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Item 4.02
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Non-Reliance on Previously Issued Financial Statement or Related Audit Report or Completed Interim Review.
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In connection with the preparation of its financial statements as of September 30, 2021, the management of Sandbridge X2 Corp (the “Company”) has reevaluated the Company’s application of ASC 480-10-S99-3A to its accounting classification of the 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 “IPO”) on March 12, 2021. Historically, a portion of the Public Shares was classified as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001. The Company’s management has determined that the Public Shares include certain provisions that require classification of the Public Shares as temporary equity regardless of the minimum net tangible assets required to complete the Company’s initial business combination.
On November 24, 2021, the Company’s management concluded that it is appropriate to restate the Company’s previously issued audited balance sheet as of March 12, 2021 as previously restated in the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 22, 2021 (the “Q1 Form 10-Q”); the Company’s unaudited quarterly financial statements as of and for the three months ended March 31, 2021 included in the Q1 Form 10-Q, the Company’s unaudited quarterly financial statements as of and for the six months ended June 30, 2021 included in the Company’s quarterly report on Form 10-Q filed with the SEC on August 13, 2021, and the Company’s unaudited quarterly financial statements as of and for the nine months ended September 30, 2021 included in the Company’s quarterly report on Form 10-Q filed with the SEC on November 8, 2021 (the “Non-Reliance Affected Financial Statements”), in each case to report all Public Shares as temporary equity.
Considering such restatement, the Non-Reliance Affected Financial Statements should no longer be relied upon. As such, the Company will restate its financial statements for the periods affected by the Non-Reliance Affected Financial Statements in an amended Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2021 (the “Q3 Form 10-Q/A”), as described therein.
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 for the periods covered by the Non-Reliance Affected Financial Statements. The Company’s remediation plan with respect to such material weakness will be described in more detail in the Q3 Form 10-Q/A.
The above changes will not have any impact on the Company’s cash position and cash held in the trust account established in connection with the IPO.
The Company’s management has discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with the Audit Committee of the Company’s board of directors and such matters have also been discussed with WithumSmith+Brown, PC, the Company’s independent registered accounting firm.