Landcadia Holdings III Inc,
05/03/2021 | Press release | Distributed by Public on 05/04/2021 01:07
Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Report
Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Report.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission ('SEC') together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled 'Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ('SPACs')' (the 'SEC Staff Statement'). Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the amended and restated warrant agreement, dated as of November 13, 2020, between Landcadia Holdings III, Inc. (the 'Company') and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent. As a result of the SEC Staff Statement, the Company reevaluated the accounting treatment of (i) the 16,666,667 redeemable warrants (the 'Public Warrants') that were included in the units issued by the Company in its initial public offering (the 'IPO') and (ii) the 8,000,000 redeemable warrants (together with the Public Warrants, the 'Warrants') that were issued to the Company's sponsors in private placements that closed concurrently with the closing of the IPO, and determined to classify the Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings. While the Company has not generated any operating revenues to date and will not generate any operating revenues until after completion of its initial business combination, at the earliest, the change in fair value of the Warrants is a non-cash charge and will be reflected in the Company's statement of operations. The Company determined, at the time of the Public Offering, the initial value of its Public Warrants and Sponsor Warrants were $18,830,000 and $9,200,000, respectively. As of December 31, 2020, the value of our Public Warrants and Sponsor Warrants were $37,000,000 and $18,720,000, respectively. We have restated our December 31, 2020 financial statements to reflect the initial warrant derivative liability of $28,030,000 with an offsetting amount recorded in additional paid in capital. Subsequently we adjusted the liability to fair value at December 31, 2020 and recorded a change in fair value of warrant derivative liability of $27,690,000 in other income and expense on our statement of operations. As of December 31, 2020 our warrant derivative liability was $55,720,000.
On April 30, 2021, after consultation with Marcum LLP, the Company's independent registered public accounting firm, the Company's management and the Audit Committee of the Company's Board of Directors (the 'Audit Committee') concluded that, in light of the SEC Staff Statement, it is appropriate to restate the Company's previously issued audited financial statements as of and for the year ended December 31, 2020. Considering such restatement, such audited financial statements should no longer be relied upon. The Company will file an amendment to its Annual Report on Form 10-K for the year ended December 31, 2020, which will include the restated audited financial statements for the Relevant Periods. The Company has not amended its Balance Sheet previously filed Current Report on Form 8-K for the period, October 14, 2020. The financial information that has been previously filed or otherwise reported for this period is superseded by the information in this Amendment.
Going forward, unless we amend the terms of our warrant agreement, we expect to continue to classify our warrants as a liabilities, which would require us to incur the cost of measuring the fair value of the warrant liabilities, and which may have an adverse effect on our results of operations.