Filing Overview
TPG Pace Tech Opportunities Corp. filed this Form 8-K on May 7, 2021, reporting an event occurring on May 3, 2021. Although the request identifies Nerdy Inc., the filing’s registrant is TPG Pace Tech Opportunities Corp., a Cayman Islands SPAC. The filing addresses accounting restatement matters rather than operating results for Nerdy or the combined company.
Material Accounting Changes
- Following an SEC statement issued April 12, 2021, the company concluded that its public and private placement warrants should be classified as liabilities, rather than equity, and measured at fair value through earnings each reporting period.
- Certain forward purchase agreements should likewise be classified as liabilities and measured at fair value through earnings.
- Issued and outstanding Class A ordinary shares should be classified entirely as temporary equity under ASC 480-10, rather than partially as temporary equity and partially as permanent equity.
- The company is also evaluating certain related disclosures.
Restatement and Financial Reporting Status
On May 3, 2021, the board, following management and Audit Committee review, determined that the previously issued audited financial statements as of October 9, 2020, and as of and for the year ended December 31, 2020, should no longer be relied upon and must be restated.
The company intends to file an amended 2020 Form 10-K. The filing does not provide the dollar amount of the expected adjustments, revised earnings, warrant liabilities, fair-value changes, or effects on shareholders’ equity. An independent valuation expert was engaged to value the warrants and forward purchase agreements as of October 7, 2020, and December 31, 2020.
Financial Metrics and Liquidity
- Revenue, profit, cash flow, margins, debt, liquidity, and other operating metrics are not reported in this Form 8-K.
- The filing does not provide a clear quantified impact of the accounting changes on the balance sheet, income statement, cash flows, or temporary equity.
- The accounting revisions may materially affect previously reported earnings and balance-sheet classifications through recurring fair-value changes, but the filing does not quantify the impact.
Outlook, Controls, and Risks
- The company stated that it was working to file the amended 10-K as soon as practicable but did not provide a filing deadline.
- Management is reassessing its previous conclusions regarding the effectiveness of disclosure controls and procedures.
- The matters were discussed with KPMG LLP, the company’s independent registered public accounting firm.
- Investors face uncertainty regarding the final restated amounts, potential control deficiencies, the timing of the amended filing, and the effect of liability classification on reported earnings and equity.
Key Facts to Verify
- Whether the amended 10-K has been filed and whether the restatement is complete.
- The valuation and fair-value adjustments for the warrants and forward purchase agreements.
- The revised classification and amount of Class A ordinary shares in temporary equity.
- The effect on net income or loss, total liabilities, shareholders’ equity, and prior-period disclosures.
- Whether management identifies any material weakness or other deficiency in disclosure controls and procedures.
- The distinction between this SPAC filing and any subsequent filings by Nerdy Inc. or the post-business-combination entity.