Two other PSPCs to restate the financial results
Two other companies that went public in PSPC mergers have announced that they will restate financial statements following new regulatory guidance on PSPC accounting.
Guidance issued by the U.S. Securities and Exchange Commission last month addressed how PSPCs should account for the warrants they typically issue as part of initial public offerings.
According to Seeking Alpha, the SEC “plunged the PSPC market into turmoil” by stating that “in some cases, special purpose acquisition companies should account for warrants as liabilities rather than equity in PSPC . This could force many PSPCs to restate previous financial statements and make accounting much more complicated and expensive in the future. “
On Friday, snack maker Simply Good Foods became the latest PSPC to announce a restatement, saying it had accounted for warrants in equity under a fixed accounting model.
In accordance with SEC guidelines, the company now intends to restate the financial statements “so that warrants are recorded as liabilities and marked to market in each reporting period.”
As a result, Simply Good said, it expects to record an additional liability on its balance sheet of $ 110 million to $ 130 million for the quarter ended Feb. 27, 2021.
The rewording of Simply Good came three days after electric pickup truck maker Lordstown Motors announced it would rephrase its statements for the year ended December 31, 2020, for similar reasons.
“The restatement relates to the accounting treatment of public and private warrants outstanding at the time of the business combination with DiamondPeak Holdings” in October 2020, Lordstown said in a press release.
Seeking Alpha said the SEC’s decision blew the wind out of the PSPC boom that began last year when a record 248 PSPC went public.
Other PSPCs that reaffirmed their results included Social Capital Hedosophia Holdings, Northern Genesis Acquisition, QuantumScape, Virgin Galactic and DraftKings.