HONG KONG, June 11, 2021 /PRNewswire/ -- Lion Group Holding
Ltd. ("Lion" or "the Company") (NASDAQ: LGHL), operator of an
all-in-one trading platform that offers a wide spectrum of products
and services with a focus on Chinese investors, announced today in
a Current Report on Form 6-K, that as a result of recently issued
guidance provided by the Division of Corporate Finance of the
Securities and Exchange Commission (the "SEC") on April 12, 2021 for all SPAC-related companies
regarding the classification of their warrants for accounting and
reporting purposes (the "SEC Statement"), it will restate its
previously issued consolidated financial statements included on the
Form 20-F for the year ended December 31,
2020.
The restatement pertains to the accounting treatment for public
and private warrants (the "Public Warrants" and "Private Warrants")
issued in connection with the initial public offering of Proficient
Alpha Acquisition Corp. ("PAAC") and recorded to the Company's
consolidated financial statements as a result of the Company's
merger with PAAC, a SPAC and legal predecessor of the Company, and
Lion Financial Group Limited on June 16,
2020 (the "Business Combination").
Consistent with market practice among SPACs, the Company had
been accounting for the Public and Private Warrants as equity.
However, consistent with the recent SEC Statement, the Company
intends to restate certain of its historical financial statements
such that the Public and Private Warrants are accounted for as
liabilities and marked-to-market each reporting period (the
"restatement"). In general, under the mark-to-market accounting
model, as the stock price increases, the fair value of the warrant
liabilities increases, and the Company recognizes additional
non-operating expense in its income statement – with the opposite
effect when the stock price declines.
The Company does not anticipate the restatement to impact its
previously communicated non-GAAP operating metrics for 2020.
As a result of the restatement and the decrease in the Company's
stock price over the applicable period, the Company expects to
recognize incremental non-operating income of approximately
$0.8 million for the period from
June 16, 2020 through December 31, 2020. There will be no impact to the
Company's previously reported net cash flow.
The following provides additional detail regarding how the
Company currently anticipates the restatement will impact its
consolidated financial statements:
- Opening Balance Sheet Impacts — As of the date of the
Business Combination (June 16, 2020),
the fair value of the Public and Private Warrants will be reflected
as warrant liabilities in the balance sheet with a corresponding
offset in Additional paid-in-capital in equity.
- Income Statement Impacts — Subsequent to the close of
the Business Combination, any change in the fair value of the
Public and Private Warrants is recognized in the income statement
below operating profit as "Change in fair value of warrant
liabilities" with a corresponding amount recognized in the balance
sheet. (In the Company's case, this is recognized as warrant
liabilities below current liabilities in the balance sheet).
- Balance Sheet Impacts — As is noted above, the balance
of the warrant liabilities on the balance sheet reflects the fair
value of the Warrants.
- Cash Flow Impacts — The impact of the changes in fair
value of the Public and Private Warrants has no impact on net cash
provided by (used for) operating activities.
- Statement of Equity Impacts — The impact to Additional
paid-in-capital as of the opening balance sheet is highlighted
above.
These estimates are subject to change as management completes
the restatement, and the Company's independent registered public
accounting firm has not audited or reviewed these estimates. As a
result, the expected financial impact described above is
preliminary and subject to change.
Finally, as of today, the Company has approximately 11.5 million
Public Warrants and 5.4 million Private Warrants outstanding. No
Public or Private Warrants have been exercised or redeemed since
originally issued.
About Lion
Lion Group Holding Ltd. (NASDAQ: LGHL) operates an all-in-one
trading platform that offers a wide spectrum of products and
services with a focus on Chinese investors. Through its
state-of-the-art technology, Lion offers contract-for-difference
(CFD) trading, insurance brokerage, futures brokerage, and
securities brokerage on its platform, which can be accessed through
applications available on the iOS, Android, Windows, and macOS
systems. Lion's customers are well-educated and affluent Chinese
individual investors residing both inside and outside the PRC as
well as institutional clients in Hong
Kong. Additional information may be found at
http://ir.liongrouphl.com.
Forward-Looking Statements
This press release contains, "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Lion's actual results may
differ from their expectations, estimates and projections and
consequently, you should not rely on these forward-looking
statements as predictions of future events. Words such as "expect,"
"estimate," "project," "budget," "forecast," "anticipate,"
"intend," "plan," "may," "will," "could," "should," "believes,"
"predicts," "potential," "might" and "continues," and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Lion's expectations with respect to future performance
and anticipated financial impacts of the Business combination, the
satisfaction of the closing conditions to the business combination
and the timing of the completion of the business combination. These
forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from expected results. Most of these factors are outside the
control of Lion and are difficult to predict. Factors that may
cause such differences include, but are not limited to: (1) the
inability to maintain the listing of the post-acquisition company's
ADSs on NASDAQ following the business combination; (2) the risk
that the business combination disrupts current plans and operations
as a result of the announcement and consummation of the
transactions described herein; (3) the inability to recognize the
anticipated benefits of the business combination, which may be
affected by, among other things, competition, the ability of the
combined company to grow and manage growth profitably and retain
its key employees; (4) costs related to the business combination;
(5) changes in applicable laws or regulations; (6) the possibility
that Lion may be adversely affected by other economic, business,
and/or competitive factors; and (7) other risks and uncertainties
to be identified in the proxy statement/prospectus relating to the
business combination, including those under "Risk Factors" therein,
and in other filings with the Securities and Exchange Commission
("SEC") made by Lion. Lion cautions that the foregoing list of
factors is not exclusive. Lion cautions readers not to place undue
reliance upon any forward-looking statements, which speak only as
of the date made. Lion does not undertake or accept any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in its
expectations or any change in events, conditions or circumstances
on which any such statement is based, subject to applicable
law.
Contacts
Lion Group Holding
Tel: +852 2820 9011
Email: ir@liongrouphl.com
ICR, LLC
William
Zima
Tel: +1 203 682 8233
Email: ir@liongrouphl.com
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SOURCE Lion Group Holding Ltd.