in its statement of operations for the year ended December 31, 2022.
Upon subsequent review and analysis, management concluded that the Company should have recognized the extinguishment of the contingent
liability as a reversal in the same relative allocation applied at the initial public offering. Offering costs allocated to the Class
A common shares will be reversed against the Class A common shares and the offering cost allocated to the derivative warrant liabilities
will be reversed on the statement of operations.
Therefore, the Company’s
management and the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) concluded that the Company’s
previously issued consolidated financial statements as of and for the year ended December 31, 2022 (the “Annual Report”) and
the unaudited financial statements as of June 30, 2022 and September 30, 2022 (the “Quarterly Reports,” and together with
the Annual Report, the “Prior Financial Statements”) should no longer be relied upon and that it is appropriate to restate
the Annual Report and each of the Quarterly Reports referenced above. As such, the Company will restate its financial statements in a
Form 10-K/A (the “Restatement Filing”) for the Company’s consolidated financial statements included in the Original
Filing.
Controls and Procedures
The Company’s management
has concluded that 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 change in accounting for the
liability extinguishment did not have any impact on the Company’s liquidity, cash flows, costs of operations in the period included
in Item 8, Financial Statements and Supplementary Data in the Annual Report. The change in accounting for the liability extinguishment
does not impact the amounts previously reported for the Company’s cash, investments held in the trust account, operating expenses
or total cash flows from operations for the affected period.
We will provide further specifics
on the deficiencies in our internal control over financial reporting and our disclosure controls and procedures, and our plan for remediation,
in the Restatement Filing.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements within the meaning of the federal securities laws, including, without limitation, statements regarding the Company’s
expectations and preliminary estimates of the impact of the restatement on the Company’s Prior Financial Statements; the scope of
the restatement and the controls and procedures deficiencies; the belief that the restatement will not affect any other GAAP or non-GAAP
measure other than as specified in this Current Report; the timing of the completion of the restatement and the filing of the Restatement
Filing; plans to remediate the deficiencies, including the material weakness, with respect to the Company’s internal control over
financial reporting and disclosure controls and procedures; the impact of these matters on the Company’s performance and outlook;
expectations concerning the Company’s performance and financial outlook; and any statements or assumptions underlying any of the
foregoing. You can identify forward looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as “if,” “anticipate,” “estimate,” “expect,” “project,”
“plan,” “intend,” “believe,” “may,” “will,” “should,” “likely”
and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure
you that future developments affecting us will be those that we have anticipated. Important risks and uncertainties that could cause actual
results to differ materially from our expectations include, among others, risks related to the timely and correct completion of the restatement
and related filings; identification of errors in our financial reporting in the future that require us to restate previously issued financial
statements, which may subject us to unanticipated costs or regulatory penalties and could cause investors to lose confidence in the accuracy
and completeness of our financial statements; the risk that additional information may become known prior to the expected filing with
the SEC of the periodic reports described herein or that other subsequent events may occur that would require the Company to make additional
adjustments to its financial statements or delay the filing of the corrected or future periodic reports with the SEC; risks related to
changes in the effects of the restatement on the Prior Financial Statements or financial results; risks related to higher than expected
charges after completing the restatement process; risks related to delays in the filing of the Prior Financial Statements; risks related
to our ability to implement and maintain effective internal control over financial reporting in the future, which may adversely affect
the accuracy and timeliness of our financial reporting; risks related to changes to accounting rules or regulations; risks related to
fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets, including net operating loss carryforwards,
which may result in volatility of our results of operations; risks related to the Company’s plans to remediate any control and procedures
deficiencies; risks related to the timing and results of the Company’s review of the effectiveness of internal control over financial
reporting and related disclosure controls and procedures; risks related to whether a restatement of financial results will be required
for other accounting issues; risks related to the application of accounting or tax principles in an unanticipated manner; risks related
to our dependence on key personnel and any changes in our ability to retain key personnel; as well as those risks and uncertainties disclosed
under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s most recent Form S-4, Form 10-K and Form 10-Q filed with the Securities and Exchange
Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on our investor relations website at
ir.rh.com and on the SEC website at www.sec.gov. Any forward-looking statement made by us in this release speaks only as of the date on
which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by any applicable securities laws.
