Lordstown Motors (RIDE) Announces Response to SEC Guidance Issued on April 12, 2021 Applicable to Warrants Issued by Special Purpose Acquisition Companies
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Lordstown Motors Corp. (Nasdaq: RIDE) (“Lordstown Motors”), a leader in electric light duty trucks focused on the commercial fleet market, today announced in a Current Report on Form 8-K, that as a result of recent guidance provided by the SEC on April 12, 2021 for all SPAC-related companies regarding the accounting and reporting for their warrants (the “SEC Statement”), it will restate its previously issued 2020 consolidated financial statements.
The restatement pertains to the accounting treatment for public and private placement warrants (“warrants”) that were outstanding at the time of the business combination with DiamondPeak Holdings Corp. on October 23, 2020 (the “Business Combination”). Consistent with market practice among SPACs, we had been accounting for the warrants as equity under a fixed accounting model. However, in light of the recent SEC Statement, we intend to restate our historical financial statements for the year ended December 31, 2020 such that some, if not all, of the warrants are accounted for as liabilities and marked-to-market each reporting period (the “restatement”). In general, under the mark-to-market accounting model, we will measure the fair value of the liability classified warrants at the end of each reporting period or at the time of exercise and recognize the changes in the fair value in our operating results. The change in accounting treatment does not impact any reporting periods prior to the Business Combination.
As of December 31, 2020, we had 13,380,680 Warrants outstanding and, as a result of exercises and redemption of certain warrants, as of March 31, 2021, 3,955,907 warrants were outstanding.
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