Item 4.02. |
Non-Reliance on Previously Issued Financial Statements
or Related Audit Report or Completed Interim Report. |
The management of Kingswood
Acquisition Corp., a Delaware corporation (the “Company”) has re-evaluated the Company’s application of ASC 480-10-S99-3A to
its accounting classification of its redeemable shares of 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 November
24, 2020 in light of further guidance from the Securities and Exchange Commission (the “SEC”). Historically, a portion of
the Public Shares were classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that
the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described
in the Company’s amended and restated certificate of incorporation (the “Charter”). Pursuant to such re-evaluation,
the Company’s management has, after taking appropriate professional advice, determined that the Public Shares include certain provisions
that require classification of the Public Shares as temporary equity regardless of the net tangible assets redemption limitation contained
in the Charter. In addition, in connection with the change in presentation for the Public Shares, the Company determined it should restate
its earnings per share calculation to allocate net income (loss) evenly to redeemable and non-redeemable common stock. This presentation
contemplates a 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.
As a result of the foregoing,
on February 14, 2022, the Company’s management, together with the Company’s audit committee (the “Audit Committee”),
determined that the Company’s previously issued (i) audited financial statements and other financial data as of December 31, 2020,
included in the Amendment No. 1 to annual report on Form 10-K, filed with the SEC on March 18, 2021, (ii) unaudited interim financial
statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the
SEC on June 17, 2021, (iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, (iv) unaudited interim financial statements included in the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, filed with the SEC on November 12, 2021
(collectively, the “Affected Periods”), should be restated to report all Public Shares as temporary equity and should no longer
be relied upon. As such, the Company will restate its financial statements for the Affected Periods in Amendment No. 2 to annual report
on Form 10-K for the period ended December 31, 2020 and in Amendment No. 1 to quarterly report on Form 10-Q for the quarterly period ended
September 30, 2021, filed with the SEC on February 17, 2022, as described therein.
The Company’s management
and Audit Committee had discussed the matters disclosed above with Marcum LLP, the Company’s independent registered public accounting
firm.
The Company does not expect
any of the above changes will have any impact on the amounts previously reported for 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 events described above, a material weakness existed in the Company’s internal control over financial
reporting and that the Company’s disclosure controls and procedures were not effective. Management plans to enhance the system of
evaluating and implementing the accounting standards that apply to our financial statements, including increased communications among
our personnel and third-party professionals with whom we consult regarding application of complex financial instruments.
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.