Business Context and Reporting Period
Company: Finance of America Companies Inc. (FOA)
Filing Type: Form 8-K (Current Report)
Date of Report: May 5, 2021
Context: The Company became a publicly traded entity on the New York Stock Exchange following a business combination with Replay Acquisition Corp. (a SPAC) on April 1, 2021. This filing addresses a non-reliance on previously issued financial statements due to new SEC guidance regarding the classification of SPAC warrants.
Key Financial Metrics
This filing does not contain specific revenue, profit, cash flow, or debt figures. The report focuses exclusively on accounting classification adjustments rather than operational performance metrics for the current period.
Material Changes and Accounting Reclassification
Management and the Audit Committee determined that previously issued financial statements for the "Affected Periods" (years ended Dec 31, 2019 and 2020, and quarterly periods from June 30, 2019, through Sept 30, 2020) should no longer be relied upon. The material changes include:
- Warrant Classification: Warrants previously classified as equity must be reclassified as liabilities measured at fair value, with changes in fair value reported in earnings.
- Equity Allocation Errors: Errors were identified in the allocation of net proceeds among ordinary shares subject to redemption and public warrants at the date of issuance.
- Temporary vs. Permanent Equity: Reclassification errors were noted between temporary equity and permanent equity.
Outlook, Management Commentary, and Risks
Management Action Plan: The Company intends to file an amended Annual Report on Form 10-K for the year ended December 31, 2020, and amended Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020, and June 30, 2020. These filings will reflect the reclassification of warrants and expanded disclosures regarding the restatement.
Current Status: The Company is working with its independent auditors (BDO USA, LLP) and an independent valuation expert to finalize the warrant valuation. The filing does not provide a specific date for the amended reports, stating only that they will be filed "as soon as practicable."
Risks: The filing includes standard forward-looking statement disclaimers, noting that actual results may differ from expectations due to risks described in the April 7, 2021, Form 8-K.
Investor Verification Checklist
- Verify the timing of the upcoming amended Form 10-K and Form 10-Q filings.
- Review the final valuation of the warrants once the amended reports are filed to understand the impact on net income and equity.
- Confirm the specific dollar amounts of the restatement adjustments to stockholders' equity and earnings once disclosed in the amended reports.
- Monitor for any further SEC inquiries or guidance related to the warrant liability classification.