Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
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 entitled "Staff Statement on Accounting and
Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies ("SPACs")" (the "SEC Staff Statement"). The SEC Staff Statement, among
other things, discussed potential accounting implications of certain terms that
are common in warrants issued in connection with the initial public offerings of
special purpose acquisition companies, and similar to terms contained in the
Warrant Agreement, dated August 7, 2019 (the "Warrant Agreement"), between
Silver Spike Acquisition Corp. (the "Company") and Continental Stock Transfer &
Trust Company, as warrant agent.
In light of the SEC Staff Statement, the Company reevaluated the accounting
treatment of (i) the 12,500,000 redeemable warrants (the "Public Warrants") that
were included as part of the units issued by the Company in its initial public
offering (the "IPO") and (ii) the 7,000,000 private placement warrants (the
"Private Placement Warrants" and, together with the Public Warrants, the
"Warrants") that were issued to the Company's sponsor in a private placement
that closed concurrently with the IPO, and determined to classify the Warrants
as derivative liabilities measured at fair value, with changes in fair value
each period being reported in earnings. While the Company has not generated any
operating revenues to date and does not expect to generate any operating
revenues until after completion of its initial business combination, 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 April 30, 2021, the Company's management and the Audit Committee of the
Company's board of directors (the "Audit Committee"), after consultation with
management and a discussion with Marcum LLP, the Company's independent
registered public accounting firm (the "Independent Accounting Firm"), concluded
that it is appropriate to restate certain items in (i) the Company's previously
issued audited balance sheet dated as of August 12, 2019, which was related to
the Company's IPO, and (ii) the Company's previously issued audited financial
statements as of December 31, 2019 and December 31, 2020 and for the period from
July 7, 2019 (inception) through December 31, 2019 and for the period from
January 1, 2020 to December 31, 2020 (the "Relevant Periods"). 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
fiscal year ended December 31, 2020, which will include the restated audited
financial statements for the Relevant Periods as well as the interim quarterly
periods.
Going forward, unless the Company amends the terms of the Warrants, the Company
expects to continue to classify the Warrants as liabilities, which would require
the Company to incur the cost of measuring the fair value of the warrant
liabilities.
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 the
Independent Accounting Firm.
Item 8.01 Other Events.
The Company announced today that it still expects to close its previously
announced business combination with WM Holding Company, LLC, a Delaware limited
liability company ("WMH"), before the end of the second calendar quarter of this
year. The delay in closing was driven by the need to amend the Company's Annual
Report on Form 10-K as a result of the changes to the accounting treatment for
warrants issued by special purpose acquisition companies due to the Securities
and Exchange Commission's staff statement on the same topic issued on April 12,
2021.
In addition, the Company announced that it received an update from WMH that WMH
does not intend to update its financial projections for the years ended December
31, 2021, 2022 and 2023 from its financial projections included in the investor
presentation (the "Presentation") that was filed as Exhibit 99.2 to the
Company's Current Report on Form 8-K filed on December 10, 2020, as WMH's
management believes these projections still represent the current forward
outlook of WMH. This preliminary projected financial information was prepared
by, and is the responsibility of, WMH's management and remains subject to the
disclaimers set forth in the Presentation. The assumptions and estimates
underlying such projected financial information are inherently uncertain and are
subject to a wide variety of significant business, economic, competitive and
other risks and uncertainties that could cause actual results to differ
materially from those contained in the projected financial information. See
"-Forward Looking Statements" below. Neither our independent registered public
accounting firm nor any other independent registered public accounting firm has
audited, reviewed or compiled, examined or performed any procedures with respect
to these preliminary results, nor have they expressed any opinion or any other
form of assurance on these preliminary financial results. These preliminary
estimates reflect WMH's management's estimates based solely upon information
available as of the date of this Current Report on Form 8-K and are not a
comprehensive statement of WMH's projected financial results. The information
presented herein should not be considered a substitute for the financial
statements for any period covered by the projected financial statements once
they become available.
