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Item 4.02
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Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
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On
April 12, 2021, staff of the Securities and Exchange Commission (the “SEC”) released a statement entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (the “SEC Statement”)
informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability
of the entity measured at fair value, with changes in fair value each period reported in earnings. In connection with the July 1, 2020
business combination with Gordon Point Acquisition Corp., a special purpose acquisition company (“GPAQ”), each issued and
outstanding GPAQ warrant (including GPAQ private placement warrants) (“GPAQ Warrant”) was cancelled and exchanged for one
Hall of Fame Resort & Entertainment Company (the “Company”) warrant (“Company Series A Warrant”) to purchase
1.421333 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”). The Company Series A Warrants
are governed by the warrant agreement, dated as of January 24, 2018 (the “Warrant Agreement”), with Continental Stock Transfer
& Trust Company, as warrant agent, that had governed the GPAQ Warrants. As a result of the SEC Statement, the Company reevaluated
the accounting treatment of the Company Series A Warrants. The SEC Statement focused on certain settlement terms and provisions related
to certain tender offers following a business combination, which terms are similar to those contained in the Warrant Agreement. The Company
has previously classified the Company Series A Warrants as equity.
On
April 23, 2021, the Company’s management concluded that the Company’s previously issued (i) audited consolidated financial
statements as of and for the year ended December 31, 2020 included in the Annual Report on Form 10-K for such period, and (ii) unaudited
condensed consolidated financial statements for the three and nine months ended September 30, 2020 included in the Quarterly Report on
Form 10-Q for such period (collectively, the “Non-Reliance Periods”) should be
restated to reflect the impact of this guidance by the SEC staff and, accordingly, should no longer be relied upon. The Company’s
management concluded that the Company Series A Warrants do not meet the conditions to be classified in equity and instead should be recorded
as liabilities on the balance sheet. The Audit Committee of the Board of Directors of the Company
(the “Audit Committee”) approved management’s decision. Similarly, the related press releases, reports of independent
registered public accounting firm, stockholder communications, investor presentations or other communications describing relevant portions
of the Company’s financial statements with respect to the Non-Reliance Periods should no longer be relied upon.
The
Company intends to promptly file restated financial statements for the year ended December 31, 2020 on Form 10-K/A. The relevant unaudited
interim financial information for the three and nine months ended September 30, 2020 will also be restated within the Form 10-K/A.
As
a result of the restatement, we expect to recognize approximately $25 million in incremental non-operating income for the year ended December
31, 2020, thereby decreasing the net operating loss by approximately $25 million. We expect that there will be no impact to our historically
reported cash and cash equivalents, or cash flows from operating, investing or financing activities. All estimates contained in this report
are subject to change as management completes the Form 10-K/A, and as the Company’s independent registered public accounting firm
completes its work. An audit of annual financial statements and/or review of quarterly financial statements could result in material changes
to these estimates. Further details and, as necessary, remediation plans will be included in the Company’s Form 10-K/A.
The
Company’s management and Audit Committee have discussed the matters disclosed pursuant to this Item 4.02(a) with Marcum LLP, the
Company’s independent registered public accounting firm.
Forward-Looking Statements
Certain
statements made herein are “forward-looking statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words and phrases such
as “will”, “may”, “should”, “future”, “promptly”, “expect”, “estimate”,
“intends”, “plans”, “subject to”, and “change” and other similar expressions that predict
or indicate future events or trends or that are not statements of historical matters. Such statements may include, but are not limited
to, statements regarding the Company’s intent to restate certain historical financial statements and the timing and impact of the
restatement. These statements are based on current expectations on the date of this Current Report on Form 8-K and involve a number of
risks and uncertainties that may cause actual results to differ significantly. These forward-looking statements are not guarantees of
future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. The Company does not assume any obligation to update or revise any such forward-looking
statements, whether as the result of new developments or otherwise.