Filing Summary
Registrant: VPC Impact Acquisition Holdings, the SPAC that subsequently pursued the Bakkt business combination. Form 8-K date: May 21, 2021. The filing reports an Item 4.02 non-reliance determination concerning previously issued financial statements.
Business Context and Reporting Period
The company had not generated operating revenue and expected to remain pre-revenue until completion of its initial business combination. The filing addresses the audited balance sheet as of September 25, 2020 and the audited financial statements for the year ended December 31, 2020.
Financial Metrics and Accounting Impact
- The company determined that 10,368,601 public warrants and 6,147,440 private placement warrants should be classified as derivative liabilities measured at fair value.
- Changes in warrant fair value will be reported in earnings and represent non-cash charges.
- The filing does not provide revised values for assets, liabilities, net income, cash flow, margins, debt, liquidity, or warrant fair values.
- The company stated that it expects to continue classifying the warrants as liabilities unless the warrant agreement is amended, creating recurring fair-value measurement costs and potential adverse effects on reported results.
Material Changes and Restatement
Following the SEC’s April 12, 2021 statement regarding SPAC warrant accounting, management and the Audit Committee concluded that previously issued financial statements should no longer be relied upon. The company planned to amend its 2020 Form 10-K to include restated audited financial statements. The filing states that the restatement was not expected to affect the previously announced business combination.
Outlook, Risks, and Unusual Items
- Future earnings may be materially affected by changes in the fair value of warrant liabilities, although those changes are non-cash.
- The company may incur additional costs to measure warrant liabilities each reporting period.
- The filing does not provide operating guidance or revenue forecasts.
- The company discussed the accounting matter with WithumSmith+Brown, PC, its independent registered public accounting firm.
Investor Verification Items
- Verify the amended 2020 Form 10-K and the precise restated balance sheet and income statement effects.
- Confirm the valuation methodology and period-to-period changes in the warrant liabilities.
- Assess whether any amendment to the warrant agreement changes the accounting classification.
- Confirm that the restatement did not alter the terms, timing, or completion status of the Bakkt business combination.