Forward Looking Statements
The information in this Current Report includes "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements may be
identified by the use of words such as "estimate," "plan," "project,"
"forecast," "intend," "will," "expect," "anticipate," "believe," "seek,"
"target" or other similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. These forward-looking
statements include, but are not limited to, statements regarding estimates and
forecasts of financial and performance metrics, projections of market
opportunity and market share, expectations and timing related to commercial
product launches, potential benefits of the transaction and the potential
success of WMH's go-to-market strategy, and expectations related to the terms
and timing of the transaction. These statements are based on various
assumptions, whether or not identified in this Current Report, and on the
current expectations of WMH's and Silver Spike's management and are not
predictions of actual performance. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as, and must not be
relied on by any investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and circumstances are
difficult or impossible to predict and will differ from assumptions. Many actual
events and circumstances are beyond the control of WMH and Silver Spike. These
forward-looking statements are subject to a number of risks and uncertainties,
including changes in domestic and foreign business, market, financial, political
and legal conditions; the inability of the parties to successfully or timely
consummate the proposed business combination, including the risk that any
required regulatory approvals are not obtained, are delayed or are subject to
unanticipated conditions that could adversely affect the combined company or the
expected benefits of the proposed business combination or that the approval of
the shareholders of Silver Spike or the equityholders of WMH is not obtained;
failure to realize the anticipated benefits of the proposed business
combination; risks relating to the uncertainty of the projected financial
information with respect to WMH; future global, regional or local economic and
market conditions affecting the cannabis industry; the development, effects and
enforcement of laws and regulations, including with respect to the cannabis
industry; WMH's ability to successfully capitalize on new and existing cannabis
markets, including its ability to successfully monetize its solutions in those
markets; WMH's ability to manage future growth; WMH's ability to develop new
products and solutions, bring them to market in a timely manner, and make
enhancements to its platform and WMH's ability to maintain and grow its two
sided digital network, including its ability to acquire and retain paying
customers; the effects of competition on WMH's future business; the amount of
redemption requests made by Silver Spike's public shareholders; the ability of
Silver Spike or the combined company to issue equity or equity-linked securities
in connection with the proposed business combination or in the future; the
outcome of any potential litigation, government and regulatory proceedings,
investigations and inquiries; and those factors discussed in Silver Spike's
final prospectus dated August 7, 2019, Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 and Quarterly Report on Form 10-Q for the quarter
ended September 30, 2020, and the Registration Statement, in each case, under
the heading "Risk Factors," and other documents of Silver Spike filed, or to be
filed, with the SEC. If any of these risks materialize or our assumptions prove
incorrect, actual results could differ materially from the results implied by
these forward-looking statements. There may be additional risks that neither
Silver Spike nor WMH presently know or that Silver Spike and WMH currently
believe are immaterial that could also cause actual results to differ from those
contained in the forward-looking statements. In addition, forward-looking
statements reflect Silver Spike's and WMH's expectations, plans or forecasts of
future events and views as of the date of this Current Report. Silver Spike and
WMH anticipate that subsequent events and developments will cause Silver Spike's
and WMH's assessments to change. However, while Silver Spike and WMH may elect
to update these forward-looking statements at some point in the future, Silver
Spike and WMH specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as representing Silver
Spike's and WMH's assessments as of any date subsequent to the date of this
Current Report. Accordingly, undue reliance should not be placed upon the
forward-looking statements.
Additional Information About the Proposed Business Combination and Where To Find
It
The proposed business combination will be submitted to shareholders of Silver
Spike for their consideration. Silver Spike has filed a registration statement
on Form S-4 (the "Registration Statement") with the SEC which includes a
preliminary proxy statement and will include a definitive proxy statement to be
distributed to Silver Spike's shareholders in connection with Silver Spike's
solicitation for proxies for the vote by Silver Spike's shareholders in
connection with the proposed business combination and other matters as described
in the Registration Statement, as well as the prospectus relating to the offer
of the securities to be issued to WMH's equityholders in connection with the
completion of the proposed business combination. After the Registration
Statement has been declared effective, Silver Spike will mail a definitive proxy
statement and other relevant documents to its shareholders as of the record date
established for voting on the proposed business combination. Silver Spike's
shareholders and other interested persons are advised to read the Extension
Proxy Statement, the preliminary proxy statement / prospectus and any amendments
thereto and, once available, the definitive proxy statement / prospectus, in
connection with Silver Spike's solicitation of proxies for its special meeting
of shareholders to be held to approve, among other things, the proposed business
combination, because these documents will contain important information about
Silver Spike, WMH and the proposed business combination. Shareholders may also
obtain a copy of the preliminary or definitive Extension Proxy Statement or
proxy statement, as well as other documents filed with the SEC regarding the
proposed business combination and other documents filed with the SEC by Silver
Spike, without charge, at the SEC's website located at www.sec.gov or by
directing a request to 660 Madison Ave Suite 1600, New York, NY 10065 or
notices@silverspikecap.com.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY AUTHORITY NOR HAS ANY AUTHORITY
PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY
OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Participants in the Solicitation
Silver Spike, WMH and certain of their respective directors, executive officers
and other members of management and employees may, under SEC rules, be deemed to
be participants in the solicitations of proxies from Silver Spike's shareholders
in connection with the proposed business combination. Information regarding the
persons who may, under SEC rules, be deemed participants in the solicitation of
Silver Spike's shareholders in connection with the proposed business combination
is set forth in the Registration Statement. You can find more information about
Silver Spike's directors and executive officers in Silver Spike's final
prospectus dated August 7, 2019 and filed with the SEC on August 9, 2019.
Additional information regarding the participants is in Silver Spike's Extension
Proxy Statement and also will be included in the proxy solicitation and a
description of their direct and indirect interests will be included in the proxy
statement / prospectus when it becomes available. Shareholders, potential
investors and other interested persons should read the proxy statement /
prospectus carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents from the
sources indicated above.
No Offer or Solicitation
This Current Report does not constitute an offer to sell or the solicitation of
an offer to buy any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
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