Item 4.02 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
Statement"). Specifically, the SEC Statement focused on certain terms and
provisions which are similar to those contained in the warrant agreement, dated
as of December 10, 2020, between Senior Connect Acquisition Corp. I (the
"Company") and Continental Stock Transfer & Trust Company, a New York
corporation, as warrant agent (the "Warrant Agreement"). As a result of the SEC
Statement, the Company reevaluated the accounting treatment of (i) the
20,700,000 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 10,280,000 redeemable warrants (together with the Public Warrants, the
"Warrants") that were issued to the Company's sponsor in a private placement
that closed concurrently with the closing of the IPO consummated on December 15,
2020, 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.
On June 22, 2021, 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 Statement, the Company's previously issued audited financial statements
for the year ended December 31, 2020 included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2020 (the "Annual Report") should no
longer be relied upon and that it is appropriate to restate the Annual Report,
which will also include a revision to the audited balance sheet dated as of
December 15, 2020 included in the Company's Current Report on Form 8-K filed
December 21, 2020.
Going forward, unless we amend the terms of the Warrant Agreement, we expect to
continue to classify the Warrants as liabilities, which would require us to
incur the cost of measuring the fair value of the Warrants, and which may have
an adverse effect on our results of operations.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with
Marcum LLP, the Company's independent registered public accounting firm.
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