automatically be deemed to be exercised or the Warrant will be terminated, depending on whether the purchase price per share of one share of Common Stock in such fundamental transaction is greater or less than the Exercise Price. In addition, if such Fundamental Transaction occurs prior to the one-year anniversary of the date of the Warrant, and the price per share of one share of Common Stock in such Fundamental Transaction is less than the Exercise Price, or if it is greater than the Exercise Price but less than the purchase price paid by the holder per Warrant Share, then the holder will be entitled to receive a cash payment up to an amount equal to the purchase price paid by the holder per Warrant Share in respect of any unexercised portion of the Warrant.
Both the Warrant and the CVRs are derivative financial instruments and reported as liabilities at their fair values on INDUS’s consolidated balance sheet as of March 31, 2021 (see Note 3). Although the fair value of the Warrant was $8,685 as of March 31, 2021, the maximum amount that INDUS would be required to pay if the Warrant were to be settled in cash is $2,018.
Income Taxes
As discussed above (see Note 1), INDUS intends to elect to be taxed as a REIT for the taxable year ending December 31, 2021. To qualify as a REIT, INDUS is required (among other things) to distribute at least 90% of its REIT taxable income to its stockholders and meet various other organization and operating requirements. Provided the Company qualifies for taxation as a REIT, it generally will not be subject to federal income taxes if it distributes 100% of its taxable income for each year to its stockholders. However, any taxable income from a taxable REIT subsidiary will be subject to federal, state and local income taxes. If INDUS fails to qualify as a REIT in any taxable year, and it is unable to avail itself of certain savings provisions set forth in the Code, all of its taxable income will be subject to regular federal corporate income tax, and it may not be able to qualify as a REIT for four subsequent taxable years. Additionally, even if INDUS qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income taxes and excise taxes on its undistributed taxable income. INDUS may also be subject to a corporate income tax on any gains recognized during a five-year period following the REIT conversion that are attributable to built-in gains with respect to assets that were owned on January 1, 2021.
In connection with the election to be taxable as a REIT for the taxable year ending December 31, 2021, INDUS reassessed its deferred tax assets and deferred tax liabilities during the fourth quarter of fiscal 2020, which resulted in de-recognizing all of its deferred tax assets and deferred tax liabilities prior to December 31, 2020. Accordingly, there is no income tax benefit reflected in the Company’s results of operations for the 2021 first quarter.
INDUS’s income tax benefit was $85 in the 2020 first quarter reflecting an effective tax rate of 23.0%. The effective tax benefit rate for the 2020 first quarter reflected the federal statutory income tax rate of 21% adjusted for effects of permanent differences and state income taxes.
INDUS’s federal income tax returns for fiscal 2017, fiscal 2018 and fiscal 2019 are open to examination by the Internal Revenue Service.
10. Commitments and Contingencies
As of March 31, 2021, INDUS had committed purchase obligations of approximately $32,446, principally related to the construction of: (a) an approximately 141,000 square foot industrial/logistics building and site work in Charlotte, North Carolina (the “Charlotte Build-to-Suit”); (b) an approximately 103,000 square foot industrial/logistics building in the Lehigh Valley of Pennsylvania being built on speculation; and (c) an approximately 234,000 square foot industrial/logistics building in Connecticut that is 67% pre-leased, as well as improvements of its real estate assets.
From time to time, INDUS is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters is not expected to be material, individually or in the aggregate, to the Company’s consolidated financial position, results of operations or cash flows.
11. Subsequent Events
In accordance with FASB ASC 855, “Subsequent Events,” INDUS has evaluated all events or transactions occurring after March 31, 2021, the balance sheet date, and noted that there have been no such events or transactions